Earnings in focus this week

Season off to a good start

It’s been a slightly positive start to what is shaping up to be a very busy trading week as big US tech prepares to announce third-quarter results.

Earnings season has been very promising so far, but whether the markets can continue to ride the momentum will depend on whether big tech is on board or not. Facebook gets things underway after the close today, followed by Alphabet, Microsoft and Twitter tomorrow, and Apple and Amazon on Thursday.

It’s not just big tech that stands out this week, there’s plenty of other companies reporting that will provide insight into how various industries are managing supply issues, higher prices and the prospect of more restrictions this winter. By the end of the week, we should have a much clearer picture and better understand whether investors are right to still be so bullish, despite growth looking sluggish and significant risks remaining.

HSBC continued the positive trend for banks that started in the US a couple of weeks ago. A 76% jump in third-quarter profit, $700m reduction in loan loss provisions and $2 billion share buyback plan was good news, as was the disclosure that it has no direct exposure to “red” category Chinese developers and limited to “orange” category.

US stocks may be getting a small boost at the start of the week on the back of Nancy Pelosi’s assurances that Congress is close to a deal on Biden’s social spending plan. It’s not clear how big the final deal would be, just that it’s unlikely to be close to the number initially touted.

I say they may be getting a boost because while being 90% there is great, the final 10% is always the part that takes the most effort and time. So I’m not expecting an imminent announcement even if the talks are heading in the right direction.

While earnings season will be the key focus this week, central banks will remain high on the agenda and this week it’s the ECB’s turn to have the spotlight on it. We may have to wait a little longer for any update on their position though, with new economic projections due in December which could determine what will replace the PEPP program, if anything, in March.

Bitcoin rallies at the start of the week

Bitcoin survived a brief dip below $60,000 over the weekend and is reaping the benefits on Monday as it trades more than 5% higher. The pullback took a little froth out of the market after the launch of the ProShares ETF saw it hit record highs. There still appears to be momentum with the rally and cryptos favourite billionaire gave his backing to the usual three once more which may be contributing to their success at the start of the week, to the disappointment of other coins hoping to get in on the action.

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