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The Zacks Consensus Estimate for revenues is pegged at $49.58 billion, indicating growth of +9.41% from the figure reported in the year-ago quarter.
The consensus mark for earnings has declined -0.4% to $2.30 per share over the past 30 days, suggesting +1.32% growth from the figure reported in the year-ago quarter.
Microsoft’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with an average quarterly EPS surprise of +4.53%.
In Europe, major companies are reporting market-shaping results, as well.
What of political and macro events?
Reuters says the breathtaking pace of political events inside Britain keeps traders on their toes, while Japan is back on a Yen and JGB bond market intervention watch.
On Thursday, expect the European Central Bank (ECB) to deliver another 75-bps policy rate hike.
On Friday, the Bank of Japan (BoJ) meets.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) Over the Next 2 Weeks, More than 300 S&P500 Companies Report
More than 300 S&P500 companies are due to report results over the next two weeks as the U.S. third-quarter earnings season heats up.
Reports from companies such as Goldman Sachs, Lockheed Martin, Bank of America and Netflix have heartened investors in those firms' shares.
Still, overall S&P500 earnings growth is only expected to have climbed +3% year-on-year, according to Refinitiv I/B/E/S. That would be the worst performance in two years, and is down from an expectation of +4.5% at the start of October.
Faltering profit growth would remove a key pillar that has helped shelter U.S. stock markets from more severe declines.
Among companies due to report in the coming week are the four largest in the U.S. by market value: Apple, Microsoft, Alphabet and Amazon.
(2) Europe’s Earnings Show Strain of Energy, Supply Chain Issues
It's a different story in Europe, where soaring costs of energy, raw materials, labor and credit and tangled supply chains are chipping away at earnings expectations.
Nonetheless, a different lockdown sequencing and favorable currency effects mean companies listed on the pan-European STOXX 600 regional index are expected to report a rise of about 28.4% in earnings in the third quarter, according to Refinitiv I/B/E/S.
Nonetheless, that's down from an expected 32% jump pre-reporting season and a whopping 60% growth in Q3 2021.
So far results have been mixed: Telecom equipment makers Nokia and Ericsson missed analysts' expectations, but on a brighter note Birkin bag maker Hermes saw a sharp rise in sales growth, and the world's second-biggest spirits group Pernod Ricard beat expectations.
(3) Who’s in Charge in the U.K.?
Brought down after just six weeks as British prime minister by a radical economic program that rocked markets, pushed up living costs for voters and enraged much of her own party, Liz Truss has quit.
Her Conservative Party, which holds a big majority in parliament and is not obliged to call an election for another two years, plans to select a new leader by Oct. 28. Former finance minister Rishi Sunak, Penny Mordaunt and previous PM Boris Johnson are all potential successors.
Finance Minister Jeremy Hunt is due to deliver a new budget on Oct. 31. He faces the uphill task of finding tens of billions of pounds in spending cuts — in the middle of a cost-of-living crisis — to rescue Britain's battered fiscal reputation, with currency and fixed income markets in the doldrums.
(4) Look for the ECB to Deliver Another 75 bps Hike
The European Central Bank (ECB) is widely expected to deliver its second supersized 75 basis-point rate hike on Thursday. Joining the global rate-hike party late, the ECB has delivered 125 bps worth of rises in two meetings in its fastest pace of policy tightening on record.
With Euro-area inflation at almost 10% versus an ECB target of 2%, there's little appetite to slow down now, even if recession risks are rising.
In fact, expect ECB Chief Christine Lagarde to face plenty of questions about when the central bank will start scaling back its bondholdings in the next tightening phase. Policymakers are also believed to be closing in on a deal to change the rules governing loans to banks that have benefited from a sudden jump in rates.
(5) Bank of Japan (BoJ) Meets Friday
The Bank of Japan meets on Oct. 28 and is expected to continue running against the grain of global central banks by sticking to its extraordinary levels of stimulus — even as its policy exacerbates a politically unpopular plunge in the yen to a 32-year low beyond 150 per dollar.
The BOJ has conducted emergency bond buying for two days running to keep a lid on yields, showing its commitment to easing.
In Australia, the monetary policy outlook is much murkier. The Reserve Bank's decision in October to slow the pace of rate hikes reverberated in global markets, leading some to say the peak of policy tightening worldwide might be reached soon.
Recent data has backed the case for a slower pace of hikes with Australian employment numbers posting a disappointingly small rise in September. That put the spotlight on quarterly inflation data due on Wednesday that could help determine the next policy move.
Top Zacks #1 Rank (STRONG BUY) Stocks
Next are three very interesting, major large-cap names on the #1 list this week.
(1) Equinor (EQNR - Free Report) : This is a $35 a share Norwegian Oil and Gas Refining and Marketing company, with a market cap of $111.6B. I see a Zacks Value score of A, a Zacks Growth score of A and a Zacks Momentum score of FA
(2) HSBC (HSBC - Free Report) : This is a $27a share Foreign Bank company, with a market cap of $108.1B. I see a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentum score of C.
(3) Airbnb (ABNB - Free Report) : This is a $117 a share Online Rental Tech company, with a market cap of $78.9B. I see a Zacks Value score of F, a Zacks Growth score of B and a Zacks Momentum score of F.
One is in European Oil and Gas Refining, one is a major Bank with an Asia-Pacific focus, and one is benefiting from surging interest in Nightly Rentals from travelers.
Talk about picks tied to geopolitical events!
Key Global Macro
I think the flash manufacturing PMIs, out at the start of the week, look interesting.
On Monday, the Jibun Bank Japan manufacturing PMI for October came out slightly lower, to 50.7. The prior reading was 50.8.
The Euro Area manufacturing PMI for October was even lower, month over month, to 46.6. The prior reading was 48.4.
The US S&P global manufacturing PMI for October comes out. The prior reading was 52.0.
On Tuesday, the U.S. Case-Shiller Home Price Index for August comes out. The prior reading showed a +16.1% y/y rise.
On Wednesday, Australia’s consumer price index (CPI) for Q3 comes out. The y/y reading has been at +6.9% y/y. Trimmed mean CPI here is +5.5% y/y.
There is a National Bureau of Statistics (NBS) press conference in Mainland China, and a host of macro data comes out there. Exports were up +7.1% y/y thru SEPT, while imports rose +0.3% y/y. We get updated on both of those key global metrics.
The Bank of Canada (BoC) is at 3.25% on their policy rate now. They will offer up a new higher rate, surely in alignment with the prospects for the U.S. Fed Funds rate.
On Thursday, the European Central Bank (ECB) likely raises its policy rate 75 basis points. There should be a LaGarde presser too.
On Friday, the Bank of Japan (BoJ) holds a press conference, and shows its monetary policy hand.
That will close out the week.
Conclusion
Here is what Zacks Research Director Sheraz Mian has to say about Q3 earnings.
“The ongoing Q3 earnings season appears to be a replay of what we witnessed in the June-quarter reporting cycle, when estimates and sentiment had weakened so much that the actual results end up looking a lot better in comparison.”
“Having seen results from about 12% of S&P 500 members by now, we can see that results are by no means great, but they are not bad either. It is all about expectations and those had been adjusted lower ahead of the start of this earnings season.”
“Importantly, many in the market appeared ready for earnings to ‘fall off the cliff’, with management teams guiding lower.”
“We have seen some of that, but for the most part the long-feared development has not materialized, at least not yet.”
Zacks Sheraz Mian’s four key Q3 earnings points, written on Oct. 19th, 2022:
(1) The picture emerging from the Q3-2022 earnings season belies pre-season fears of an impending earnings cliff.
The overall corporate profitability picture isn’t great, but it isn’t bad either.
(2) For the 62 S&P500 members that have reported Q3 results already, total earnings are down -4.6% from the same period last year on +8.8% higher revenues, with 77.4% beating EPS estimates, and 59.7% beating revenue estimates.
(3) With respect to positive surprises, the percentage of these 62 index members beating EPS estimates is below the 5-year average, but otherwise within the historical range, though the revenue beats percentage is on the lower side.
(4) Looking at Q3-2022 as a whole, total S&P500 earnings are currently expected to be up +0.6% from the same period last year on +9.1% higher revenues.
Excluding contributions from the Energy sector, Q3 earnings for the rest of the index would be -6.0% below the year-earlier level.
That’s it for me.
Have a great trading week!
Warm Regards,
John Blank Zacks Chief Equity Strategist and Economist
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Major Earnings Reports Flood In: Global Week Ahead
In the Global Week Ahead, the USA enters the heart of Q3 earnings season.
Most shares will likely follow the trading action of the major mega-cap tech stocks.
(1) Microsoft (MSFT - Free Report) is set to report first-quarter fiscal 2023 results after market close (AMC) on Tuesday, Oct 25th.
The Zacks Consensus Estimate for revenues is pegged at $49.58 billion, indicating growth of +9.41% from the figure reported in the year-ago quarter.
The consensus mark for earnings has declined -0.4% to $2.30 per share over the past 30 days, suggesting +1.32% growth from the figure reported in the year-ago quarter.
Microsoft’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with an average quarterly EPS surprise of +4.53%.
(2) Alphabet (GOOGL - Free Report) reports AMC on Tuesday Oct. 25th too.
(3) Both Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) report AMC on Thursday, Oct. 27th.
In Europe, major companies are reporting market-shaping results, as well.
What of political and macro events?
Reuters says the breathtaking pace of political events inside Britain keeps traders on their toes, while Japan is back on a Yen and JGB bond market intervention watch.
On Thursday, expect the European Central Bank (ECB) to deliver another 75-bps policy rate hike.
On Friday, the Bank of Japan (BoJ) meets.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) Over the Next 2 Weeks, More than 300 S&P500 Companies Report
More than 300 S&P500 companies are due to report results over the next two weeks as the U.S. third-quarter earnings season heats up.
Reports from companies such as Goldman Sachs, Lockheed Martin, Bank of America and Netflix have heartened investors in those firms' shares.
Still, overall S&P500 earnings growth is only expected to have climbed +3% year-on-year, according to Refinitiv I/B/E/S. That would be the worst performance in two years, and is down from an expectation of +4.5% at the start of October.
Faltering profit growth would remove a key pillar that has helped shelter U.S. stock markets from more severe declines.
Among companies due to report in the coming week are the four largest in the U.S. by market value: Apple, Microsoft, Alphabet and Amazon.
(2) Europe’s Earnings Show Strain of Energy, Supply Chain Issues
It's a different story in Europe, where soaring costs of energy, raw materials, labor and credit and tangled supply chains are chipping away at earnings expectations.
Nonetheless, a different lockdown sequencing and favorable currency effects mean companies listed on the pan-European STOXX 600 regional index are expected to report a rise of about 28.4% in earnings in the third quarter, according to Refinitiv I/B/E/S.
Nonetheless, that's down from an expected 32% jump pre-reporting season and a whopping 60% growth in Q3 2021.
So far results have been mixed: Telecom equipment makers Nokia and Ericsson missed analysts' expectations, but on a brighter note Birkin bag maker Hermes saw a sharp rise in sales growth, and the world's second-biggest spirits group Pernod Ricard beat expectations.
(3) Who’s in Charge in the U.K.?
Brought down after just six weeks as British prime minister by a radical economic program that rocked markets, pushed up living costs for voters and enraged much of her own party, Liz Truss has quit.
Her Conservative Party, which holds a big majority in parliament and is not obliged to call an election for another two years, plans to select a new leader by Oct. 28. Former finance minister Rishi Sunak, Penny Mordaunt and previous PM Boris Johnson are all potential successors.
Finance Minister Jeremy Hunt is due to deliver a new budget on Oct. 31. He faces the uphill task of finding tens of billions of pounds in spending cuts — in the middle of a cost-of-living crisis — to rescue Britain's battered fiscal reputation, with currency and fixed income markets in the doldrums.
(4) Look for the ECB to Deliver Another 75 bps Hike
The European Central Bank (ECB) is widely expected to deliver its second supersized 75 basis-point rate hike on Thursday. Joining the global rate-hike party late, the ECB has delivered 125 bps worth of rises in two meetings in its fastest pace of policy tightening on record.
With Euro-area inflation at almost 10% versus an ECB target of 2%, there's little appetite to slow down now, even if recession risks are rising.
In fact, expect ECB Chief Christine Lagarde to face plenty of questions about when the central bank will start scaling back its bondholdings in the next tightening phase. Policymakers are also believed to be closing in on a deal to change the rules governing loans to banks that have benefited from a sudden jump in rates.
(5) Bank of Japan (BoJ) Meets Friday
The Bank of Japan meets on Oct. 28 and is expected to continue running against the grain of global central banks by sticking to its extraordinary levels of stimulus — even as its policy exacerbates a politically unpopular plunge in the yen to a 32-year low beyond 150 per dollar.
The BOJ has conducted emergency bond buying for two days running to keep a lid on yields, showing its commitment to easing.
In Australia, the monetary policy outlook is much murkier. The Reserve Bank's decision in October to slow the pace of rate hikes reverberated in global markets, leading some to say the peak of policy tightening worldwide might be reached soon.
Recent data has backed the case for a slower pace of hikes with Australian employment numbers posting a disappointingly small rise in September. That put the spotlight on quarterly inflation data due on Wednesday that could help determine the next policy move.
Top Zacks #1 Rank (STRONG BUY) Stocks
Next are three very interesting, major large-cap names on the #1 list this week.
(1) Equinor (EQNR - Free Report) : This is a $35 a share Norwegian Oil and Gas Refining and Marketing company, with a market cap of $111.6B. I see a Zacks Value score of A, a Zacks Growth score of A and a Zacks Momentum score of FA
(2) HSBC (HSBC - Free Report) : This is a $27a share Foreign Bank company, with a market cap of $108.1B. I see a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentum score of C.
(3) Airbnb (ABNB - Free Report) : This is a $117 a share Online Rental Tech company, with a market cap of $78.9B. I see a Zacks Value score of F, a Zacks Growth score of B and a Zacks Momentum score of F.
One is in European Oil and Gas Refining, one is a major Bank with an Asia-Pacific focus, and one is benefiting from surging interest in Nightly Rentals from travelers.
Talk about picks tied to geopolitical events!
Key Global Macro
I think the flash manufacturing PMIs, out at the start of the week, look interesting.
On Monday, the Jibun Bank Japan manufacturing PMI for October came out slightly lower, to 50.7. The prior reading was 50.8.
The Euro Area manufacturing PMI for October was even lower, month over month, to 46.6. The prior reading was 48.4.
The US S&P global manufacturing PMI for October comes out. The prior reading was 52.0.
On Tuesday, the U.S. Case-Shiller Home Price Index for August comes out. The prior reading showed a +16.1% y/y rise.
On Wednesday, Australia’s consumer price index (CPI) for Q3 comes out. The y/y reading has been at +6.9% y/y. Trimmed mean CPI here is +5.5% y/y.
There is a National Bureau of Statistics (NBS) press conference in Mainland China, and a host of macro data comes out there. Exports were up +7.1% y/y thru SEPT, while imports rose +0.3% y/y. We get updated on both of those key global metrics.
The Bank of Canada (BoC) is at 3.25% on their policy rate now. They will offer up a new higher rate, surely in alignment with the prospects for the U.S. Fed Funds rate.
On Thursday, the European Central Bank (ECB) likely raises its policy rate 75 basis points. There should be a LaGarde presser too.
On Friday, the Bank of Japan (BoJ) holds a press conference, and shows its monetary policy hand.
That will close out the week.
Conclusion
Here is what Zacks Research Director Sheraz Mian has to say about Q3 earnings.
“The ongoing Q3 earnings season appears to be a replay of what we witnessed in the June-quarter reporting cycle, when estimates and sentiment had weakened so much that the actual results end up looking a lot better in comparison.”
“Having seen results from about 12% of S&P 500 members by now, we can see that results are by no means great, but they are not bad either. It is all about expectations and those had been adjusted lower ahead of the start of this earnings season.”
“Importantly, many in the market appeared ready for earnings to ‘fall off the cliff’, with management teams guiding lower.”
“We have seen some of that, but for the most part the long-feared development has not materialized, at least not yet.”
Zacks Sheraz Mian’s four key Q3 earnings points, written on Oct. 19th, 2022:
(1) The picture emerging from the Q3-2022 earnings season belies pre-season fears of an impending earnings cliff.
The overall corporate profitability picture isn’t great, but it isn’t bad either.
(2) For the 62 S&P500 members that have reported Q3 results already, total earnings are down -4.6% from the same period last year on +8.8% higher revenues, with
77.4% beating EPS estimates, and 59.7% beating revenue estimates.
(3) With respect to positive surprises, the percentage of these 62 index members beating EPS estimates is below the 5-year average, but otherwise within the historical range, though the revenue beats percentage is on the lower side.
(4) Looking at Q3-2022 as a whole, total S&P500 earnings are currently expected to be up +0.6% from the same period last year on +9.1% higher revenues.
Excluding contributions from the Energy sector, Q3 earnings for the rest of the index would be -6.0% below the year-earlier level.
That’s it for me.
Have a great trading week!
Warm Regards,
John Blank
Zacks Chief Equity Strategist and Economist