Welcome to Momentum Monday.
After what has been a relatively quiet period for markets, things will begin to warm up as we fast approach the quarterly earnings season in the US and the half year reporting period in Australia.
While this section discusses the charts more than the fundamentals, any chartist will know that major news events can have a significant impact on sentiment. While we try to find clues in the momentum of the price prior to any news, this period could still get volatile. So be sure to eagerly watch your holdings if you decide to trade at this time.
Week ended 13th January 2023
S&P500
Another strong week for US markets saw the S&P 500 Index (SP:SPX) rise 2 67%, the best weekly performance since September, and it's 2nd in a row.
S&P500 weekly chart
The driving factor was the US inflation figure which despite coming in at 6.5% was a 0.1% decline in December, increasing hopes that CPI may be finally under control .
But have we seen the worst of the company news yet? On Friday (Early Saturday our time) we saw the commencement of the US earnings season, and at least at the open, the market didn't like what it saw.
Wells Fargo saw profits for the last quarter cut by half, and said that the economy will “get worse than it’s been over the last few quarters.” JPMorgan Chase also warned the market by saying its setting aside more money to cover credit losses. Even Citigroup and Bank of America also said they’re anticipating a “mild recession.”
Despite this though the market was able to shrug off the bad news and by the end of Friday had closed up.
Next week more companies will report and they will contribute to overall sentiment as it's time for the fundamentals to take stage.
As with most things index related, often the returns are governed by the few and in the US it is the tech stocks that have the biggest influence on the broader index given their size. Microsoft will be the first of the tech giants to report and the other will follow in early Feb.
It has been interesting to note that…
