A Mad Week for Endless Corporate Earnings Has Led to Markets Looking Optimistic

UK & Europe: Shinier Days for FTSE 100

The FTSE 100 had a positive week, closing on Friday up over 3%.

Data released early in the week showed a fall in inflation in the UK for the month of June, dropping from 8.2% in May to 7.9% in June. 

This takes inflation to its lowest level in over a year and shows movement in the right direction, following a flat month in May. 

Data on retail sales for the UK also showed an increase in June, which is mostly being attributed to the imminent need for garden furniture, summer outfits, and cold beverages in the unseasonably warm month of June. 

UK food retailer Ocado drove many of the notable gains on the FTSE 100 after reporting promising second quarter earnings. 

The European markets were relatively lacklustre, with not a lot to report in either negative or positive territory. The Eurostoxx 50 ended the week up by 0.15%. 

Sweden’s Tele2 reported disappointing earnings, causing their share price to fall by 11% and continuing the turbulent times in the European telecommunications sector. 

The European Central Bank is due to announce their decision on interest rates next week which may explain the relatively muted week, as the investors await the impending decision.  

Americas: Earnings Season Begins

This week begins the silly season of major companies announcing their earnings for the second quarter of 2023. 

Kicking the week off was some of the major banks, including Goldman Sachs, Bank of America and Morgan Stanley. Most were positive in their outlook, which shows promising signs for the troubled financial sector. 

The tech sector disappointed a little later in the week, with Netflix and Tesla both missing the mark, causing both of their share prices to dip. 

Netflix saw an increase in subscribers, owing to their ban on password sharing, but a fall in profits and uncertainty around the strikes in Hollywood. 

Tesla also saw an increase in sales, but a similar decrease in profits, thanks to their cost cutting measures on their electric vehicle models. 

The overall positive sentiment nonetheless caused the Dow Jones to see nine consecutive days of gains, which hasn’t been done since 2017.

Asia & Australasia: The Inflation Battle Continues

China released data showing slowing growth, as well as a fall in exports, which dampened market sentiment. Many are expecting the government to announce stimulus measures shortly. 

Most are now forecasting around 5% growth for China for the year, which is lower than they had hoped. 

Inflation in Japan was also shown to have climbed in June, from 3.2% in May to 3.3% in June. 

This may cause the Bank of Japan to introduce a controversial yield curve control measure in the next week. 

New Zealand on the other hand saw inflation fall from 6.7% to 6%. However this still isn’t low enough to consider a pause in interest rate hikes. 

India placed a ban on the export of a certain type of basmati rice, to ensure that they have sufficient to supply the domestic market, following a destructive monsoon season. 

This has caused some to worry about the global food price situation.

Stock World: Entertainment Time

Writers and actors in Hollywood are currently on strike following a vote from the union SAG AFTRA. 

Pay and use of AI are bones of contention in the ongoing dispute. 

Netflix, one of the major entertainment companies in the industry, released their earnings for the second quarter of 2023 last week. 

It revealed that subscribers were up in numbers following a successful password sharing ban, but their profits weren’t as high as expected. 

They also revealed a reduction in content costs due to the strikes, which may well start to impact the quality of material produced. 

Shares of other major entertainment companies, including Disney and Warner Bros might well be further impacted by the ongoing strike disruptions in Hollywood, keep a keen eye on them!