17 April 2023 | Weekly Snapshot

Did you know?

The Q1 reporting season is expected to see S&P 500 earnings decline 6.5% from Q1 last year, the largest earnings decline since Q2 2020 and the onset of the pandemic when earnings fell 31.6%. Q1 is also expected to be the trough in earnings with earnings growth expected to return in the 2nd half of this year.

Market Movements

Australian Share Market (ASX 200) – up 1.98% for the 3rd week in a row in another holiday shortened trading week. It was a strong week with every sector higher with Materials (+4.08%), Info Tech (+2.55%) and Energy (+2.09%) leading the gains. The Westpac-MI consumer sentiment survey out last week showed consumer confidence jumped to the highest level since June last year. The report noted that sentiment overall remains weak and that the Reserve Bank of Australia is an increasingly large swing factor with the 9% jump in the sentiment index following the RBA’s decision to hold interest rates steady the week prior. Consumers were more positive about the state of family finances, the 12-month economic outlook and the labour market. Respondents also became bullish on house prices with the house price expectations sub index jumping 16.6% over the month. We saw more evidence of the residential property market picking back up over the weekend with strong auction clearance rates in Melbourne and Sydney of 72.4% and 72% respectively. The NAB business confidence survey also improved to -1 in March from -4 in February led by the manufacturing sector. Business conditions were little changed at above average levels. The survey showed trading conditions and demand remained strong, and that price and cost inflation eased, though underlying pricing pressures remain well above normal levels. The highlight of the week was the March jobs data stronger that came in stronger than expected with employment rising by 53,000 jobs, more than double expectations for a 20,000 increase with the unemployment rate holding steady near the 50 year low of 3.5%. It was a strong report with full time employment rising 72,000 more than offsetting a 19,200 fall in part time jobs. Takeaways from the strong report would lean hawkish in terms of the Reserve Bank of Australia after pausing rate hikes to put a greater emphasis on incoming data. Economists are still expecting one more rate hike although markets have since priced out additional tightening. The next key input to any interest rates decisions is our Q1 CPI report due on the 26th of April.


U.S. Share Market (S&P 500) – up 0.79%, with the Dow (+1.20%) and Nasdaq (+0.29%) also higher with U.S equities up four out of the past five weeks. Economic data continued to come in a bit softer after surprising to the upside for much of 2023. Retail sales fell more than expected but Industrial production was better, and the University of Michigan Consumer Sentiment index rose but by less than expected. The first signs of easing in the super strong jobs market were also apparent with the weekly initial unemployment claims up around 20% from the recent lows and the highest since January 2022. U.S equities fluctuated on inflation readings and FOMC meeting minutes with equities higher as the headline March Consumer Price Index rose less than expected, up 5% annually vs expectations of 5.2% and down from 6% last month. Core CPI was in line with expectations of 5.6% increasing from 5.5% last month and remaining stubborn. The FOMC minutes from the Federal Reserve’s March meeting were released and sent stocks lower, probably on the comments that members now expect a mild recession to start later this year, and members still quite hawkish despite the banking mini crisis. Members noted that downside risks to growth and upside risks to unemployment had increased, but inflation is still well above the Committee’s longer-run goal and the recent economic data remained strong, with upside risks to the inflation outlook. Members agreed there was little evidence pointing to disinflation for core services, but the case for a pause was building with several participants considering whether it would be appropriate to leave rates unchanged. U.S equities then rallied as Producer Price Inflation fell 0.5% for the month vs. an expected 0.1% increase. Annualized PPI was down to 2.7% below estimates of 3% and the lowest since January 2021. The Q1 earnings season got underway on Friday night with some better-than-expected Bank reporting showing the underlying economy, households and businesses are still chugging along with bottom-up earnings releases set to dominate the narrative over the next few weeks.

Portfolio Movements

Citigroup (C) beats estimates – reaffirms guidance. Citigroup reported Q1 EPS of $1.86 ex-items on Friday night, well ahead of the $1.65 expected. Revenue of $21.45 billion was also ahead of the $20 billion expected. Citi delivered strong operating performance, showing good revenue growth and expense discipline. Management comments included: “TTS (Treasury Trade and Solutions) continued to perform extremely well, growing noninterest revenue on new mandates and strong cross border activity. “Markets saw the third best quarter in the last decade in Fixed Income.” “Banking activity picked up from the end of 2022, and our two cards businesses are showing momentum.” And “While it is not an ideal environment for wealth management, the drivers of this business continue to be very positive”. Citi also reaffirmed 2023 guidance of Revenue of $78-79 billion and Net Interest Income expected ~$45 billion with the shares up strongly on the result.


Novo Nordisk (NOVO) raises sales and profit outlook, again. Novo Nordisk raised sales and profit guidance last week mainly due to their blockbuster weight loss and diabetes drug Wegovy. In the first three months of 2023 Novo Nordisk’s sales increased by 25% and operating profit increased by 28%, both at a constant exchange rate (CER). Wholesaler inventory movements in the US positively impacted sales growth and a second contract manufacturer is now ready to begin production, increasing Wegovy supply capacity. For FY2023 sales growth of 24-30% is now expected vs previous guidance of 13-19%, and operating profit growth of 28-34% is now expected vs previous guidance of 13-19%.


Transurban (TCL) reports record 3rd quarter. Transurban has released their March quarter 2023 traffic update, reporting that Average Daily Traffic (ADT) increased by 12.9% compared to the March quarter last year and a new record third quarter traffic result for the business. Traffic was particularly strong in Sydney and Brisbane, with positive underlying performance, as well as contribution from new assets and enhancements that have come online over the past few years. Melbourne traffic continued to improve with weekend traffic remained strong while car and weekday travel improved. The company reported large toll increases are now coming through due to Transurban’s CPI linked contracts with Brisbane’s AirportLink toll up 7.9%, Sydney’s WestConnex toll up 6.1% while Melbourne’s tolls increased by 1.05% per quarter, equivalent to 4.25% per annum.

The Week Ahead

There are no meaningful domestic economic data releases this week.

International highlights include U.S Empire State Index and NAHB Housing Market Index tonight, China GDP and Industrial Output tomorrow and German ZEW economic surveys tomorrow night. U.K CPI and PPI is Wednesday. German PPI, Eurozone Consumer Confidence, and U.S Philadelphia Fed Index, Existing Home Sales and leading indicators are Thursday night. Friday has Japan CPI with Eurozone and U.S Services and manufacturing PMI’s on Friday night.

Corporate reporting ramps back up this week with Bank of America and Johnson & Johnson Q1 results tomorrow night, Santos Q1 on Thursday, and BHP Q3, Woodside Q1 and Freeport Q1 on Friday. There are 60 S&P 500 companies including 6 Dow components 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.