It’s about to be a boisterous week on the market, as central banks, including the Feds, European Central Bank, and Bank of England are set to continue their meetings on possible rate hikes. This comes at a time when tech giants are set to deliver Q4 earrings on the back of an almost never-ending amount of job cuts and layoffs.
Q4 2022 hedge fund letters, conferences and more
The big tech industry has already cut more than 58,000 jobs, and some analysts predict this will continue for the better half of the year as companies look to find their footing against macroeconomic problems.
While the industry has been rattled by several economic problems, from slower consumer spending due to red-hot inflation, soaring interest rates, and less advertising spending from companies - all eyes will be on some key players this week as they deliver their Q4 results.
Ben Schaecter, CEO of Vantage Markets, a multi-asset brokerage platform that operates in 172 countries globally said that the coming months will be a “make or break” situation for some investors. “There is a lot of volatility in the market right now, and investors have been pounded into the ground as central banks raise rates and inflation remains stubbornly high.”
Here’s What To Expect
The Federal Reserve ended 2022 with another interest rate hike of half a percentage point, pushing up their funds' rate to a target range of 4.25% to 4.5%. In the coming days, the Federal Open Market Committee (FOMC) will once again vote on whether it will raise its target range by 0.25 percentage points.
Many experts predict that the Fed will go this route, as it continues looking to push down high inflation, which ended at 6.5% in December last year. While the Fed has been able to bring down soaring inflation rates over the last 12 months, many expect that conditions will remain relatively sticky in the coming months, as the cost of living spirals, and consumers make ongoing cutbacks.
The Board of Governors of the Federal Reserve System voted to raise interest rates by another quarter point, effective, February, 2. This raised interest to 4.65%, a tough decision to keep inflation down. This was the first of such rate hikes for the year, with experts predicting more to come in the months ahead.
The Bank of England will also be looking to keep their rates bulging, as Monetary Policy Committee (MPC) members are in favor of further raising rates by another half-point. In December last year, the MPC raised rates by 0.5% to 3.5%.
Inflation remains high across Englands, and the central bank has been struggling to get a grip on soaring inflation. Many experts suggest that the MPC may be tempted to initiate another raise of 0.25% after their meeting on February 2 this week.
Over in Europe, economic recovery has been slow and somewhat daunting. Germany is now seeing itself teetering on the brink of a recession after the country’s economy contracted in the last quarter of 2022. Overall, the GDP fell by 0.2% between October and December, with inflation hitting another double-digit figure - 11.6% - in October as Russia continued its energy war on Europe.
It’s unclear what the European Central Banks’ decision will be in the coming days, but many analysts have predicted that the ECB is set to bump up the deposit rate by 0.50% to 2.5% this week.
What About Big Tech?
On the big tech front, there will be some clear winners and losers this week, and investors are keeping their finger on the pulse. Volatility is at an all-time high, and many are sharing uncertainty on whether some tech giants have been able to make their targets.
Eyes will be on the Facebook parent company, Meta (NASDAQ:META), as it is set to deliver its earnings on the first day of February. While the owners of Facebook, Instagram, and Whatsapp have seen their fair share of challenges in the better half of 2022, share prices have risen over recent weeks by 60% to roughly $147.00 per share. It’s expected that profits for the final quarter are set to come in at $2.25 per share.
“Meta endured some interesting headwinds throughout much of 2022, but the company has remained resilient. While other social platforms such as TikTok may be drawing more users, the company has seen their daily active users remain stable as the year drew to a close,” says Schaecter from Vantage Markets.
eCommerce mammoth, Amazon (NASDAQ:AMZN) is also scheduled to deliver its earnings this week, with the online retailer looking to deliver $0.17 profit per share for the fourth quarter. Overall, Q3 numbers were less-than-expected, yet the company has been trying to regain itself as a leader in the online shopping world, claiming to spend more than $35 billion by 2040 on Amazon Web Services, and investment into EV automaker Rivian.
iPhone and iPad maker Apple (NASDAQ:AAPL) will also deliver its Q1 2023 earnings on February 3, with many analysts predicting a better-than-expected turnaround for the smartphone maker. Q1 results typically cover the period before Christmas, and the first half of the new year, which tends to be the company’s best quarter, helping to boost share prices and performance a bit. So far AAPL has risen by 14% this year, after coming down 10% during the last 12 months.
Schaecter mentioned that investors should keep their strategies diverse, and be prepared to overcome whatever the next few days have in store. “There will be some clear winners, and those that don’t make the cut will need to prove themselves in the coming quarter, even with the ongoing macroeconomic problems.” Schaecter continues to say, “we’ll see many investors looking for round-the-clock support, and their instruments moving in all sorts of directions, with many hoping for stable performance.”
Other big names to look out for this week include T-Mobile (NASDAQ:TMUS), Exxon Mobil (NYSE:XOM) and Spotify Technology (NYSE:SPOT), Shell (LON:SHEL), and BT Group (LON:BT.A) These and other well-known names will take to the stage this week, keeping investors on the ends of their seats, hoping for a more positive outlook as the unfolds.
The week will end on a high note with the U.S. January nonfarm jobs report being released on Friday. The American job market has been in flux in recent months, seeing droves of employees resigning or being laid off. In December, employers added around 223,000 new jobs, outpacing expectations of 200,000. The better-than-expected turnaround helped push down the unemployment rate from 3.6% in November to 3.5%.
There is a lot to look forward to, a nail-biting time for many investors who are hoping that the current economic climate could potentially cool over the coming months. While there’s still a lot of uncertainty in the air, perhaps big tech might surprise us after all, yet this is on the back of central banks raising their rates, yet again. This could be a final showdown for the Fed and other central banks, reversing conditions and slowing recessionary concerns.
