Daily Markets: CEO Outlook on the Economy Clouds December Quarter Earnings Season

Today’s big picture

Equity markets in Asia and the Pacific ended mixed today. The South Korean KOSPI fell 0.85%, led by the names Technology Services and Health Technology. Hong Kong’s Seng closed 0.79% lower, while both Australia’s ASX All Ordinaries and China’s Shanghai Composite fell just 0.10%. Taiwan’s TAIEX remained essentially flat, posting gains of 0.04%, while India’s Sensex was up 0.94% and Japan’s Nikkei advanced 1.23% on speculation ahead of the Bank of Japan interest rate decision . By midday trading, European stock indices are lower across the board and US futures point to a lower market open.

Setting the tone for the first day of this shortened trading week is PwC’s 26th annual Global CEO Survey, which found that 73% of CEOs believe global growth will slow in the coming year. These findings, which surveyed 4,410 CEOs in 105 countries, follow the Conference Board’s annual “C-Suite Outlook” survey last week, which found that corporate leaders saw a “soft and shallow” recession ahead. These survey results are expected to emerge during the December quarterly earnings season, which kicks up a notch this week. In addition, the World Economic Forum (WEF) 2023 in Davos, Switzerland, is underway. There too, the WEF shared the results of a survey of chief economists from the public and private sectors, which showed that two-thirds expect a global recession in 2023.

European Central Bank chief economist Philip Lane rubbed salt in the market mood, saying interest rates will have to become restrictive to get inflation back on target. That comment set the tone for several Federal Reserve officials circulating this week amid a flurry of key December economic data.

A possible tailwind for the economy in the first half of 2023 is the reopening of China; however, the upcoming Chinese New Year celebrations starting on January 22 is expected to bring a spike in Covid cases. Once the current Covid wave is over, economists see a recovery in the coming months and forecast growth of almost 5% in 2023.

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International economy

China’s economy grew at an annualized rate of 2.9% in the fourth quarter of 2022, down from 3.9% growth in the third quarter but above market estimates of a 1.8% increase. For the full year 2022, China’s economy grew at 3.0%, falling short of the official target of about 5.5%, marking the second slowest pace since 1976, underlining the impact of the zero-COVID Beijing’s strategy before it was abruptly scrapped last month. China’s leaders will announce the GDP growth target for 2023 in March at an annual parliamentary meeting.

Chinese retail sales fell 1.8% yoy in December, less than a 5.9% decline in the previous month and better than market expectations for an 8.6% decline. However, December was the third month in a row in which retail sales declined. China’s industrial production grew 1.3% year on year in December, beating market estimates of a 0.2% increase but much slower than the 2.2% increase posted in November. Finally, according to data released by China’s National Statistics Bureau, the country’s population was 1.41 billion at the end of last year, 850,000 fewer than at the end of 2021. This is the first time China’s population has shrunk in six decades, making it the latest milestone in a worsening demographic crisis for the world’s second-largest economy.

Annual inflation in Germany was 8.6% in December, the lowest in four months and in line with the flash estimate, but still well above the European Central Bank’s target of around 2%.

The ZEW economic sentiment indicator for the euro zone rose 40.2 points from a month earlier to +16.9 in January, well above the market forecast of -15.0, and the first data point in positive territory since February . The January report also showed that the current economic situation indicator rose 2.6 points to -54.8 and inflation expectations fell 4.4 points to 83.7.

Domestic economy

At 9:30 a.m. ET, the Empire State Manufacturing Index for January will be released. The consensus view sees a reading of -8.7 for the month versus -11.2 for December.


On Friday, markets continued their week-end rally as the Dow rose 0.33%, the S&P 500 gained 0.40%, the Russell 2000 rose 0.58% and the Nasdaq Composite was up 0.71% ditch. Sectors were mixed, with Real Estate (-0.58%), Utilities (-0.36%) and Industrials (-0.12%) outnumbered by the rest of the sectors, led by Consumer Discretionary (0.94%) ) and financial institutions (0.75%). ). Interestingly, the Aerospace and Defense names took a hit General Dynamics (GD), Lockheed Martin (LMT), Raytheon Technologies (RTX)and Northrup Grumman (NOC) combined to contribute to more than 330% of the Industrials sector’s negative returns for the day. The move in those stocks reflects new leadership in the House of Representatives and its statement to rein in government spending.

Here’s how the key market indicators stack up so far:

  • Dow Jones Industrial Average: 3.49%
  • S&P 500: 4.16%
  • Nasdaq Composite: 5.85%
  • Russell 2000: 7.14%
  • Bitcoin (BTC USD): 19.71%
  • Ether (ETH-USD): 20.93%

Stocks to watch

Before trading in US-listed stocks starts, Goldman Sachs (GS), Morgan Stanley (MS), and New Oriental Education & Technology (EDU) are expected to report their quarterly results.

Microsoft (MSFT) will add OpenAI’s viral artificial intelligence bot ChatGPT to its cloud-based Azure service “soon” as Microsoft considers taking a much larger stake in OpenAI. For those unfamiliar with ChatGBT and OpenAI, and the possibilities this technology can bring, learn more here.

Following Teslas (TSLA) recent price cuts, Chinese automaker Xpeng (XPEV) also announced price reductions for some models. Xpeng reduced starting prices for its best-selling P7 electric sedan to CNY 209,900, a 12.5% ​​drop from previous prices. It has also slashed prices between 10% and 13% on all versions of its P5 sedan and G3i SUV.

Embraer SA (ERJ) has won a new order for an unknown customer for 15 new E195-E2 aircraft valued at $1.17 billion.

Diageo (DEO), the owner of Johnnie Walker whiskey and Tanqueray gin, agreed to purchase Don Papa Rum, a high-end dark rum from the Philippines, in a deal worth approximately $473 million.


The near-term IPO calendar is relatively light, so no significant IPOs are scheduled this week. Readers interested in learning more about the upcoming IPO calendar can visit Nasdaq’s Latest & Upcoming IPOs page.

After today’s market close

Interactive Brokers (IBKR), Pinnacle Financial (PNFB), Progress Software (PRGS) and United Airlines (UAL) will release their latest quarterly results after stock trading ceased today. Those who want to know more about which companies are reporting when, check out the Nasdaq earnings calendar.

On the horizon

Wednesday January 18

  • Japan: Core Machine Orders, Industrial Production – November
  • UK: car registrations – December
  • Eurozone: Consumer Price Index – December
  • Japan: Bank of Japan interest rate decision
  • US: Producer Price Index – December
  • US: Retail Sales – December
  • US: Industrial Production and Capacity Utilization – December
  • US: NABH Housing Market Index – January
  • US: Fed Beige Book – January

Thursday January 19

  • US: Housing starts and building permits – December
  • US: Philadelphia Fed Index – January

Friday January 20

  • Japan: Consumer Price Index – December
  • UK: Retail Sales – December
  • Germany: producer price index – December
  • US: Existing home sales – December

Thought of the day

“Keep calm and enjoy the short week.” ~ Anonymous


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.