Tech Earnings Dominate to Provide Upward Push


Tech Earnings Dominate to Provide Upward Push

Tuesday, May 2, 2023 By Vincent David-Robin

It was the big tech earnings that dominated the releases last week. Meta (the parent company of Facebook and Instagram) and Microsoft reported earnings that were stronger than analysts’ expectations. That created a strong momentum, pushing the US stock market upwards.

Even weaker earnings by Amazon, especially in the cloud business, did not derail the momentum. Neither did the weaker 1st quarter US GDP number (at +1.1% annualised). Inflation data was a bit softer, but wage pressures remained high.

Global Markets Show Positive Signs

It was a similar story in Europe. At 1.3%, GDP growth was low. Inflation, however, was higher than expected, particularly in France, Spain, and Germany.

Meanwhile in Asia, the new head of the Bank of Japan, Mr. Kazuo Ueda, commented on adjusting the current monetary policy. This gave an upward push to equities.

Overall, US markets were up 1% to 1.5%. Japan was up by close to 2%. Though Europe remained quite flat, it is still near the all-time highs.

Good News for Equities?

Markets seem to suggest that there is no recession. Corporate earnings remain resilient. Especially for larger companies. Going by the numbers: the path is likely to perhaps head towards a moderate slowdown, but not a recession. This would be a near-perfect outcome for equities.

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