Earnings
Big tech
Advertising figures will be in the spotlight when Google’s parent Alphabet reports this week. An unexpected surge of advertising in the final months of last year lifted Google’s revenues far above Wall Street forecasts.
Alphabet’s revenue grew 13 per cent for the year as a whole, even as non-digital sectors of the global advertising industry contracted about 20 per cent.
A boom in PC sales, surging demand for video-gaming and increased usage of cloud services are expected to drive up revenues for Microsoft.
Last quarter, the company produced a 17 per cent surge in revenue, to $43.1bn. The jump belied Wall Street expectations that the US software company’s growth rate would slow to less than 10 per cent.
Sales of iPads and in its wearables unit, which includes AirPods and the Apple Watch, are expected to boost earnings for Apple.
Sales in all five of the $2.4tn company’s product categories grew at double-digit percentages in January, with the iPhone being the group’s slowest-growing category because of supply constraints and the delayed launch of its first 5G-enabled smartphones.
A push into ecommerce during coronavirus lockdowns bore fruit for Facebook, which posted record quarterly revenues in January. But the forecast might be uncertain for this quarter after chief executive Mark Zuckerberg warned of a growing competitive threat from Apple.
Zuckerberg cited Apple’s forthcoming privacy changes to the iOS 14 operating system, which requires applications on iPhones to obtain users’ permission to harvest advertisement targeting and tracking data.
Amazon’s initiative to ramp up its infrastructure to offer one-day shipping, the growth in other parts of the business and rising figures for its Prime subscriptions are expected to boost the ecommerce giant’s earnings.
Amazon’s earnings over the festive period far surpassed analysts’ expectations last quarter. The retailer exceeded revenue estimates, but it was strong net income that surprised investors most: $3.3bn versus a consensus of $1.97bn, according to data from S&P Capital IQ.
Banks
Barclays reports this week after suffering a 68 per cent plunge in the fourth quarter and warning that the long-term impact of coronavirus was still uncertain, with the true fallout disguised by government and central bank support programmes.
HSBC, which unveiled a strategic shift to Asia and retreat from the west, pledging to invest $6bn to expand in Hong Kong, China and Singapore, while selling its US retail arm and its French consumer bank, is publishing its earnings this week.
Lloyds, NatWest and Standard Chartered also report this week.
Provisions for bad loans and writedowns in the value of some of Santander’s businesses are expected to affect the lender’s results.
In February, the loss of €8.8bn was exacerbated by new costs related mainly to restructuring in Santander’s Spanish businesses in the fourth quarter. However, the bank predicted a rebound in profitability in 2021.
A surge in bond and rates trading revenue is likely to boost Deutsche Bank’s net profit, when Germany’s largest lender reports.
Last quarter, Deutsche made a net profit for the first time in six years on the back of a global trading boom. The bank reported a net profit of €113m for 2020, the first since 2014 and higher than expected by analysts.
Payment groups Visa and Mastercard also report this week.
Energy
Some of the world’s biggest energy groups reported record annual losses in the last quarter, marking a brutal 12 months for an industry under mounting pressure to speed up a transition to cleaner fuels. Both ExxonMobil, the US’s biggest oil producer, and BP, the UK energy group, will update investors.
ExxonMobil racked up losses of more than $20bn last year — the first annual loss in its history, while BP recorded its first annual loss since the Deepwater Horizon disaster more than a decade ago after fourth-quarter profits plunged 96 per cent.
Total, which will also issue its results this week, in February joined the list of oil majors reporting multibillion-dollar full-year losses, but it provided a rare glimmer of hope in the pandemic-stricken sector by beating fourth-quarter expectations and maintaining its dividend.
Other companies to watch this week include electric-car maker Tesla, drugmaker AstraZeneca, coffee chain Starbucks, aerospace manufacturer Boeing, British drugmaker GlaxoSmithKline, KFC’s owner YUM! Brands, foodmaker Kraft Heinz and fast-food chain McDonalds.
Key reports
Monday
Canadian National Railway; Tesla; Pearson
Tuesday
3M; Advanced Micro Devices; Alphabet; Amgen; BP; Centene; Ecolab; Eli Lilly; Fiserv; General Electric; HSBC; Illumina; Marsh & McLennan Companies; Microsoft; Mondelez International; Roper Industries; Sherwin-Williams; Starbucks; Stryker; Texas Instruments; United Parcel Service; Vale; Visa; Waste Management; Novartis; Whitbread; Focusrite; Aveva; IWG; PZ Cussons
Wednesday
ADP; Apple; Boeing; Boston Scientific; Equinix; Facebook; GlaxoSmithKline; Humana; Moody’s; Norfolk Southern; Qualcomm; Sanofi; ServiceNow; Deutsche Bank; eBay; Ford Motor; Shopify; Spotify; YUM! Brands; Chubb; Santander; Dixons Carphone; Fresnillo; Lloyds Banking Group; London Stock Exchange; Metro Bank; Nichols; Persimmon; Reckitt Benckiser; WPP; French Connection; J Sainsbury
Thursday
Altria; Amazon; American Tower; Baxter International; Bristol-Myers Squibb; Caterpillar; Comcast; Digital Realty; Gilead Sciences; Intercontinental Exchange; Kraft Heinz; Mastercard; McDonalds; Merck & Co; Newmont Mining; Northrop Grumman; S&P Global; Southern; Thermo Fisher Scientific; Total; Vertex Pharmaceuticals; Twitter; Royal Dutch Shell; Airbus; Willis Towers Watson; WHSmith; Flutter Entertainment; Glencore; Inchcape; Meggitt; NatWest; Schroders; Smith & Nephew; St James’s Place; Standard Chartered; Unilever
Friday
AbbVie; AON; AstraZeneca; Charter Communications; Chevron; Colgate-Palmolive; ExxonMobil; Barclays; BNP Paribas
Economic data and central banks
Investors will be watching the US Federal Reserve’s post-meeting press conference on Wednesday for any indication from chair Jay Powell about the thinking on the looming rise in inflationary pressures that could compel it to reduce its $120bn monthly asset purchase programme as policy rates remain tethered at close to zero.
While Powell acknowledged this month that the US economy was at an “inflection point”, he has not strayed from his stance that monetary policy will remain ultra-accommodative until the central bank’s goals of a more inclusive recovery are realised.
In the weeks since the US central bank’s last gathering in mid-March, initial applications for jobless benefits in the world’s largest economy have fallen to their lowest level since the start of the pandemic and data has shown retail sales for March rose by the most in 10 months.
Preliminary growth figures for the eurozone, to be released on Friday by Eurostat, are expected to show that the region’s gross domestic product contracted 0.8 per cent in the first quarter compared with the previous one, according to a Reuters survey.
A fall in output would push the bloc into the second technical recession — defined as two consecutive quarters of GDP contraction — since the start of the pandemic.
Analysts at Nomura, however, are forecasting an economic rebound starting later in the second quarter.
Data released at the end of last week bolstered such optimism, with activity in the eurozone services sector returning to growth this month for the first time since last summer despite continuing restrictions. The IHS Markit eurozone flash purchasing managers’ index for services rose to 50.3 in April, from 49.6 in March.
China’s manufacturing purchasing managers’ index for April, out on Friday, will be closely watched for signs of further expansion as the country’s economic recovery continues.
Factory activity in the country beat expectations to rise to 51.9 in March, according to official figures from the National Bureau of Statistics. A reading higher than 50 signals expansion.
Data released earlier this month showed that gross domestic product leapt by a record amount year on year in the first quarter, though the rise was flattered by a contraction a year earlier owing to the pandemic.
Non-manufacturing PMI data, also out on Friday and which leapt to 56.3 in March, will indicate the role of China’s services sector in the recovery.
Key data and events
Monday
Germany, Ifo expectations (Apr)
Tuesday
US, consumer confidence (Apr)
Sweden; Hungary; Japan, rate decisions
Wednesday
Japan, retail sales (Mar)
Australia, CPI (Q1)
Germany, GfK consumer confidence (May)
France, consumer confidence (Apr, Index)
Canada, retail sales (Feb)
US, rate decision
Thursday
Sweden, GDP (Q1)
Germany, unemployment rate (Apr)
Eurozone, consumer confidence (Apr)
Germany, CPI (Apr, flash)
US, initial jobless claims
US, real GDP (Q1)
US, real consumer spending (Q1)
Egypt, rate decision
Friday
Japan, jobless rate (Mar)
Japan, industrial production (Mar, preliminary)
Japan, manufacturing PMI (Apr, final)
China, NBS non-manufacturing PMI (Apr, Index)
China, NBS manufacturing PMI (Apr, Index)
France, GDP (Q1, flash)
France, CPI (Apr, flash)
Spain; Germany; Italy, GDP (Q1, flash)
Eurozone, HICP (Apr, flash)
Eurozone, GDP (Q1)
Canada, GDP (Feb)
US, personal income (Mar)
US, personal spending (Mar)
US, core PCE inflation (Mar)
US, University of Michigan sentiment (Apr)
Colombia, rate decision
Source: Economy - ft.com
