Happy Sunday! There’s a lot to cover in this week’s Market Update, but as always, I’ll try to keep it as brief as possible.
We have lots of company earnings (these are separated into additional posts, for your convenience), job cut announcements, UK GDP data, news around the Ukraine war which will impact financial markets, and even a devastating natural disaster.
The true global impact of all of this is currently unknown. Though, with so much uncertainty, markets are almost definitely going to continue to be volatile throughout 2023.
Next week, we also have inflation data coming in for both the UK and US for January. There is no shortage of stock market catalysts, it seems!
Key Events
UK GDP Figures for Q4 2022
Despite the World Cup occurring in the last few months of 2022, it wasn’t quite enough to push the economy into positive growth for the fourth quarter of the year. However, it did seem to prevent a decline in GDP for the quarter.
In fact, the UK economy saw zero growth (well, 0.01% growth) between 1st October and 31st December 2022, barely avoiding a technical recession (two quarters in a row of negative GDP).
If this report is anything to go by, though, a recession seems inevitable in 2023.
Global Geopolitical and Economic Issues Intensify
Over the last few week’s we’ve seen signs that the Russia-Ukraine war is not likely to end any time soon, and is in fact more likely to escalate from here. The US and European countries have offered to supply tanks to Ukraine, with fighter jets on the table (and training already confirmed). It’s also expected that Russia will make a significant move in the coming weeks as we near the anniversary of the war’s beginning.
In retaliation for Western sanctions on Russian oil, Russia have announced a 5% cut in their oil production to artificially push up global demand for oil, keeping prices elevated.
If that wasn’t bad enough, we’ve also seen tensions rise with China. The US has been forced to shoot down one Chinese air balloon, illegally flying in its airspace, as well as second, unidentified object.
Outside of geopolitical conflict, Turkey, a large exporter of goods (e.g., gold, vehicles, vehicle parts and refined petroleum) experienced two earthquakes this week. These were magnitude 7.8 and 7.5 earthquakes, with damaging aftershocks expected to continue for the next several months. Over 25,000 people are thought to have been killed so far, with the real figure likely double this. Syria was also significantly affected.
All three of these issues could have huge implications on the global financial markets and supply chains. The war in Ukraine will continue to put pressure on oil, gas and food supplies. Political turmoil with China could result in sanctions against the western world (even worse, China could decide to invade Taiwan), which would have a significant impact on supply chains.
Then there’s the earthquakes, which will heavily impact Turkey and its neighbouring countries. From its food supplies, to housing and materials, to its ability to export goods. This will likely increase the already incredibly high inflation the country is experiencing currently. Turkey is already seeing severe civil unrest following the earthquakes, which could then spark a humanitarian – or even a refugee – crisis.
Stock Market News
Further Job Cuts Announced
This week, we’ve seen even more company layoffs as companies try to grapple with higher costs. Here are the latest announcements:
- Disney – Reducing its workforce by ~3%, or 7,000 employees
- Dell – Reducing its workforce by ~5%, or 6,650 employees
- PayPal – Reducing its workforce by ~7%, or 2,000 employees
- Zoom – Reducing its workforce by ~15%, or 1,300 employees
- eBay – Reducing its workforce by ~4%, or 500 employees
- Affirm Holdings – Reducing its workforce by ~19%, or 500 employees
Company Earnings Reports for W/E 12th February 2023
On Tuesday, I covered the earnings reports of the following 3 companies. Click here to find out what happened:
- Activision Blizzard (ATVI) – Q4 Earnings
- BP (BP) – Q4 Earnings
- Enphase Energy (ENPH) – Q4 Earnings
On Wednesday, I covered the earnings reports of the following 3 companies. Click here to find out what happened:
- The Walt Disney Company (DIS) – Q4 (Fiscal Q3 2023) Earnings
- Affirm Holdings (AFRM) – Q4 (Fiscal Q2 2023) Earnings
- Robinhood (HOOD) – Q4 Earnings
On Thursday, I covered the earnings reports of the following 4 companies. Click here to find out what happened:
- AstraZeneca (AZN) – Q4 Earnings
- PepsiCo (PEP) – Q4 Earnings
- PayPal Holdings (PYPL) – Q4 Earnings
- Cloudflare (NET) – Q4 Earnings
Next Week
US CPI (Inflation) Data for January 2023
On Tuesday, we’ll get US inflation data for January. Forecasts aren’t as positive as they were for December, and with oil prices on the rise once again, there’s a risk that we could see an uptick in inflation once again in February. These two reports are crucial in terms of the Federal Reserve’s interest rate decision in March. This, in turn, will impact the entire stock market, both the US market and the international markets.
On a month-over-month basis, expectations are that inflation will rise by 0.5% (6.0% annualised), compared to 0.1% (1.2% annualised) in December. On a year-over-year basis, CPI is expected to come in at 6.2%, compared to December’s 6.5%.
Excluding energy and food (known as “core” CPI), it’s expected that inflation will increase by 0.3% month-over-month (3.6% annualised), compared to 0.4% (1.6% annualised) in December. Year-over-year, core inflation is expected to come in at 5.5%, compared to December’s 5.7%
UK CPI (Inflation) Data for January 2023
On Wednesday, we’ll get UK inflation data for January. Unfortunately, it’s still expected to come in high.
Current expectations are that we’ll see a 10.2% reading year-over-year, down slightly from 10.5%. If this reading comes in as expected, it will mark the fifth month where year-over-year inflation has been over 10%.
With any luck, we’ll begin to see this figure fall sharply
Company Earnings Reports
Here’s a list of the companies I’ll be covering next week (subject to change; may add more):
- Palantir Technologies (PLTR) – 13th February
- The Coca-Cola Company (KO) – 14th February
- Airbnb (ABNB) – 14th February
- Roblox Corporation (RBLX) – 15th February
- Shopify (SHOP) – 15th February
- Roku (ROKU) – 15th February
- Hargreaves Lansdown (HL) – 15th February
Let me know your thoughts on this week’s events, in the comments below!
