Pavan Sharma

US markets (S&P 500 Index +1.5%) continued to rally as investors bet that rates are close to their peak. We think there’s a disconnect here: markets are pricing in a rate cut by the end of ‘23, whereas the Fed has said it will “stay the course” and won’t be making any cuts at all this year.

US markets (S&P 500 Index +1.1%) was in the red for most of the session but then jumped into positive territory on Wednesday, following Fed Chairman Jerome Powell’s slightly dovish tone compared to its December meeting.

Visa reported better-than-expected earnings on the back of steady organic growth and a return to cross-border payment volumes that are equivalent to pre-pandemic levels. Payment volumes grew + 1% year-on-year, or 7% on a constant currency basis. The company reported earnings per share of $2 18 vs the street’s estimates of $2.01. Revenue came in at $7.94 billion slightly ahead of analysts’ estimates.

The New Zealand market (NZX 50 Index, -0.6%) retreated at the ed of the month, but still posted its best monthly performance since August 2021, up +4.31% since opening January 4. Serko (-2.31%) was one of the months best performers, finishing up +14.4%, although plummeted at the end of the trading day Tuesday. The monthly performance is down to expectation that the company will surpass its pre-covid level of travel booking transactions in the 2023 financial year. 

US markets (S&P 500 Index –1.3%) have paused its January rally in time for the Federal Reserve’s latest interest rate decision due Thursday 8.00am (NZDT). Markets are expecting a 25-basis-point rate increase

Mastercard (MA) reported strong results for Q4 and FY22. EPS came ahead of analyst expectations at $2.65 and net revenue came in at $5.8B (+17% YoY). Adjusted operating margin increased 80 bps to 55%. Cross-border transaction volumes remained flat at 41% for January. Switched transactions grew 14% YoY for the quarter.

US markets (S&P 500 Index +1.1%) have been buoyed by corporate earnings from Tesla (+11%) and fourth-quarter GDP coming in above expectations, at +2.9%, above expectations (+2.8%), and down from the third quarter rise of +3.2%. 

Microsoft (MSFT) reported revenues of $52.7B, a 2% increase from the previous year. This was slightly lower than the expected $53.1B forecast by analysts, but still within the company’s projected range of $52.4B to $53.4B. Adjusted EPS came in at $2.32 per share, surpassing the predicted $2.29 per share by Wall Street. Gross margin came in at 66.8%, slightly lower than the 67.2% from the previous year. In other words, there are two ways to take these results: the first is that they’re better-than-expected, and show the company’s relative resilience. The second is that they show material slowdown across the board. Both are accurate – the read-through we take is that tech earnings aren’t as bad as feared, but they’re nothing to “write home about” either.