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Weekly stocks review

  • US stocks ended the week higher, while Asian markets closed mixed and European shares finished lower.

  • Fed’s meeting and Jerome Powell speech highlighted the week’s central bank monetary policy outlook

  • US GDP data showed the economy grew 6.9% in Q4 to beat expectations

  • Earnings season continued, with Apple Inc (AAPL) releasing blockbuster revenue results, while Tesla (TSLA) and Netflix (NFLX) saw massive volatility

Markets continued to experience choppiness this week, with Friday seeing a nervy start for US stocks before strong earnings helped Wall Street navigate into a strong ending.

Here is a recap of the last full week of trading for January.

Stocks weekly recap

US stock closed the week higher; Asia was mixed while Europe shares moved lower.

The Dow Jones Industrial Average ended Friday 1.7% higher, as did the S&P 500 index that gained 2.4% on the day. The Nasdaq Composite ended the day 3.1% higher to erase earlier losses and see the week turn positive.

The weekly performance for the benchmark indexes was as follows: the Dow edged higher by 1.3%, the S&P 500 pared losses to close 0.8% up and the Nasdaq Composite closed the week largely unchanged. The S&P 500 is at -9.3%, the Dow -6.0% while the Nasdaq has lost 14.7% year-to-date.

In Europe, the pan European Stoxx 600 ended the week -1.0% ahead of next week’s European Central Bank meeting. Germany’s DAX fell 1.3% while France’s CAC 40 declined 0.8%.  

Russia’s stock market recovered significantly to close 1.0% higher as the week ended without a declaration of war from Moscow.

In the UK, the FTSE 100 ended the week nearly 1.2% down as investors digested the implications of the Fed’s rate hike plans as well as broader market sentiment.

In Asia, Japan's Nikkei 225 index closed 2.1% higher, while South Korea's Kospi ended the week 1.9% in the green.  Australia's ASX 200 also reversed earlier losses to close 2.2% higher. 

There were losses, however, for China's Shanghai Composite which fell 1.0% on Friday, and Hong Kong’s Hang Seng index, which closed 1.1% lower. 

Earnings summary

The week saw 103 S&P 500 companies release their Q4 revenue and earnings reports. Of these, 83 returned earnings that beat consensus estimates, including big hitters such as Apple Inc. (AAPL), Microsoft Corp (MSFT) and Visa (V).

This week’s earnings results bring to 169 companies, or 34%, the total number of S&P 500 firms to have released their Q4 results. Earnings have surpassed analyst estimates by 29.8% compared to 21% year-over-year, while actual revenue is up 15.9% against 13% projected over the quarter.

The earnings season continues, but actual growth as of Friday of 29.8% and 15.9% trails Q3 results of 39.1% in earnings and 17.4% in revenue.

Apple Inc.'s fiscal Q1 results showed the iPhone maker’s revenue grew year-over-year in all but one product category. Overall revenue grew 11%, reaching a historic $124 billion and well above analyst estimate of $119 billion. Apple’s stock price jumped in after hours trading, with an upbeat forecast helping catalyse the higher move. 

Microsoft (MSFT) and Visa Inc (V) also reported their quarterly earnings this week, with share prices edging up afterward.

Netflix shares reversed earlier losses to end the week in positive territory, as did Tesla, which slipped more than 10% on Thursday before a nice rebound on Friday saw it close the week 2% up. The TSLA stock’s value is however more than 6% down over the past five days.

Fed and GDP data highlight week

The US Federal Reserve held its two-day meeting on Tuesday and Wednesday, with the market highly keen on the language adopted by the FOMC.

The Fed Chair Jerome Powell’s speech at the end of the meeting highlighted the week’s central bank monetary policy outlook. All indications are the Fed will move ahead with the first interest rate hike in March, with analysts suggesting more pain for stocks in the short term.

In economic data, the US gross domestic product (GDP) for the fourth quarter came in at 6.9%, surpassing analyst estimates by 1.4%. As well as beating the 5.5% Wall Street projection for Q4, the US economy expanded well above the 2.3% pace recorded for Q3.

The dollar index edged to 97.22 but was a little subdued against the Japanese yen. The Sterling also made slight gains against the greenback at $1.34, while the euro was unchanged at $1.114.

What next?

The higher close for US markets did not remove from the fact that equities continue to trade with an uncertainty currently paced around Fed's tightening.

European Central Bank (ECB) and Bank of England monetary policy agenda will be key, as might geopolitical tensions between Russia and Ukraine could continue to play a role in next week’s market action.

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