30 January 2023

Quarterly earnings season takes centre stage in the markets

The quarterly earnings season was in full swing and the results of the major US companies drove the week on the stock markets to some extent, along with the now customary discussion on the evolution of monetary policy in the US and Europe. The bad news about the profits of companies such as Microsoft and Intel was counterbalanced by positive notes from macro data. Germany and Spain seemed able to avoid entering recession, while in the US consumption held up, albeit weakening, in the fourth quarter of 2022. The markets continue to believe that a pause on the part of the FED is imminent and the bond market in particular benefits from this. On the equity front, uncertainty is increasing, with many analysts believing the short-term rally to be short-lived.

In the past week, 68% of the instruments and indices used for our analysis recorded a positive change. 32% experienced a negative change. Analysing by macroclass, 81% of equity instruments and indices recorded a positive weekly change. 42% of bond instruments and 28% of the other asset classes used for our analysis.

Improving valuations in the past week accounted for 23% of the total. The previous week, upwardly adjusted valuations were 14% of the total.

Among the equity sector analyses, improving valuations accounted for 26% of the total. On this front, it is interesting to note that the “dominance” of European equities is showing some first signs of abating in this start of the quarterly season.

Among analyses relating to the bond segment, improving valuations accounted for 18.75% of the total.

Analyses of other asset classes saw 23% of the total for improving valuations. Analyses relating to sentiment, commodities and currencies were included in this section.

Of the valuations, 22 per cent were above average in the short term. 36% were above the long-term average of valuations. Last week it was 19% and 53% respectively.