Markets Under Pressure after Disappointing Earnings Reports

  • Market Overview

Most markets were under pressure on Tuesday as investors continued to worry about company earnings in an increasing interest rate environment. All three of the major indices on Wall Street traded in the red at 17h50 “as investors fretted about the prospects of sharp downward earnings revisions from aggressive central bank actions to tame inflation. Industrial conglomerate 3M (NYSE: MMM ) plunged over 5% after reporting a drop in profit, while General Electric (NYSE: GE ) was down 1% after offering weak guidance. Meanwhile, Johnson & Johnson (NYSE: JNJ ) rose nearly 1% after the pharmaceutical giant posted better-than-expected quarterly results. Now, all eyes turn to Microsoft (NASDAQ: MSFT ), which will announce its earnings after the close and most likely shape the outlook for tech,” reported Trading Economics.

Major European markets also closed lower yesterday “after regional business activity data reinforced expectations that the European Central Bank (ECB) will raise rates by a further 50 basis points,” said Reuters. “The latest survey showed the Eurozone business activity returned to growth after six successive months of decline, with business confidence jumping the most since the aftermath of the Covid-19 outbreak, despite high inflation and rising borrowing costs,” Trading Economics added.

Most Asian markets were still closed for the Chinese New Year celebrations, while the Japanese Nikkei closed up by 1.46% following an overnight rally on Wall Street. The local bourse closed down by 0.11% on Tuesday, dragged down by losses in the resource and financial sectors. The rand remained weak against major global currencies, trading at R17.22/ USD , R21.20/ GBP and R18.71/ EUR at 18h00.

Optimism over a recovery in demand for oil due to China’s reopening kept the price of Brent crude above $87 a barrel at 18h00 local time, while the price of spot gold remained range bound at around $1 933 an ounce.

PSG Wealth Daily Investment Update, 25 January 2023

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