23 Apr ‘Holding pattern’: ASX look to US megacaps Google, Amazon, Microsoft
By Lewis Krauskopf, Sruthi Shankar and Ankika Biswas
Australia’s investors are expecting a soft opening for the ASX as they weigh conflicting economic data and a massive week of corporate earning in the United States.
Australian shares are set to edge lower and the S&P 500 ended barely changed last Friday in the US following mixed earnings results.
A survey showed US business activity accelerated to an 11-month high in April, further clouding the outlook for the Federal Reserve’s monetary policy after data earlier in the week indicated a weakening economy.
Procter & Gamble Co’s shares rose as customers kept buying despite repeated price hikes, helping the maker of products raging from Tide detergent and Gillette razors to Head & Shoulders shampoo and Crest toothpaste boost its sales forecast and third-quarter margins.
The benchmark S&P 500 has been generally stable over the early stages of a first-quarter earnings season that investors expect to show tepid results. This week will see a flood of reports, including from megacap tech and growth companies whose shares have helped the S&P 500 rally to start the year.
“The market has been basically in a bit of a holding pattern ahead of big tech earnings this week,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. “There is a tug of war between good and bad economic data, good and bad earnings data.”
According to preliminary data, the S&P 500 gained 3.89 points, or 0.09 per cent, to end at 4,133.68 points, while the Nasdaq Composite gained 13.82 points, or 0.11 per cent, to 12,073.37. The Dow Jones Industrial Average rose 23.05 points, or 0.07 per cent, to 33,809.67.
Results this week are due from some of the highest-valued U.S. companies including Microsoft, Google parent Alphabet and Amazon. Amazon shares rose on Friday after a research firm predicted the online retailer’s business in North America would beat Wall Street’s estimates.
The materials sector fell, weighed down by declines in Freeport-McMoRan Inc and Albemarle Corp. Albemarle slumped after Chile unveiled plans to nationalise the lithium industry. Shares of Freeport dropped after the copper miner’s first-quarter profit more than halved.
In other earnings news, HCA Healthcare Inc shares jumped after the hospital operator lifted forecasts for 2023. Its report boosted shares of other hospital operators.
So far, analysts have largely retained last week’s expectations of a near-5 per cent year-on-year fall in quarterly profits at S&P 500 companies, according to Refinitiv data.
“The unpredictability of earnings and revenue and guidance going forward has increased a lot,” said Peter Tuz, president of Chase Investment Counsel. “You have signs that the economy is softening all over the place.”
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