Can Nasdaq 100 solidify its minimal impact on margins?
The Q1 earnings season kicks into its highest gear next week with earnings releases from the major US technology/consumer companies with the heavyweights such as Microsoft, Alphabet, Visa, Meta, Apple and Amazon stealing the show. Outside the technology and consumer sectors, the Friday’s earnings releases from Exxon Mobil and Chevron are important for tracking capex plans for 2022 because the world economy desperately needs more investments in energy.
The preliminary data on Q1 earnings show that net profit margins are rolling over in the S&P 500 and MSCI World while holding up for the Nasdaq 100. This is a key thing to watch next week when the major US technology companies are reporting earnings, because profit margin insulation for technology amid galloping inflation could be a game changer for sentiment on the US technology sector. EPS growth in Q1 q/q is also only positive right now for Nasdaq 100 while down for the MSCI World and S&P 500. While profit margin insulation for technology companies could become the new hot topic and what drives a comeback for technology stocks, the opposite force at play are rapidly tightening financial conditions and discount rate on cash flows.
One thing is for sure, we are in for a very exciting next week as there are also mounting pressures coming from the strengthening USD and more bottlenecks in our global supply chain due to lockdowns in China.