Big- and megatech June quarter reports dominate the global earnings calendar this week and will shape the look of what is turning out to be a pretty strong three months — although they are coming off a low base from the depressed June 2020 quarter.
There’s a string of giants reporting this week – Apple, Amazon, Facebook, Microsoft and Alphabet but the tone will be set by the performance tonight revealed tonight by Tesla, the electric vehicle and battery group.
Tesla has to be convincing on vehicle production and sales data, especially in China and some analysts warn that if founder Elon Musk starts talking about bitcoin or other crypto currencies, or his space efforts, the market will look at the Tesla figures with some scepticism to see if he is providing some sort of smokescreen.
Energy giants also report this week – Exxon Mobil, Chevron and Shell lead the charge – with strong results that will boost the overall performance.
China remains a wildcard. It is in the midst of a massive crackdown on big tech companies and their use of data offshore – especially data involving mapping technologies.
After school tuition companies are the latest in the sights of the Communists – they have been banned from making profits, which will destroy the sector, especially the three companies listed in the US.
Second-quarter reporting season is in full swing, with 120 of the companies in the S&P 500 having reported. Of those, 88% have beaten consensus, according to Refinitiv.
This week, a further 165 S&P 500 companies are due to report.
Instead of Netflix it was Twitter and Snap that sparked the recovery in techs late in the week – social media firms Twitter Inc and Snap Inc rose 3.8% and 24.5%, respectively on Friday, after their upbeat results the day before.
For the week, twitter rose nearly 8% but Snap was up almost a third in value – 31.4%.
But the company that will attract a lot of attention with be the Covid vaccine maker, Pfizer on Wednesday. Analysts will be watching closely for sales and earnings – with the performance in its Covid vaccine business to be looked at very closely, especially by the US government.
Friday will be a day when not only the quarterlies from the two energy giants will be out but it will also see a series of results that will go a long way to confirming the health of the wider economy.
Other companies due to report include Caterpillar (construction and exports), Colgate Palmolive, Procter and Gamble (two consumer goods giants), Newell Brands (household products), VF Corp, the clothing and footwear group, George Weston, the Canadian food group, Weyerhaeuser, the US lumber and paper giant and manufacturer, Dana Inc, a big manufacturer.
So far the US June quarter earnings reporting season is only 22% done but 87% of results have beaten earnings expectations, 82% have beaten on revenue.
Reuters says that analysts now expect aggregate year-on-year S&P 500 earnings growth of 78.1% for the April to June period, a sizeable increase from the 54% annual growth seen at the beginning of the quarter.
“Given the rebound in various macro variables this could end up closer to +90%, the AMP’s chief economist, Shane Oliver wrote at the weekend.
According to Bloomberg, more than 85% of the S&P500 companies that reported earnings beat analysts’ expectations, even if medium-term forecasts are not always on track.
Netflix’s lacklustre subscriber figures and forecasts set the tone for earnings from the megatechs last week, but the surprise surges from Twitter and Snap lifted the sector and raised hopes for the coming week’s reports from their much larger peers.
Tuesday sees Apple, Alphabet (Google), Facebook and Microsoft report. Apple, Google and Facebook are due to report after the close or early Wednesday morning, Sydney time.
Amazon reports Thursday, as does Facebook and by then the shape and enthusiasm for the season will have been confirmed one way or the other. Shell is down to release what will be an upbeat report as well.
Other companies due to report include General Electric, Comcast, General Dynamics, Lockheed Martin, Bristol Myers Squibb, Pfizer, Albertsons, Peabody Energy, Textron, Hasbro, Mattel, UPS, Xerox, Raytheon, Waste Management, Qualcomm, Bunge, Hershey, Yum! Brands, Merck and Co,
Starbucks, Boeing and McDonald’s are also due to report this week as well.
