The September quarter and half year (and full year in some cases) earnings reports hits top gear this week with more than 170 S&P 500 companies in the US due to report, including major oil, aircraft makers, telcos, foreign stocks and the mighty A’s – Apple, Alphabet and Amazon.
Apple is just one of the many S&P 500 reporting results this week. Amazon, Twitter, Alphabet, Visa, Caterpillar, General Motors, VW, Audi, Ford, Fiat Chrysler, Under Armour, Dow Chemical, Barrick Gold, DuPont, Chevron, Eni, Total, ExxonMobil, BristolMyers, Glaxo Smith Kline, Merck and Co are among those reporting results as well.
Twitter will also be worth watching – no one (or rather the likes of Apple, Salesforce.com, 21st Century Fox and several other companies) wants to but the messaging company is on the market and unwanted. Amazon and Alphabet (Google’s owner) are also reporting and investors want to see them following the very strong report from Microsoft last week.
Offshore some major groups will be releasing results – Samsung Electronics, UBS, Deutsche Bank, Hyundai Motor, BASF, Bayer, Newmont Mining, Posco, Anheuser InBev.
With AT&T grabbing control of Time Warner for a reported $US880 billion, its quarterly report and briefing Tuesday night, our time will grab more interest than usual. The cost and financing of the massive bid will be of considerable interest.
Some of these, such as Deutsche Bank, and the struggling Italian lender, Monte dei Paschi di Sienna could surprise with bad news that upsets bank stocks across Europe and the the rest of the world. Or Deusche could reveal a settlement to its fine with US regulators for miss-selling mortgage securities, or Monte dei Paschi could confirm that it has raised enough capital to save itself (for the time being?)
In fact according to S&P Global, instead of another quarter of weak revenue and earnings, the three months to the end of September is looking very much like a positive with a small gain in revenues and earnings, and much bigger gains now forecast for the current 4th quarter.
On top of that, we are seeing huge takeovers continue to emerge – the $US87 billion agreed bid for Time Warner from AT&T and the $US47 billion mop up by BAT or US tobacco giant, Reynolds, only the latest ) previous Monsanto’s $US66 billion offer from Bayer and the huge, $US100 billion plus beer merger between Anheuser InBev and SAB Miller (and in Australia the $10 billion merger of Tabcorp and Tattersalls).
In Australia though, the full year figures on Thursday from the National Australia Bank will be the major release and will set the tone for the market for much of the rest of the year, helped by the full year reports next week from rivals, Westpac (November 7) and the ANZ (November 3).
In fact earnings from leaders and others in specific sectors this week could very well tell us more about how the US economy has been going (and that in Europe and China), than official figures.
But all is not as rosy as it seems, America’s biggest manufacturer, GE, buried lowered guidance for revenues for the rest of the year on Friday night, our time, a hint that perhaps there are some cool spots in the economy, plus the impact of the stronger dollar.
Apple and Twitter though will dominate market sentiment this week, along with another tech darling, Tesla. And Amazon will be the one investors will watch as closely as Apple because its growth momentum has been much stronger in recent quarters than the iPhone giant.
After the strong quarterly reports last week from Netflix and then Microsoft (and Microsoft’s record share price), good results from Apple and Amazon (and even Twitter, which would be a major shock) will boost market sentiment and underline to investors that the so-called FANG stocks are back (Facebook, Apple, Netflix and Google. Amazon has been left out of that and is showing every one a clean pair of heels).
Apple is expected to report earnings of $US1.65 a share, on sales of $US46.9 billion in its fourth quarter. That will lower than the $US1.96 a share, on sales of $US51.5 billion in the same period in the 2014-15 financial year.
Apple has said been talking up demand for the iPhone and believes the decline in sales of its flagship device had reached a trough. And it also claims demand for the newly launched iPhone 7 is strong. But its performance in China will be closely examined because it is quite often where surprises come from. Growth in the mature US market will also be examined for any signs that the new iPhone is doing better than expected.
The company, which in August was ordered to pay 13 billion in back taxes to Ireland, is also expected to unveil new Mac products at its media event next Thursday in the US. Coca Cola and snacks group, Mondelez also report this week and both are expected to confirm solid results for the quarter.
For car companies, investors will be looking at the figures for VW to see if the emissions scandal is continuing to impact sales in some markets, but with US car sales weakening (and forecasts of more falls to come in the next few months), Ford’s comments with its figures will be the ones to watch given they have been the more realistic about the rest of this year and next so far as market growth is concerned.
And besides AT&T other telcos reporting include Telefonica of Spain, T-Mobile and Sprint in the US. Other major companies reporting globally Chevron, Exxon Mobil, ENI, General Dynamics, Philips, United Technologies, Texas Instruments, Boring, 3M Co, Baker Hughes, Grumman, Banco Santander, Haier Electric, Timken, Hisense, Texas Instrument and Colgate Palmolive.
