On Tuesday, two major technology companies, Alphabet and Microsoft, will release quarterly financial results. This will mark the beginning of an important week for the industry. The direction the market takes from here on out will most likely be determined by how well they perform.
Given the reduction in earnings projections over the last several months and the fact that technology stocks have plummeted off their highs. This drop can be attributed to investors’ anxiety about growth-focused industries; the bar has been set relatively low for many firms going into this season.
Although performance in this region has been lacklustre so far, a significant advance higher and sustained recovery for the market is contingent on this area regaining its position as the market leader. The earnings from the most prominent technology firms continue to be the primary focus of investors this week, with Alphabet and Microsoft scheduled to release their quarterly results on Tuesday. On Wednesday, Meta Platforms will release their report, followed on Thursday by Amazon and Apple. Any move will likely push the market in the direction they want, given their sheer size and market capitalization.
Since the beginning of this season, businesses have shown that they may be doing better than was first projected. This is partly owing to the fact that profit predictions provided by experts have decreased over the last few months due to the challenges posed by fluctuations in foreign currency rates and other growth issues. This might lay the stage for stock market rises on the possibility of better results than expected.
Stocks continued their upward trend throughout Monday’s normal trading session, adding to the gains seen on Friday. The Dow Jones Industrial Average finished the day at 31,499.62, up 417.06 points, or 1.3%. The Nasdaq Composite Index ended the day 0.9% higher, while the S&P 500 gained almost 1.2%; nine of the 11 market sectors ended the day with gains headed by the healthcare industry.
The UK’s New Prime Minister
Rishi Sunak is currently in line to become the next Prime Minister of the United Kingdom. Now, he has to clean up the economic disaster left by his predecessor, find a way out of the energy issue, and boost the United Kingdom’s anaemic pace of economic development. These are the three most critical economic difficulties he confronts right now.
The disastrous economic experiment known as “Trussonomics” has ended, and the next prime minister’s first task will be to clean up the wreckage it produced. As the United Kingdom works to rebuild its reputation among financial markets, the monetary and fiscal policies are expected to become more restrictive simultaneously. It now seems that the end outcome will be a recession somewhat dissimilar to the one that occurred in the 1990s.
According to our projections before the government released its budget statement on September 23, the GDP would most likely contract by approximately two per cent the following year. We anticipate the GDP to decline 1.5% in 2023, a significant downgrade from our initial projection of a 0.7% rise in September. The original forecast of 1.3% growth for 2024 has been revised to 0.8%.
The worst for the economy will probably come in the second quarter of 2023 when GDP will be 2.5% lower than we had anticipated. The failed growth plan conceived by former Chancellor Kwasi Kwarteng and Liz Truss is believed to have resulted in a decrease of 1.5% in GDP at that moment. This represents around 80% of the entire damage to production. The remaining is a reflection of a tightening of global financial conditions that have taken place during the previous month.
The prognosis for inflation has been significantly questioned due to the decision to cease universal energy subsidies in April of the following year. We have assumed that the government would aid families in the future by providing income support rather than by capping prices. This indicates that we should anticipate an increase in inflation to 12% in April.
As the pressure on the Bank of England to take dramatic action decreases, it will probably take less action than the markets anticipate, raising interest rates by 75 basis points in November and bringing borrowing prices to a top of 4.25% by May of next year.