Will a wait and see approach work?

Will a wait and see approach work?
  • Corporate Earning News
  • Global market indices  
  • Currencies
  • Cryptocurrencies
  • Fixed Income
  • Commodity sector news 
  • Key data to move markets this week  
  • ​Global macro updates   

Corporate Earnings News

The Energy sector is having a mixed earnings season thus far. BP slowed the pace of its share buybacks this week, announcing $1.75bn of repurchases for the next three months, down from $2.75bn last quarter, despite reporting Q1 profits of $5bn that resulted from an “exceptional” quarter from its gas traders and a “very strong” performance from its oil trading division. Shell said it had returned $6.3bn to shareholders through $2bn in dividend payments and $4.3bn of share repurchases, adding that it would buy back another $4bn of shares over the next three months. It reported a Q1 net profit of $9.65 billion today, largely attributable to strong earnings from fuel trading and higher liquefied natural gas (LNG) sales offset cooling energy prices.

The Technology sector also took a bit of a hit this week with chipmaker Qualcomm forecasting weaker Q3 revenue and profit, with total revenue now expected to be $8.1 billion to $8.9 billion in the third quarter. CEO Cristiano Amon told investors on a conference call that "we have not seen evidence of meaningful recovery and are not incorporating improvements into our planning assumptions." This followed on from news of chipmaker Advanced Micro Devices Inc.’s weak sales forecast for the second quarter overshadowed upbeat first quarter results. As noted by Refinitiv, the smartphone market was one of the first hit by declining demand after high inflation curbed consumer spending on discretionary goods, resulting in vendors slashing new chip orders. Smartphone demand has remained weak despite promotions and price cuts. Global smartphone shipments fell 13% in the first quarter, according to research firm Canalys. Investors will be looking to one of the largest users of chips, Apple, for its Q1 results expected to be released after hours today. 

According to Refinitiv I/B/E/S data, the 23Q1 Y/Y blended earnings growth estimate is -1.1%. If the energy sector is excluded, the growth rate for the index is -2.6%. The 23Q1 Y/Y blended revenue growth estimate is 3.1%. If the energy sector is excluded, the growth rate for the index is 4.0%. Of the approximately 342 companies in the S&P 500 that reported earnings by 3 May for 23Q1, 77.5% reported above analyst expectations. This compares to a long-term average of 66%.

Corporate earning calendar 4-11 May 2023

Thursday: American Electric PowerAnheuser-Busch InBevAppleBall CorpBecton, Dickinson & CompanyBlockCoinbase GlobalConocoPhillipsEOG ResourcesEquinorExpedia GroupFortinetKellogg CompanyLemonadeModernaMonster BeverageNovo Nordisk,PPL CorporationRegeneron PharmaceuticalsSempra EnergyShopifyShellVulcan MaterialsWheaton Precious MetalsZoetisCardinal Health
Friday: AMC EntertainmentCigna,Dominion EnergyEnbridge
Monday: McKesson CorporationViatrisLucid GroupKKRPalantir TechnologiesPayPal HoldingsBerkshire HathawaySuncor EnergyDevon EnergyTyson FoodsWestern Digital Corporation
Tuesday: AirbnbAir Products and Chemicals Inc.Duke Energy CorporationJackson FinancialOccidental PetroleumRivian AutomotiveTwilioUpstart HoldingsVirgin GalacticWaters CorporationCelanese CorporationCorebridge Financial
Wednesday: The Trade DeskUnity SoftwareWalt Disney CompanyManulife Financial
Thursday: BayerFiverr InternationalMerckSun Life FinancialTakeda PharmaceuticalNortonLifeLock

US Stock Indices 

Nasdaq 100 -1.62% MTD and +19.11% YTD 
Dow Jones Industrial Average -1.21% MTD and +1.62% YTD 
NYSE -2.01% MTD and +0.33% YTD 
S&P 500 -1.20% MTD and +7.29% YTD 

Mega caps AlphabetMicrosoftMeta PlatformsTeslaAmazon and Apple are all down this week. According to Refinitiv, Apple is likely to report later today a more than 4% drop in revenue, its second straight quarterly decline, due to consumers shunning non-essential purchases such as iPhones and Mac computers and slowing growth at its services business.

Energy stocks were mixed this week as oil continued to fall on growing expectations of weakening global demand. Imports to Asia fell to a seven-month low in April as top buyers China and India trimmed purchases. Energy Fuels was up, but Apa Corp (US) ,ShellChevronMarathon PetroleumOccidental PetroleumCoterra EnergyPhillips 66Diamondback Energy and ConocoPhillips were all down.

Materials and Mining stocks were mixed again this week on concerns of a sluggish recovery of demand in China. Although Albemarle Corporation posted Q1 2023 net income of $1.24 billion, or $10.51 per share, compared to $253.4 million, or $2.15 per share, in the year-ago period, it cut its annual profit forecast to a range of $9.8 billion to $11.5 billion, from a prior forecast of $11.3 billion to $12.9 bill on softening lithium prices. Sibanye StillwaterMosaicPackaging Corporation of America, and CF Industries Holdings were all up, while Yara InternationalNucor CorporationNewmont MiningDow ChemicalFreeport-McMoran, and Albemarle CorporationInternational Paper Company were all down.

European Stock Indices 

Stoxx 600 -0.89% MTD and +8.85% YTD 
DAX -0.67% MTD and +13.58% YTD 
CAC 40 -1.17% MTD and +14.37% YTD 
IBEX 35 -1.78% MTD and +10.30% YTD 
FTSE MIB -0.89% MTD and +13.20% YTD
FTSE 100-1.04% MTD and +4.52% YTD 

Other Global Stock Indices 

MSCI World Index -1.33% MTD and +6.76% YTD
Hang Seng -0.98% MTD and -3.44% YTD


The USD fell against most major currencies this week as it became apparent that the Fed was going to hike once more and potentially then take a pause, if not a full stop, in its tightening cycle. However, it was supported somewhat by market discomfort with potential risks posed by regional bank shares. The GBP is +3.92% YTD against the USD, while the EUR is +3.46% YTD against the USD. The BoE is expected to raise rates again next week by 25 bps but with the economy pretty much flat-lining and with inflation remaining high, that is not good for Sterling. Also the lagged effects of policy tightening are likely to weigh on activity in coming quarters. The ECB is expected to maintain its tightening path while the Fed’s moves have been interpreted by many as a strong pause signal. 


Bitcoin-0.50% MTD and +76.19% YTD
Ethereum+0.64% MTD and +59.35% YTD

Turbulence in the US banking sector and investors strengthening their bets on Fed interest-rate cuts later this year have helped Bitcoin and other crypto currencies valuations this year. Given the rapid rise in cryptocurrencies this year despite, or perhaps because of, growing volatility in the banking sector, there are growing questions about its potential decoupling from other asset classes such as equities. 

Fixed Income

US 10-year Treasuries at 3.35%.
German 10-year Bunds at 2.25%.
UK 10-year Gilts at 3.70%.

US yields fell this week as the Fed tightening cycle appears to be hitting a pause after Wednesday’s rate rise. Although the ECB is expected to raise rates again today, the pace of future rate hikes may be more moderate. 


Gold futures to $2,043.60 an ounce.
Silver futures to $25.48 per ounce.
West Texas Intermediate crude to $68.14 a barrel.
Brent crude to $ 72.33 a barrel.

Oil prices have fallen over 9% so far this week due to signs of weak manufacturing growth in China, with China’s official manufacturing purchasing managers' index (PMI) falling to 49.2, down from 51.9 in March, due to weaker than anticipated domestic demand and after the Fed raised interest rates to their highest since 2007 on Wednesday, admitting that it expected a further slowdown in the economy this year. However, oil has remained somewhat supported by the expected cuts in supply by OPEC+ members starting this month. 

Gold has continued to benefit from a weakening dollar and uncertainties around the stability of the US banking system. The likelihood of further gains for the safe-haven asset as economic risks continue are growing although there is the possibility that there may be some profit taking that could, at least temporarily, drive down the price in the shorter term.

Note: As of 6:30pm EDT 3 May 2023

Key data to move markets this week


Thursday: ECB Monetary Policy Rate decision, a speech by ECB President Christine Lagarde, German HCOB Composite and Services PMIs, Eurozone HCOB Composite and Services PMIs and Eurozone PPI. 
Friday: A speech by ECB executive board member Frank Elderson and Eurozone Retail sales. 
Wednesday: German Harmonised Index of Consumer Prices.


Thursday: S&P Global/CIPS Composite and Services PMIs.
Monday: BRC Like-for-Like Retail Sales.
Thursday: Bank of England Interest Rate Decision, Monetary Policy Report and a speech by BoE Governor Andrew Bailey. 


Thursday: Initial jobless claims, Continuing jobless claims, Non farm productivity, and Unit Labour costs.
Friday: Unemployment rate, Labour Force Participation rate, Non Farm Payrolls, Average Hourly earnings, and a speech by Fed board of governors member Lisa Cook. 
Wednesday: CPI.
Thursday: Initial jobless claims, continuing jobless claims, and PPI.

Global Macro Updates

The Fed’s hike and hold? As widely expected, in a unanimous vote, the Fed raised its benchmark overnight interest rate by 25 basis points to the 5.00%-5.25% range, the highest since 2007, on Wednesday. However, it dropped from its policy statement language saying that it "anticipates that some additional policy firming may be appropriate.” Fed Chair Jerome Powell said that he expects growth to be modest, not recessionary, as labour markets remain very strong with robust job gains and historically low unemployment levels despite a fall in job openings and lower earnings growth. Although Powell stated that the Fed was “closer, or maybe even there," the Fed said that it would take into account how the impact of monetary policy firming and credit tightening in the wake of volatility in the banking sector is affecting inflation and that it is therefore too soon to say with certainty that the rate-hike cycle is over. "We are prepared to do more," he said. He also pushed back on market expectations that there would cut rates this year, saying such a move was unlikely. Chair Powell said, "We on the committee have a view that inflation is going to come down not so quickly, it will take some time… and in that world, if that forecast is broadly right, it would not be appropriate to cut rates this year.” In short, it appears that further Fed moves will be data dependent. It is also quite possible that the risks around the continuing standoff over the US debt limit between Republicans in Congress and Democratic President Joe Biden may have contributed to the Fed’s wait and see approach. According to FEDWATCH data, money markets are now pricing in a slightly more than 10% chance the Fed will begin cutting rates in June, and expect roughly 80 basis points of rate cuts through to the end of the year.

Moving at a slower pace. The ECB has raised rates again today by 25 basis points. It has raised rates by at least 50 basis points at each of six successive meetings. However, indications that core inflation may be slowing gave credence for a 25 basis point move. For the ECB headline inflation remains too high and underlying pressures remain strong. The ECB said that future decisions will ensure that policy rates will be brought to levels sufficiently restrictive to achieve the 2% target and will be kept at those levels as long as necessary. What is very clear is that the tightening cycle is highly likely to continue over the next few meetings. Markets are currently pricing in 50 basis point hikes by September.

Defining crypto. The US Securities and Exchange Commission (SEC) is continuing to create confusion in crypto markets by still refusing to define “digital asset” in its hedge fund and private equity fund reporting rules, despite proposing to do so some nine months ago. As noted by Coindesk.com, while the SEC had initially included the definition in its 2022 proposal to overhaul mandatory disclosures for hedge funds, it changed the definition in the final rule approved by the commissioners. The agency included a footnote in its amendments to Form PF — a form that SEC-registered funds complete to disclose basic information about their fund so the regulator can assess potential “systemic risks.'' The SEC said, “The commission and staff are continuing to consider this term and are not adopting ‘digital assets’ as part of this rule at this time.” This means that digital assets are still undefined in its lexicon, making their use uncertain from a regulatory perspective.

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