FNArena’s Weekly Insights – February 08 2023
In this week’s Weekly Insights:
As I traditionally like to remind investors: every corporate results season has its own character and dynamics. The overall macro background, including index level and share price moves, plays an important role in understanding the overall context.
This time around, share markets have rallied, and rallied hard. In particular when we look back at the lows in September. That observation still stands if we simply measure returns year-to-date.
The past four-five weeks have witnessed an almost indiscriminate pickup in global sentiment, driven by macro-related drivers (inflation, bonds, central banks, China). While corporate earnings play a minor role when macro rules the day, at some point investors will be forced to zoom in, and price stocks accordingly.
This does not by default have to spell negative news, though there appears to be plenty of room to square off short-term results against further-out uncertainties. History suggests once share prices have had a strong run leading into corporate results, the balance of probabilities shifts towards ‘disappointment’ with the onus on management at the helm now having to prove why shares in the company should enjoy more upside.
