1 May 2023 | Weekly Snapshot

Did you know?

Australian immigration is now expected to surge to 400,000 people this financial year, a record intake and 70% higher than the 235,000 announced in the October budget last year.

Market Movements

Australian Share Market (ASX 200) – down 0.29% for the 2nd week in a row despite some positive offshore leads on some “not as bad as feared” Q1 earnings reports. The Telecommunications sector (+1.7%) led the gains helped by Telstra hitting a new 6 year high, followed by Info Tech (+1.07%) and Industrials (+0.42%). The Materials sector (-1.68%) led the declines with the big miners lower on a falling iron ore price, followed by Utilities (-0.95%) and Health Care (-0.58%). The highlight of the week was our Q1 Consumer Price Index with headline inflation slowing to 7% for the year in Q1, down from the 7.8% peak in Q4 and largely in line with the 6.9% expected. Trimmed mean inflation weakened more than expected to 6.6% for the year from 6.9% in Q4 helped by a fall in goods inflation. Although services inflation rose to the highest since 2001 with holiday travel, medical services, rents, and restaurant meals still rising with the stickier components (rents in particular) showing few signs of easing. The decline in inflation to 7% is still high relative to the RBA’s cash rate of 3.6% but considering the recent political pressure and the RBA’s statements on the lagged effects of rate hikes to date, another hold and wait and see decision at their meeting tomorrow has firmed up as the most likely outcome but could be a close call. The housing market could be a swing factor with activity continuing to pick back up despite the rate hikes to date with auction clearance rates around their highest in 12 months over the weekend. Investors were focused on what was the biggest week of the U.S Q1 earnings season as 180 S&P 500 companies, and the bulk of big tech reported results that were largely “not as bad as feared”. At the beginning of the week 18% of companies in the S&P 500 had reported a blended annual earnings decline of -6.2%. By the end of the week 53% of companies had reported with an earnings decline of -3.7% and much improved on the -6.7% earnings decline expected at the start of reporting season.


U.S. Share Market (S&P 500) – up 0.87%, with the Dow (+0.86%) and Nasdaq (+1.28%) also higher with the Nasdaq hitting a new 8 month high and the volatility index (VIX) falling to the lowest levels since the pandemic began. Regional Bank issues persisted with California based First Republic Bank shares declining sharply and regulators seeking bids for the Bank over the weekend. Inflation and economic data were largely in line with expectations although the first estimate of Q1 GDP was weaker than expected coming in at 1.1%, lower than the 1.9% estimate and down from Q4’s 2.6% with inventories a big drag. Consumer Confidence slipped and the 1-year consumer inflation expectations fell 0.1% to 6.2%, still elevated but down from the 7.9% peak last year. New Home sales smashed expectations with a 9.6% monthly increase and the highest in 13 months on tightening supply and further improvement in housing market indicators. The March PCE and quarterly Employment Cost Index on Friday night were a bit higher than expected but largely in line and little changed on previous reports with the wage and price inflation figures declining on an annual basis on high base effects. The quality of the year-to-date rally in stocks came under some scrutiny with JPMorgan noting that by some measures underlying market breadth is the weakest ever and the had been the narrowest stock leadership in an up market since the 1990s. It was a big week of Q1 earnings and gains were broad based with equity markets driven by results that were “not as bad as feared”. Key takeaways for the week included pricing power in consumer staples, housing market stabilization, aviation still benefitting from normalization, weak freight and transportation, slowdown in consumer spending, restructuring and cost cutting to protect margins, and resilient tech earnings with lots of discussion around artificial intelligence. With inflation no longer running away, Bank issues still simmering, the GDP miss and corporate profits better than feared but still under pressure, the Federal Reserve may have a case to pause on interest rates at the upcoming FOMC meeting on Thursday morning although consensus is still for another 25-basis point hike.

Portfolio Movements

Microsoft (MSFT) reports better than expected Q3 results. Microsoft reported a decent beat last week with Q3 net income up 9%, or EPS of $2.45 vs consensus of $2.24. Revenue increased 7% to $52.86 billion from $49.36 billion a year ago. In the earnings call Q4 guidance was also increased to “the middle of the range” which implies $55.35 billion or 6.7% growth, which is ahead of the $54.84 billion consensus. The Microsoft CEO was upbeat on AI highlighting the multibillion-dollar investment in OpenAI and said it would draw on the company’s artificial intelligence models for a new version of its Bing search engine and enhancements to the Microsoft 365 productivity software stating, “We feel we have a good lead, and we have a differentiated offering up and down the stack,”


Thermo Fisher Scientific (TMO) reports in line Q1. Thermo Fisher reported Q1 earnings per share of $5.03 last week that was in line with expectations. Revenue of $10.71 billion was a slight beat on the $10.65 billion estimate, down 9% on the same quarter last year. Although core organic revenue growth was 6% and a good result. Highlights included repurchasing $3 billion of stock, increasing the dividend by 17%, and completing the acquisition of The Binding Site. “We delivered another quarter of very strong financial performance, driven by our proven growth strategy and powered by our PPI business system,” said Marc Casper, chairman, president and CEO. “The team executed very well to navigate a dynamic macroenvironment, enable our customers’ success, and drive share gain.” Adding “We are incredibly well positioned to deliver differentiated performance, as we continue to create value for all of our stakeholders and build an even brighter future for our company.”


Verizon (VZ) Q1 in line – most broadband net additions in over a decade. Telecommunications giant and Dow component Verizon has reported an in line result last week with Q1 EPS of $1.20 ex-items vs estimates for $1.19. Q1 revenue of $32.9 billion was also in line. Total broadband net additions of 437,000 was the largest result in more than a decade, reflecting a strong demand for fixed wireless and Fios products. Total wireless service revenue of $18.9 billion was a 3% increase year over year. “Our operational and financial results reflect the steps that we have taken to improve our performance. Compared to this time last year, we have added more post-paid phone gross additions to our network and have increased our cash flow from operations and free cash flow,” said Verizon Chairman and CEO Hans Vestberg. Verizon also maintained 2023 guidance for total wireless service revenue growth of 2.5% to 4.5%. Adjusted EBITDA of $47.0 billion to $48.5 billion. And adjusted EPS of $4.55 to $4.85.

The Week Ahead

The domestic highlight this week is the May RBA meeting tomorrow where expectations are currently for another pause although could be a close call following the services inflation in the Q1 CPI report last week. Retail Sales are Wednesday, Balance on Goods and Services is Thursday, with Housing Finance on Friday.

International highlights include U.S Construction Spending and ISM Manufacturing tonight. Tomorrow night is Eurozone CPI and U.S Durable Goods, factory Orders and the JOLTS (job openings) report. Wednesday night has the Eurozone Unemployment Rate, U.S ISM Services PMI and the highlight of the week which is the U.S Federal Reserve’s May FOMC meeting where expectations are currently for another 25-basis point interest rate hike. Eurozone PPI is Thursday night as is the ECB interest rate decision where another 25-basis point hike is also expected. The other highlight of the week is the U.S nonfarm payrolls report on Friday night where monthly employment growth is expected to slow to 185,000, from 236,000 jobs added last month.

Corporate reporting continues to ramp up this week with Transurban investor day today and Woolworths Q3 update tomorrow. Amcor Q3, Lloyd’s Bank Q1 and CVS Health Q1 are Wednesday. Novo Nordisk Q1, NAB first half, and Shell Q1 are Thursday. With Macquarie full year, ANZ first half and Apple Q2 on Friday. There are another 162 S&P 500 companies reporting this week.

Saward Dawson Wealth Advisors Pty Ltd, a Corporate Authorised Representative of Akambo Pty Ltd t/a Accountants Private Advice

The information presented in this publication is general information only, and is not intended to be financial product advice. It has not been prepared taking into account your investment objectives, financial situation or needs, and should not be used as the basis for making an investment decision. Before making any investment decision you need to consider (with your financial adviser) your particular investment needs, objectives and financial circumstances.

Some numerical figures in this publication have been subject to rounding adjustments. Akambo Pty Ltd (including any of its directors, officers or employees) will not accept liability for any loss or damage as a result of any reliance on this information. The market commentary reflect Akambo Pty Ltd’s views and beliefs at the time of preparation, which are subject to change without notice.