13 February 2023 | Weekly Snapshot

Did you know?

The cost of running a 30 second advertisement during today’s Superbowl hit an all-time high of $7 million. The biggest increase in advertising costs was between 2021 and 2022 when a 30 second ad went from $5.5 million to $6.5 million.

Market Movements

Australian Share Market (ASX 200) – down 1.65%, snapping a 5-week winning streak and posting the first down week for the year. Offshore leads were negative, and weakness was broad based with all sectors lower. Info Tech sector (-4.20%), Health Care (-3.63%) and Utilities (-3.08%) led the declines while Financials (-0.35%), Energy (-0.51%) and Materials (-0.76%) fell the least. The highlight of the week was the Reserve Bank of Australia’s first meeting for the year where they hiked the cash rate another 25 basis points to 3.35% as expected. It was the 9th consecutive hike and the highest cash rate since September 2012 with the recent Q4 inflation data showing the Consumer Price Index had risen by 7.8% forcing them to act.

The higher then expected CPI also saw the RBA’s rhetoric shift back to a more hawkish stance. This was backed up further on Friday when the RBA released their latest Statement on Monetary Policy, reiterating that multiple interest rate increases will be necessary to ensure the high inflation is only temporary, and revised up their inflation forecasts. Trimmed mean inflation, the RBA’s preferred measure which is currently running at 6.9%, is now expected to fall to 4.3% by the end of the year, compared to the previous forecast of 3.8%. While headline inflation is expected to ease to 4.8% by the end of the year but it is not expected to return to target until mid-2025.

Annual wages growth was also upgraded and is now expected to reach 4.2% by the end of the year, up from the previous forecast of 3.9%. Following the more hawkish RBA meeting and Statement on Monetary Policy, market pricing is currently expecting the cash rate to peak at 4% by the middle of this year. The ASX first half reporting season got underway last week. Of the 16 ASX 200 companies that reported earnings, 12 saw post earnings share price falls. With our market testing all-time highs and having already run quite hard into the upcoming reporting season over recent months, further significant gains could be a bit harder to come by.


U.S. Share Market (S&P 500) – down 1.11% with the Dow (-0.17%) and the Nasdaq (2.41%) also lower with the Nasdaq snapping a 5-week winning streak. Following the strong run, the forward 12-month P/E for the S&P 500 had moved up to 18.4 x, up from 17.2 x the prior week with valuations likely a bit of a headwind. Although the Q4 earnings decline improved somewhat last week according to FactSet’s latest Q4 Earnings Insights report. The blended annual growth rate for Q4 S&P 500 earnings currently stands at -4.9% with 69% of S&P 500 companies having reported. This is an improvement from the -5.3% earnings decline reported last week when 50% of companies had reported, although earnings and guidance metrics in aggregate have been largely underwhelming.

U.S. equities started the week lower on caution ahead of Federal Reserve Chair Powell’s speech in Washington, and bond yields were moving back up following the stronger than expected employment data the week prior. Investor sentiment continued to improve. Bank of America’s Bull & Bear Indicator rose to 4.2 last week, the biggest 3 month increase since August 2020. A Bloomberg article noted the market is now the closest to neutral positioning since Q2 2022 with $300B worth of bearish bets having been cut in recent months. And the latest AAII Investor survey also showed investor sentiment has turned net bullish for the first time in almost a year and is now the most bullish since November 2021. U.S Federal Reserve Chair Powell continued his dovish stance from the recent FOMC meeting reaffirming the view that “The disinflationary process, the process of getting inflation down, has begun” and expects inflation to now fall back to around 2% in 2024. He also outlined a plan B, that if data shows that inflation is higher than the Fed currently expects, that will mean higher rates. Although takeaways from other Fed officials later in the week were more hawkish. The University of Michigan consumer sentiment index was higher than expected in line with other improving sentiment indicators this year. But the 1-year consumer inflation expectations jumped to 4.2% from 3.9% last month.

Portfolio Movements

Linde (LIN) reported a strong Q4 last week with Q4 EPS of $3.16 vs. consensus of $2.90. Q4 Revenue of $7.90B was a slight miss on the $8.40B expected but this was a strong result. Management comments included “Despite the challenging environment, the Linde team again delivered outstanding performance including a record ROC of 22.9%, expanding operating margin to 25.3% and a ninth consecutive quarter of delivering 20% or more EPS growth ex. FX”. “Looking ahead, the geopolitical and macro environment continues to remain uncertain. However, we are well positioned to win more than our fair share of high-quality projects, primarily in clean-energy and again create shareholder value by leveraging all the opportunities that lie ahead.” Full year 2023 guidance was provided in the range of EPS of $13.15 – $13.55 and was also ahead of the $12.95 consensus.


Amcor (AMC) reports strong first half – increases share repurchase program. Leading global packing giant Amcor reported a strong first half and Q2 2023 results with Q2 EPS $0.19 vs consensus around $0.17 and have increased share repurchase program to $500M from $400M. The quarterly dividend also increased to 12.25 cents per share, compared with 12 cents in the same quarter last year. Net sales for the 1H of $7,354 million were up 6%. Full Year Guidance for 2023 was maintained at EPS in the range of $0.77-0.81, in line with the current $0.79 estimates with the company a bit more cautious in relation to the demand environment. Amcor CEO Ron Delia said: “Amcor delivered strong financial performance for the first half of fiscal 2023, demonstrating excellent operating leverage amid ongoing challenges in the macroeconomic environment. For the year-to-date, organic net sales growth of 2% drove an 8% increase in adjusted earnings per share on a comparable constant currency basis”.


CME Group (CME) beats Q4 estimates – Posts record year. CME Group, the world’s largest derivatives exchange (formerly Chicago Mercantile Exchange), reported better than expected Q4 results last week with Q4 EPS of $1.92 vs estimates of around $1.88. “Last year was the best year in our history as global market participants turned to CME Group to navigate tremendous economic and geopolitical uncertainty, generating a 19% increase in average daily volume to a record 23.3 million contracts,” said Terry Duffy, CME Group Chairman and CEO. Adding “Our 2022 performance was driven by new records in financial products, options on futures, and volume from outside the United States. In addition, CME Group had its best Q4 ever, with record ADV of 21.8 million contracts resulting from double-digit growth in equity index and foreign exchange.”

The Week Ahead

Domestic economic data releases this week include the NAB Business Confidence tomorrow and Consumer Inflation Expectations on Thursday. The highlight of the week is the labour force data also on Thursday. Expectations are for a 17.5k rise in employment, after last month’s surprise 14.6k fall. The unemployment rate is expected to hold steady at the very low 3.5%. There are also around 60 ASX 200 companies reporting earnings this week.

Internationally we have China Trade balance and Japan Q4 GDP today. The highlight of the week is the January U.S. CPI report tomorrow night with annual headline CPI expected to fall to 6.2% from 6.5% last month. U.K CPI is also Tuesday night. U.S. Capacity Utilization, Retail Sales, Industrial Production, Business Inventories, Empire State Index and the NAHB Housing Market Index are Wednesday night. U.S Housing Starts, Philadelphia Fed Index, PPI, German PPI and France CPI are on Friday. Another 61 61 S&P 500 companies are scheduled to report Q4 earnings this week.

Corporate reporting remains busy this week with Insurance Australia Group (IAG) first half today, CSL (CSL) first half tomorrow. Commonwealth Bank (CBA) and Wesfarmers (WES) first halves Wednesday. Telstra (TLS), South 32 (S32) and Sonic Health (SHL) first halves and NAB Q1 trading update on Thursday. And Westpac (WBC) Q1 trading update Friday.

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

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