What’s in store for the Markets this week?
Stock Markets this week are very busy as big companies like Apple, Amazon, and Alphabet are set to announce their earnings. Meanwhile, three central banks, including the Federal Reserve, the European Central Bank, and the Bank of England, will be holding policy meetings. Here’s what you need to know to get ready for the week ahead.
The Federal Reserve’s next move effects Markets this week
On Wednesday (01/02/2023), the Federal Reserve will have a policy meeting where they will decide on whether to raise interest rates. Currently, it’s expected that they will increase rates by 0.25%, which is a slower pace compared to their last meeting. The market will be paying close attention to the post-meeting press conference for more information on the future of interest rate hikes.
European Central Bank’s rate hike effects Markets this week
The European Central Bank is also holding a meeting this Thursday (02/02/2023) and is expected to raise rates by 0.50%. Despite the high core inflation rate, there are some policymakers who believe that the inflation rate has dropped from its record high. ECB President Christine Lagarde is expected to take a tough stance on inflation, and investors will be watching closely for any hints on the future of rate hikes.
Bank of England’s latest move also effects Markets this week
The Bank of England is also expected to raise interest rates this Thursday (02/02/2023). It’s their tenth rate hike since December 2021, and they are expected to increase rates by 0.50%. The Bank of England will be closely watched to see if they believe they are near the end of their interest rate hikes.
Big Companies’ Earnings will also effects Markets this week
This Thursday (02/02/2023), three of the four biggest companies in the US by market value, Apple, Amazon, and Alphabet, will announce their earnings. Microsoft, the fourth biggest company, already reported last week. Investors will be closely watching these companies to see how they are performing during these uncertain economic times.
Amazon Expectations will also effects Markets this week
Amazon is expected to report lower earnings in the quarter ending December 2022, but with higher revenues. The earnings report is expected to be released on February 2, 2023, and the results may impact the company’s stock price. Analysts are expecting Amazon to earn $0.15 per share and report revenue of $145.37 billion. The most recent earnings estimate has been revised lower by 3.05% in the last 30 days.
Analysts have recently become bearish on Amazon’s earnings prospects, which has resulted in a negative Earnings ESP of -5.10%. The stock currently has a Zacks Rank of #3, making it difficult to predict an earnings beat. In the past, Amazon has beat earnings expectations just once in the last four quarters.
Apple Earning expectations
Apple is expected to report a year-over-year decline in earnings and revenue for the quarter ending Dec 2022, with the consensus estimate being $1.94 per share and $121.21 billion in revenue. The consensus EPS estimate has been revised lower by 0.13% in the past 30 days. The Zacks Earnings ESP compares the Most Accurate Estimate with the Zacks Consensus Estimate, but a negative reading of -0.17% and a Zacks Rank of #3 make it difficult to predict an earnings beat.
Apple has a history of beating EPS estimates with a surprise of +2.38% in the last reported quarter and four times in the past four quarters. While an earnings beat or miss may not be the sole reason for stock movement, betting on stocks expected to beat earnings expectations increases the odds of success. Apple may not be a compelling earnings-beat candidate, but investors should pay attention to other factors before betting on the stock.
Alphabet Earning Estimates
Alphabet (GOOGL) is expected to report a decline in earnings with higher revenues in Q4 2022, with earnings per share of $1.17 and revenues of $63.18 billion. The consensus EPS estimate has been revised higher in the last 30 days. The Zacks Earnings ESP compares the most accurate estimate to the consensus estimate and a positive ESP indicates a likely earnings beat. Alphabet’s Most Accurate Estimate is lower than the consensus estimate resulting in an ESP of -0.65% and the stock has a Zacks Rank of 3.
The company has only beaten earnings expectations once in the past four quarters. While an earnings beat or miss is not the sole basis for stock movement, betting on stocks that are expected to beat earnings expectations does increase the odds of success. Investors should consider other factors in addition to earnings expectations when deciding to invest in Alphabet.
The return of Chinese Markets this week.
The Chinese financial markets will reopen this week after their week-long Lunar New Year holidays. The markets are expected to continue their upward trend, reaching a five-month high. This will be watched closely by investors to see if the growth in the Chinese economy continues.
In conclusion, it’s going to be a busy week for the stock market with big announcements from companies and central banks. Keep an eye on the Federal Reserve, the European Central Bank, and the Bank of England’s policy meetings, as well as the earnings reports from Apple, Amazon, and Alphabet.