Weekly Market Insights: Tech Stocks Reporting Earnings

This week, investors will be keeping an eye on several key events, including the US GDP growth report, the first BOJ policy meeting in the Ueda era and 5 of the 10 biggest tech companies in the MSCI All World Index are set to report their earnings, including Microsoft, Amazon, Alphabet, Meta, and Exxon.

What’s going on?

So far this US quarterly earnings season, 87 out of the S&P500 have reported results, and 73% have beaten expectations. However, overall aggregate earnings have declined 1.6% in the quarter. The Materials sector has seen the biggest drop in aggregate earnings, falling 43%. Meanwhile, Tech earnings declined 36% on average. However, there is some positive news in the Industrials sector, which reported the most average earnings growth of 47%. Alaska Air, for example, reported that demand has returned to pre-pandemic levels.

This week, we will see another 170 members of the S&P500 report results, including a number of blue-chip companies. With earnings misses on the horizon, investors will be closely monitoring commentary on how cost-reduction measures, such as mass layoffs, have helped ease margin pressures. Analysts are expecting tech profits earnings to see the biggest drop since 2009, as big tech’s customers are curbing spending on software, cloud, and advertising services due to inflation and higher borrowing costs. This focus on cost reduction measures could have an impact on the market’s risk appetite for downside protection, which is already increasing.

Tech stocks in the S&P500 are trading at 25 times prospective earnings, which some investors believe is too expensive given earnings growth is going backwards, with average tech earnings growth down 37% so far.

What’s happening in Singapore?

Keppel Corp is moving towards transforming itself into a global asset manager with strong operating capabilities focused on creating sustainability-related solutions. It aims to reach its target of SGD200b in assets under management (AUM) by 2030 through both organic and inorganic strategies, including possible acquisitions of fund management platforms in Europe, the US, and Asia.

Finally, Singtel-owned Optus has been hit with a class-action lawsuit over a 2022 cybersecurity breach. The lawsuit alleges that Optus breached laws and its own policies by failing to adequately protect customer data and destroy or de-identify former customer data. This comes after a spate of cyber attacks on Australia’s corporate sector has exposed data from tens of millions of customers online. Optus has said that it will defend itself in the class action.

This week corporate actions