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Weekly outlook

The Week Ahead: Fed rate decision; UK banks, US tech results

Get ready for a packed week of company earnings. Below, we run the rule over some of the biggest names set to report results in the coming days, including UK banks (Lloyds, Barclays, NatWest), the US tech giants (Apple, Microsoft, Alphabet, Amazon, Meta) and more. 

Traders with an interest in US markets should strap themselves in for a busy week of economic announcements, as the Fed prepares to raise interest rates by an estimated 75 basis points. We’ll also get the first reading of US Q2 GDP, plus the June print of the core PCE price index, a closely watched measure of US inflation.


Wednesday – Federal Reserve interest rate decision

It’s fairly certain that the Federal Reserve will raise rates by another 75 basis points at its upcoming meeting. The key question is what comes in September – it remains to be seen whether policymakers will hike by another 75 bps, or ease off and go for 50 bps. 

The most recent US inflation numbers jumped again, with the consumer price index (CPI) hitting 9.1% in June, above estimates for 8.8%. However, core CPI, which strips out food and energy prices, slipped to 5.9%, versus 6% in May and down from a peak of 6.5% in March. The jump in the headline figure once again highlights how far behind the curve the Fed is, though we are now seeing signs that the US economy is slowing in certain areas. For now, we can expect to see the Fed lean into the narrative that they need to get inflation under control even if it pushes unemployment higher. 

Nonetheless, the Fed appears concerned about the risk of overtightening, even as the unexpectedly sharp increase in headline CPI raised the possibility that the central bank may increase rates by 100 bps this month. Such a move is by no means off the table, but it became less probable after two of the Fed’s most hawkish members, Christopher Waller and St. Louis Fed President James Bullard, pushed back on the idea, saying that 75 bps remained their favoured option. 

Their comments prompted a modest pullback for the US dollar, which rose to a 20-year high in June. Also weighing on the dollar were the results of the University of Michigan’s consumer sentiment survey, which found that households expect inflation to be at 2.8% in five years – the lowest reading in a year. The finding suggests that inflation could be nearing its peak. 

Wednesday – Lloyds Banking Group half-year results

In January, the Lloyds share price reached its highest level in two years before slipping back. The shares are down roughly 14% this year, as Russia’s invasion of Ukraine, the cost of living crisis and rising interest rates have dented investor confidence. Higher rates are likely to dampen the housing market, leading to a dip in mortgage lending, a key business area for Lloyds. 

The group posted decent Q1 results, with statutory profit after tax coming in at £1.2bn, a modest fall from year-ago quarter. The bank booked an impairment charge of £177m in relation to the possible impact of inflation. This sum could be added to in the upcoming numbers given the deteriorating economic outlook. 

Also in Q1, operating costs rose compared to the year-ago period, increasing to just shy of £2.1 bn, though that figure marked a decrease versus Q4 levels. Looking ahead, Lloyds boosted its guidance on net interest margin to 2.7% and raised its predicted return on tangible equity to above 11%. Given recent events and the flattening of the yield curve, these targets could prove challenging.

Thursday – Apple Q3 results

Last week Apple surprised the markets by announcing plans to slow hiring and spending next year in response to economic uncertainty. Apple, like other tech firms such as Amazon and Google that have made similar announcements, is grappling with supply chain issues and Covid-related factory shutdowns in China. In April, Apple said that these problems could cost it as much as $8bn in Q3, while the suspension of sales in Russia is also likely to have had a negative impact on its bottom line.

In Q2 Apple once again reported a strong set of numbers. Revenue came in at $97.3bn, with iPhones contributing $50.57bn to the headline figure. Services accounted for $19.82bn, while Mac products brought in $10.43bn. Profits came in at $1.52 a share, or $25bn. The company also authorised a $90bn share buyback. As has been the case for several quarters, Apple declined to offer guidance for Q3, though consensus estimates point to revenue of $83bn and profits of $1.15 a share.


Monday 25 July

No major announcements

Tuesday 26 July

easyJet Q3 results

This year was supposed to be the year that airlines broke free from the problems brought by Covid, as travel restrictions loosened and flying hours increased to near-normal levels. Unfortunately for the industry, things haven’t quite gone according to plan. EasyJet’s share price has fallen by more than a third this year, hitting a 10-year low earlier this month, as rising costs and significant travel disruption have hindered the path to recovery. 

The low-cost airline’s half-year numbers revealed that group headline costs rose by 117% to just over £2bn, as revenues rose 524% to £1.5bn. The headline loss before tax came in at £545m, which was in line with expectations. Load factor for the first half rose to 77%, up from 63.7% a year ago, with Easter seeing load factors of 90%. For the second half of the year, management initially said that they expected load factors to be at 90% of 2019 levels, rising to 97% in Q4, with capacity above the levels seen in the last pre-Covid year of 2019. These targets were cut to 87% for Q3 and 90% for Q4 after easyJet cancelled flights due to staffing problems and a lack of airport capacity. On fuel costs, the airline improved its hedging capacity to 71% for H2 at $619, and is 49% hedged for H1 2023 at $701.

Unilever half-year results

Unilever has increased prices this year to offset a steep rise in costs that has squeezed operating margins. Nonetheless CEO Alan Jope remains under pressure to improve performance. He has also been criticised by influential shareholders, who would like him to rein in his activism and focus more on performance after he entered in to a spat with Ben & Jerry’s, one of Unilever’s major brands, over the ice cream maker’s boycott of Israel, a stance which Unilever overruled. The ice cream brand is known for its activism on various controversial issues, which has caused problems in the past and will probably continue to do so in the future. Given these issues Unilever might be better off selling the brand, especially as they also own the Magnum and Wall’s ice cream brands. 

In Q1 Unilever reported a 7.3% rise in underlying sales growth, well above estimates. Revenues also beat estimates, coming in at €13.78bn, a rise of 11.8%, helped by an 8.3% rise in underlying pricing. Since the failure of the £50bn bid for GlaxoSmithKline’s consumer health care unit caused Unilever’s share price to slide, the shares have recovered to pre-bid levels. The recovery was aided in part by the board’s recruitment of activist investor Nelson Peltz, who was instrumental in turning around Procter and Gamble. Nonetheless rising costs are expected to be a challenge going forward, as shareholders were warned in Q1. The board said that input cost inflation is likely to increase costs to around €2.7bn in the second half of the year, up from €2.1bn in the first half.

Microsoft Q4 results

Microsoft’s shares are down by more than 20% from the record high set at the end of 2021. Year-to-date revenue at the end of Q3 stood at $146.5bn, raising the possibility that Microsoft may have generated full-year revenue of $200bn for the first time, which would mark an 18.6% rise on last year. 

In Q3 revenue came in at $49.36bn, representing a decline on the record Q2 figure of $51.73bn, but still slightly higher than expected. Profits were also better than expected at $2.22 a share. Personal computing revenue of $14.52bn was helped by decent sales of Windows 11 and Xbox, while its intelligent cloud business, which includes Azure, generated $19.1bn in revenue. The intelligent cloud business has been a key revenue driver for the past two years, and is likely to remain so going forward. In Q4 last year this segment contributed $17.38bn, a rise of 51% on the previous year. The hope at Microsoft is that this unit will soon account for 50% of overall revenue. 

On guidance, Microsoft said it expected to see record revenue of $52.4bn in Q4, though this target was recently lowered to $51.94bn, which would still be a record number. The main reason for the cut appears to be concern over FX effects and the strength of the US dollar. Profits for Q4 are expected to come in at $2.30 a share.  

Alphabet Q2 results

It’s been a difficult year for tech stocks, though most are off their year-to-date lows. Shares in Google parent company Alphabet are down more than 20% this year, but over the last three months have traded sideways. With the stock split completed, it will be interesting to see whether there is renewed appetite for the shares at these sorts of levels. 

The Q1 numbers weren’t too disappointing, despite the miss on YouTube ad revenues, which contributed $500m. Advertising still makes up the majority of Alphabet’s earnings, with revenue here coming in short at $61.47bn, below expectations of $62.58bn. Total revenue beat expectations, rising to $68.01bn, while operating margins came in at 30%. The ad market is likely to be a focus of attention on the upcoming earnings call, as companies cut ad spend in response to a slowing economy. 

Google’s cloud business has been a key growth driver, with the total global cloud market reaching $126bn in Q1. Google will be hoping for a big slice of that, as will its rivals Microsoft and Amazon. However, gains in this segment will need to be significant if they are to help alleviate concerns over future ad revenues. Profits for Q2 are expected to come in at $26.50 a share.  

Wednesday 27 July

Federal Reserve interest rate decision

See top three events, above 

Lloyds Banking Group half-year results

See top three events, above 

Meta Platforms Q2 results

Shares in Facebook’s parent company are down more than 50% in the last year, having plunged in February after a decline in daily and monthly active user numbers. Meanwhile, Apple’s privacy changes hit revenues, prompting Facebook to downgrade its Q1 revenue outlook to between $27bn and $29bn. This proved accurate, as Q1 revenue totalled $27.91bn. Profits came in at $2.72 a share, while average revenue per user was slightly better than expected at $9.54 a share. The number of daily active users came in at 1.96bn, beating expectations of 1.95bn, and better than the previous quarter’s tally of 1.93bn. However, monthly active users came in lower at 2.94bn. 

For Q2, Meta said it expected revenue to improve to between $28bn and $30bn. Investors are prepared for a dip in monthly active users after a Russian court banned Meta, effectively rendering Facebook and the group’s other social media platforms illegal. The regulatory outlook in the EU is set to remain challenging, too. Profits for Q2 are expected to come in at $2.56 a share. 

Thursday 28 July


Is the US already in a technical recession? The publication of the first iteration of Q2 GDP will provide an answer. In Q1 the US economy contracted by 1.6%, mainly because of a big fall in net trade amid supply chain disruption. Another factor was that some purchases were brought forward into Q4, resulting in an inventory build-up in Q1. This isn’t likely to have been repeated in Q2. We should therefore see a recovery, but that doesn’t mean we can expect to see a strong rebound. With the labour market remaining resilient and consumer spending holding up reasonably well despite widespread cost-of-living pressures, estimates suggest that GDP grew 0.5% in Q2, driven by personal consumption and some inventory bounce-back.

Shell half-year results

The rise in oil and gas prices has made the energy sector one of the big winners of the year so far. However, bumper revenues and profits led the UK government to impose a windfall tax. The strength of Shell’s Q1 numbers pushed its shares up to their highest level in two years in May, though since the announcement of the new levy in late May the shares have slipped back, along with oil prices.

Underlying profits in Q1 came in at $9.1bn, up 43% versus Q4, and above expectations for $8.2bn, marking Shell’s best quarterly performance in over a decade. The company also said that it would take a $3.9bn charge in relation to its Russian assets. Shell’s trading division brought in $1.1bn, after  losing $251m in Q4. The firm also said that it had reduced its net debt from $75bn pre-pandemic to $48.5bn. 

On capex Shell is spending between $23bn and $27bn this year, with $5bn spent in Q1. The business has also been spending money on renewables, completing the purchase of solar and energy storage developer Savion in the US at the end of last year, as well as winning bids with Scottish Power to develop 5GW of floating wind power in the UK in January this year. Shell also said it would be looking to spend £25bn on renewables projects in the UK by the end of the decade, though the windfall tax, which is expected to be levied annually until 2025, might prompt a rethink. 

Earlier this month Shell shares received a boost after the company announced that it was revising up its oil and gas assets amid higher refining margins, as higher prices generate higher returns. Improvements in refining margins at its chemicals and products division are expected to boost EBITDA by between $800m and $1.2bn in Q2.

Barclays half-year results

Having recovered from a 10-year low in 2020, Barclays shares hit their highest levels since 2018 earlier this year. But since those peaks, investor concerns have sent banking stocks lower. Barclays’ shares fell to a one-year low in April, where they have languished ever since. 

When the bank reported its Q1 numbers management were not only combatting a difficult economic outlook, they were also dealing with questions about the competence of new CEO C.S. “Venkat” Venkatakrishnan. The bank is facing a regulatory investigation into some of its US trading products which were sold when Venkat was in charge of controlling the bank’s risk environment. The trading breach, which appears to have been the result of a clerical error, involved the sale of nearly £28bn of exchange traded notes that track commodity prices over a three-year period, but Barclays registered only £16bn of sales with the SEC. The bank now has to repurchase the excess, which is estimated to cost over £500m. Barclays has set aside £540m in respect of the matter. 

For Q1, the bank reported that total revenue grew 10% to £6.5bn. Offsetting that were higher costs, which grew 15% to £4.1bn, though over £500m of that was earmarked to cover the above-mentioned trading breach. Consequently, attributable profits declined 18% to £1.4bn. Barclays’ UK business saw profits rise to £594m on revenue of £1.65bn, buoyed by an improved interest rate environment which saw net interest margins rise to 2.62%. Despite the cost-of-living squeeze there was little sign of an increase in credit card arrears, and customer deposits were stable at £260.3bn. 

The corporate and investment banking division posted revenue of £3.94bn. The unit’s profits before tax declined by 13%, again primarily due to an increase in costs, which rose 23% to £3bn, while investment banking fees fell 25% to £648m. Revenue from fixed-income, currency and commodities came in at £1.6bn, up 37%, while revenue from equities trading rose 13% to £1.05bn.

The bank said it expected to be able to resume its buyback programme, but this no longer seems imminent given the challenges that the sector faces. US banks have suspended buybacks, instead setting aside reserves to cover potential loan defaults and battling against a fall in investment banking fees.

Apple Q3 results

See top three events, above 

Amazon Q2 results

Amazon shares slid sharply after it revealed its Q1 numbers back at the end of April. The reason for the decline was a lower-than-expected Q2 revenue forecast. 

Q1 revenue beat expectations, coming in at $116.44bn, with web services driving the improvement with another record quarter of $18.44bn, up from $17.8bn in Q4. Despite this Amazon fell to a $3.8bn net loss as it recorded a $7.6bn hit on its investment in Rivian. It was notable that advertising revenue missed forecasts as companies reduced ad spend in the face of a tougher economic environment. 

For Q2, Amazon said it expected to see revenue of between $116bn and $121bn, below market expectations of $125bn. Amazon has been raising its prices to combat the effect of higher costs, whether it be the cost of labour or energy prices. Nevertheless, margins are being pinched, falling to 3.2% in Q1, down from 8.2% a year ago. To give an indication of how much costs have risen in the space of a year, operating expenses in 2020 were $363bn. These rose to $445bn in 2021, and could well increase further in 2022. 

In the US the price of Amazon Prime subscription rose to $139 from $119, while it has also started to surcharge some of its US sellers. Amazon has spent big on new content. A new Lord of the Rings series “Ring of Power” is set to launch in September, and the company has also bough streaming rights for Thursday night football. In addition it is looking to monetise its purchase of MGM with a pay subscription channel on Prime Video. The recent stock split appears to have done little to support the share price, which sits just above two-year lows. Profits for Q2 are expected to come in at $0.16 a share.

Friday 29 July

US PCE inflation (June)

While headline CPI and PPI increased in June, the core measures decreased, continuing a trend that goes back to Q1. Similarly, the core personal consumption expenditures (PCE) price index, which excludes food and energy costs and is closely monitored by the Fed, reached 5.3% in February before declining in every subsequent month, coming in at 4.7% in May. It will be interesting to see what the June reading tells us. Will we see another decline? Does the Fed still regard core PCE as its preferred measure of inflation? Recently, the Fed seems to have paid closer attention to headline CPI as the key inflation gauge that it uses to shape policy decisions.    

EU flash CPI (July)

The European Central Bank’s recent interest rate rise, its first since 2011, is unlikely to have a marked effect on inflationary pressures. With inflation as high as 20% in some parts of the Eurozone, it matters little whether the headline interest rate is at -0.5% or -0.25%. 

Consumer prices rose 8.6% in the year to June, and producer prices remain persistently high at over 30% in parts of the EU. It seems likely, then, that CPI will continue to edge higher. The flash reading for July could well put headline inflation at close to 9%. 

NatWest Group half-year results

NatWest’s shares are down roughly 4% this year after recovering from the one-year low they hit in March in the wake of Russia’s invasion of Ukraine. The shares are performing slightly better than those of some of the bank’s peers, such as Lloyds Banking Group, whose shares have suffered a double-digit fall this year. 

NatWest’s full-year profit last year came in at £2.95bn, compared to a loss of £753m a year ago. The numbers were flattered enormously by the release of £1.28bn in loan-loss reserves that were set aside in 2020. Nonetheless, the results offered plenty of cheer to shareholders, including the UK government which currently holds a 48.1% stake. 

CEO Alison Rose said the bank expects to maintain ordinary dividends of around 40% of attributable profit. It also plans to distribute a minimum of £1bn in each of 2022 and 2023 via a combination of ordinary and special dividends. Attributable profits in Q1 rose to £841m, boosted by the release of £38m in credit impairments, as total income rose to over £3bn. Net interest margins increased to 2.46% in Q1, helped by recent interest rate rises. Mortgage lending, a key growth driver in Q1, grew to £2.6bn, but could slow in Q2.

Index dividend schedule

Dividend payments from an index's constituent shares can affect your trading account. View this week's index dividend schedule

Selected company results

Squarespace (US) Q2
Alphabet (US) Q2
Chipotle Mexican Grill (US) Q2
Coca-Cola (US) Q2
easyJet (UK) Q3
Games Workshop (UK) Full-year
General Electric (US) Q2
General Motors (US) Q2
McDonald's (US) Q2
Microsoft (US) Q4
Mondelez (US) Q2
Moody's (US) Q2
Raytheon Technologies (US) Q2
Reach (UK) Half-year
Skechers (US) Q2
Stryker (US) Q2
Unilever (UK) Half-year
United Parcel Service (US) Q2
Visa (US) Q3
Automatic Data Processing (US) Q4
Boeing (US) Q2
Bristol-Myers Squibb (US) Q2
British American Tobacco (UK) Half-year
CME Group (US) Q2
Etsy (US) Q2
Ford Motor (US) Q2
GSK (UK) Half-year
Invesco (US) Q2
Kraft Heinz (US) Q2
Lloyds Banking Group (UK) Half-year
Meta Platforms (US) Q2
Morningstar (US) Q2
Netgear (US) Q2
Qualcomm (US) Q3
Reckitt Benckiser Group (UK) Half-year
Rio Tinto (UK) Half-year
ServiceNow (US) Q2
Unite Group (UK) Half-year
Upwork (US) Q2
Altria Group (US) Q2
Amazon (US) Q2
American Tower Corp (US) Q2
Anglo American (UK) Half-year
Apple (US) Q3
BAE Systems (UK) Half-year
Barclays (UK) Half-year
BT Group (UK) Q1
Centrica (UK) Half-year
Diageo (UK) Full-year
First Solar (US) Q2
Foxtons (UK) Half-year
Harley-Davidson (US) Q2
Hershey (US) Q2
Hertz Global Holdings (US) Q2
Honeywell International (US) Q2
Informa (UK) Half-year
Intel (US) Q2
ITV (UK) Half-year
Mastercard (US) Q2
National Express Group (UK) Half-year
Pfizer (US) Q2
Relx (UK) Half-year
Rentokil Initial (UK) Half-year
Robert Walters (UK) Half-year
Roku (US) Q2
Santander UK Group Holdings (UK) Q2
Schroders (UK) Half-year
Segro (UK) Half-year
Shell (UK) Half-year
Smith & Nephew (UK) Half-year
St James's Place (UK) Half-year
Thermo Fisher Scientific (US) Q2
Wingstop (US) Q2
Aston Martin Lagonda Global (UK) Half-year
AstraZeneca (UK) Half-year
Colgate-Palmolive (US) Q2
Exxon Mobil (US) Q2
International Consolidated Air (UK) Half-year
Intertek Group (UK) Half-year
NatWest Group (UK) Half-year
Rightmove (UK) Half-year
Standard Chartered (UK) Half-year

Company announcements are subject to change. All the events listed above were correct at the time of writing.

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