Tech Giants’ Earnings This Week to Dominate Market Sentiment


FullertonMarkets Representative
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FOMC meeting seems like the big event risk on the calendar this week, but we are not convinced it will really be a dominant theme when there’s so much else going on, such as Tech giants’ earnings, which would set for dominating the market moves.

Apple, Tesla, Alphabet, Microsoft are the companies that have the biggest impact for global investors and they are all reporting this week. Bank results in Europe and Asia will also be interesting due to the Archegos fallout.

This earnings season is going to be really fascinating. The annual comparisons, so beloved of equity analysts, are going to experience the same sort of base effects as inflation metrics. if anything, the effect will be magnified, given the steep decline in earnings in the first half of 2020. This makes forward-looking statements even more important this time around, particularly given the optimism embedded in equity market pricing and the bond market’s concerns over inflation. But which companies are worth focusing on? Today we’ll have a look at an updated list of the global stocks that generate the most dollar volatility every day. It turns out, you don’t even need to make any sales.

Tech is once again leading the market for the month of April, but still trails six of the 11 other S&P 500 sectors. The group is expected to post strong earnings in the week ahead, but what’s different this time is that growth in much of the rest of the market will likely be even better this year, compared to 2020.

Data suggests technology companies are expected to lead the S&P 500 with 16% revenue growth in the first quarter. Projections for the rest of the year, however, aren’t quite as bright. Growth in the second quarter and beyond, although impressive, is likely to lag behind financials, industrials, consumer discretionary and materials.

Bulls are betting that strong results and forecasts will help catapult tech back to the forefront, yet lofty valuations pose a challenge. Amazon is the only company among the top five projected to see its revenue growth shrink this year. The other four heavyweights are all expected to see revenue growth accelerate in their current fiscal years.

From the virus side, situation in India has deteriorated so rapidly that many are failing to fully register it. Japan’s new virus emergency declarations will have a larger impact this time due to stricter conditions. So, when will the Olympics be officially cancelled?

Then, we have the FOMC meeting on Wednesday, which from a dollar and Treasuries point of view, may be overshadowed by Biden. His recent policy plans have been making waves, whether on taxes, climate or infrastructure. On the same day as the Fed, he brings his first address to Congress.