Week at a Glance – Can Tech Earnings and the Fed revive the Risk on Momentum?

Morning from Copenhagen.
While we saw one of the strongest inauguration weeks historically last week with Trump being more benign on Tariffs than initially thought, this week starts off with a huge selloff in tech caused by China´s DeepSeek discussions. While the news has been out for a while, we saw a significant market reaction this morning, which shifted sentiment quite a bit and will likely raise the bar for brightening sentiment based on earnings surprises.
Let´s leave this morning´s noise aside and focus on the look ahead with one of the most important weeks in 2025. We will see more than 100 companies reporting from the S&P 500 including tech heavy weights Apple, Microsoft, Meta and Tesla.
Tech Earnings ahead – High expectations penciled in
Q4 earnings season has started notably well with around 10% having reported so far and with Financials, Materials and Consumer Discretionary fueling the run, surprising by double digits. This week´s focus will be on Tech, with Apple, Tesla, Meta and Microsoft reporting. Q4 has proven to be usually a strong quarter for big tech companies historically.
The earnings season in Q4 will likely be slightly more mixed given the growth signals we observed in our nowcast through November and early parts of December in a broader context, and high frequent data from Bloomberg also suggest that we are below 0% sales growth for Microsoft for the first time since early 2023. Markets are having especially high expectations for this week´s earnings with anticipated earnings growth of more than 20% compared to less than half of this figure for overall earnings growth. Capex on AI will be closely watched, with Meta´s plan to spend up to $65 bn on AI in 2025 for instance.
Chart 1.a: Q4 2024 Earnings Season – so far so good
With tech giants set to report earnings and both the Fed and ECB meeting, this week promises to be an exciting one. Will AI spending and a dovish Fed stance counteract the negative tech sentiment of this morning?
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