Weekly Newsletters

28 October 2022 | William Buckhurst

That Was The Week That Was

MACRO

  • Markets recovered from weakness in the tech sector as the US core personal consumer expenditure (PCE) for September rose 5.1% year-on-year against expectations for a 5.2% increase offering hope that inflationary pressures may have peaked
  • As expected, the ECB raised interest rates by 75bps, taking the main deposit rate facility to 1.5% and reaching its highest level in more than ten years

COMPANY NEWS

  • Microsoft announced 11% revenue growth year over year, but this was their weakest growth rate in five years, and they forecast slower growth going forward
  • Alphabet’s revenues rose 6% year over year but missed expectations as they pointed to slower digital advertising revenues
  • Amazon warned consumer spending was in “uncharted waters” as it issued revenue forecasts well below expectations, sending its shares down 10% on Friday
  • Apple bucked the trend as it beat expectations, reporting an 8% increase in revenues year over year and higher than expected profits
  • Shell announced another quarter of bumper profits, said it plans to raise its dividend by 15% and buy back a further $4bn of shares
  • Merck’s revenues rose 14% year over year and they beat analysts’ expectations on profits while raising guidance going forward
  • Coca Cola reported organic revenue growth of 16%, way ahead of expectations and upgraded profit forecasts
  • Unilever announced that it had increased its prices by 12.5% in the third quarter from a year earlier, its highest-ever quarterly rise, another consumer goods company that has been able to pass steep cost inflation on to customers

THIS WEEK IN HISTORY

  • 1990: the digging of the Channel Tunnel is completed. The company behind it, Eurotunnel, issued shares at £3.50 per share in 1987. By mid-1989 the price had risen to £11.00 but, following delays and cost overruns, the company was almost bankrupt by 1995

TECH WEEK

Following disappointing results from Microsoft, Amazon and Alphabet, Meta’s shares suffered a further 25% drop this week on their results. They reported reduced advertising spend and ongoing investment in the currently loss making metaverse division as the cause for this. The shares were already down 60% this year and CEO Mark Zuckerberg told analysts “It has a long way to go before it is where we want it (AI and VR) to be, we are doing interesting work, but we are not there yet.” Altimeter Capital, one of the firm’s largest investors, has openly suggested limiting metaverse investment to US$5bn from the budgeted US$15bn

STAT OF THE WEEK

California Dreaming? The west coast state’s GDP is about to overtake that of Germany to nudge itself into 4th place globally behind the US, China and Japan. Leading in tech and renewable energy California is on track to overtake Germany (currently likely to slip back from its current level of $4.22 trillion) by next year

MARKET DATA

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return)

1.55

2.95

-6.62

-6.42

World Equities (% return)

3.47

6.39

-15.25

31.58

10 Year US Treasury Yield (%)

4.01

3.72

1.57

2.41

GBP / USD (fx rate)

1.16

1.07

1.37

1.31

 As at 28th October 2022. Source: Financial Express

 

 

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