In this Global Week Ahead, the world marks two years since Russia invaded Ukraine, bringing war to Europe for the first time in decades.
Meanwhile, the stock markets’ AI-bulls’ seemingly unstoppable run continues. Nvidia will report its latest earnings after the market close (AMC) on Wednesday.
In Asia, Mainland China returns from a week-long Lunar New Year holiday, to economic uncertainty.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) AMC on Wednesday, the A.I. mega-cap Nvidia reports earnings.
While stunning gains of the so-called Magnificent Seven have been the story of the U.S. stock market over the past year, one of those mega-cap tech and growth stocks has been the main character: Nvidia (NVDA – Free Report) , and it reports quarterly results on Feb. 21st.
After its stock more than tripled in 2023, the chipmaker at the center of the excitement over A.I. has seen its shares soar another roughly +50% so far this year.
Nvidia has now surpassed Amazon (AMZN – Free Report) and Alphabet (GOOGL – Free Report) in market value, making it the third-biggest U.S. company by market cap as of Feb. 14th.
Such mammoth stock gains stand to raise the bar for its results, which the company reports after the U.S. market closes on Wednesday.
And any disappointment potentially has a broad market fallout given Nvidia’s growing heft in major indexes and importance to the outlook for A.I.’s financial promise.
(2) U.K. banks reports earnings.
The U.K.’s biggest banks are set to release financial results for 2023, showing they have had their best year on record. Investors are unlikely to cheer.
HSBC (HSBA), Barclays (BARC), NatWest (NWG), Standard Chartered (STAN) and Lloyds (LLOY), should announce combined pretax profits of 51.6 billion pounds ($64.8 billion), above the 2007 record of 35.8 billion, stockbroker AJ Bell calculates.
Markets tend to focus on the future, however. And for U.K. banks, much is uncertain.
High interest rates, which banks have passed on to borrowers while shrugging off pressure to equally compensate savers, have fattened up their profit margins for now.
But a new mortgage price war and the need to repay Bank of England pandemic-era support are threatening future earnings. Borrower stress is also increasing, with insolvencies running at their highest since 1993.
U.K. bank shares, trading at hefty discounts to lenders’ asset values, suggest the record year the industry is about to report has already faded from investors’ minds.
(3) On Thursday, lots of global PMIs come out. Global recession risk gets a fact check.
A resilient U.S. economy, with its strong labor market, explains why global recession fears have fallen away.
Yet, even with China in the doldrums and powerhouse Germany now the sick man of Europe, business activity data out globally from Thursday should show that the picture beyond the U.S. is not all bleak.
While in contraction territory, the January Eurozone PMI hit six-month highs and the bloc avoided a recession late last year, the latest GDP data suggests.
German Q4 GDP data and the Ifo sentiment index are out Friday. Note, German business morale brightened last month.
Emerging markets outside China — notably India and the Middle East — are strong, and the U.S. PMI likely remains in expansionary territory after reaching six-month highs in January.
No surprise then, that investors no longer expect a recession.
(4) On Monday, Mainland China citizens return from a week-long Lunar New Year holiday.
Markets in China return from the week-long Lunar New Year holiday on Monday, and investors are looking out for what Beijing does next to shore up its battered stock market.
In the run-up to the festive period, authorities scrambled to pull out all the stops to stem losses in mainland shares that had cratered to five-year lows.
That included appointing a new head of the country’s market regulator, nicknamed the “broker butcher” for his tough stance on containing risks.
The week also brings a decision from the People’s Bank of China on its benchmark lending rates, though persistent headwinds for the yuan could limit the scope for any monetary easing.
Home prices, meanwhile, land on Friday, which will show just how deep the downturn in the beleaguered property sector is.
(5) The world marks two years since the Russian invasion of a democratic Ukraine.
Feb. 24th marks two years since Russia launched its full-scale invasion of Ukraine.
While markets have long overcome their initial panic, the anniversary is an unwelcome reminder of the war’s ongoing and multifaceted toll.
Aside from the human tragedy, the rebuild cost alone is now estimated to have reached almost half a trillion dollars, or 2.8 times Ukraine’s annual economic output.
Western governments have provided $100 billion — $60 billion in military aid and $40 billion in budgetary help — a year since the invasion.
The grumblings are growing in Washington, where Joe Biden’s leading Republican opponent Donald Trump is revving up for November’s election that he fully expects to be part of.
European leaders could also be about to raid some of the frozen Russian asset money that is currently sitting idle.
Zacks #1 Rank (STRONG BUY) Stocks
Three very large-cap growth stocks made it onto our #1 list, hailing from three different industries.
Two of the three are Tech-related, of course.
(1) Cadence Design Systems (CDNS – Free Report) : This is a $296 stock found in the Computer-Software industry. The market cap is $81.8B. I see a Zacks Value score of F, a Zacks Growth score of B and a Zacks Value score of B.
Cadence Design Systems Inc. offers products and tools that help customers to design electronic products.
Through System Design Enablement (SDE) strategy the company offers software, hardware, services and reusable IC design blocks (IPs) to electronic systems and semiconductor customers.
Cadence’s core electronic design automation (EDA) software and services enable engineers to develop different types of ICs. Its design IP’s are directly integrated into the ICs.System Connect tools and services are used for the design, analysis and verification of PCBs.
Further, System Integration solutions aid in designing and analyzing systems as well as verifying system functionality.
(2) HCA Healthcare (HCA – Free Report) : This is a $308 stock found in the Medical-Hospital industry. The market cap is also $81.8B. I see a Zacks Value score of B, a Zacks Growth score of A, and a Zacks Value score of B.
HCA Healthcare, Inc. is the largest non-governmental operator of acute care hospitals in the U.S. The company operates hospitals and related health care entities.
The general, acute care hospitals also provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy. It operates in two geographically organized groups — the National and American Groups.
The National Group includes hospitals across Alaska, California, Florida, southern Georgia, Idaho, Indiana, northern Kentucky, Nevada, New Hampshire, North Carolina, South Carolina, Utah and Virginia. The American Group includes hospitals across Colorado, northern Georgia, Kansas, southern Kentucky, Louisiana, Missouri, Tennessee and Texas.
The company also operates hospitals in England that are included in the Corporate and Other group. The company’s general, acute care hospitals provide a wide range of services to cater to different medical specialties.
(3) CrowdStrike (CRWD – Free Report) : This is a $331 stock found in the Internet-Software industry. The market cap is $80.3B. I see a Zacks Value score of F, a Zacks Growth score of A, and a Zacks Value score of C.
CrowdStrike is a leader in next-generation endpoint protection, threat intelligence and cyberattack response services.
This cybersecurity tech company is based in Austin, TX.
Key Global Macro
Thursday’s big PMI data dump is worth focusing on this week.
On Monday, this was President’s Day in the USA. Stock markets were closed.
Mainland China’s Foreign Direct Investment data for JAN came out. -8% y/y was the prior reading.
On Tuesday, there is a People’s Bank of China (PBoC) policy rate decision out. 3.45% is the current rate.
Canada’s CPI for JAN comes out. The broad CPI for DEC was at +3.4% y/y, while the core was at+2.6% y/y.
On Wednesday, the latest FOMC minutes come out.
On Thursday, Japan’s Jibun Bank manufacturing PMI comes out for FEB. It was 48 in JAN.
Europe’s HCOB manufacturing PMI for FEB comes out too. The JAN reading was 46.6. The consensus is looking for 47.1.
Europe’s broad HICP (their consumer inflation measure) for JAN should be stable at +2.8% y/y. Core HICP should be +3.3% y/y.
The U.S. S&P global manufacturing PMI for FEB should be out. The prior JAN reading was 50.7.
It is the Japanese emperor’s birthday.
On Friday, there is an all-day Eurogroup meeting.
We also get Germany’s IFO business climate (expect 85.5), current assessment (expect 87), and expectations (look for 83.8) indices. All three should be better than the prior readings.
Conclusion
On February 15th, 2024 Zacks Research Director Sheraz Mian had a positive S&P500 earnings note to share—
“We now have Q4-23 results from 387 S&P500 members, or 77.4% of the index’s total membership.”
“Total earnings for these companies are up +5.1% from the same period last year, on +3.4% higher revenues.”
“79.1% are beating EPS estimates. 65.1% are beating revenue estimates.”
“This Q4-23 earnings and revenue growth pace is notably better than what we had seen from this group of companies in the last few quarters.”
“Estimates for the current period (Q1-24) are coming down.”
“But the pace and magnitude of negative revisions compare favorably to what we had seen in the comparable period, during the Q4-23 earnings season.”
Have an excellent trading week!
John BlankZacks Chief Equity Strategist and Economist
