Kaohoon Morning Brief – 3 February 2023

1) KSS sees SET Index moving between 1,675 – 1,695 points, hoping Fed to slow down rate hike

Krungsri Securities (KSS) expected SET Index to move between 1,675 – 1,695 points in hopes of the Fed slowing down the pace of rate hikes following gradual decline of inflation. The analyst expected buying pressure in stocks with individual driving factors could push the index further. However, foreign flows that turned negative, declining oil prices and depreciation in the greenback could cause the market to fluctuate.


2) US big tech’s earnings missed expectations

Wall Street’s big tech stocks reported disappointing earnings in the previous quarter.

Alphabet Q4 earnings missed expectations as EPS was at $1.05 vs. $1.18 expected. Revenue grew only 1% YoY to $76.05B vs. $76.53B expected. This is Alphabet’s third slowest growth rate in its history. YouTube advertising revenue also missed forecast with $7.96B vs. $8.25B expected.

Meanwhile, Amazon Q4 EPS was $0.03 vs $0.13 expected. Revenue was $149.20B vs. $145.42B expected, representing only 9% growth, which was the slowest quarter in its history as inflationary pressures and aggressive rate hikes by the Fed to a higher level put consumer spending on hold.

Additionally, Apple reports first earnings miss in nearly seven years with EPS $1.88 vs. $1.94 expected, while revenue was $117.15B vs. $121.10B expected, Down 5% YoY, the first YoY sales decline since 2019. Apple recorded its first decline in iPhone revenue since the third quarter of 2020.

CEO Tim Cook said three factors impacted the results; a strong dollar, production issues in China during Covid outbreak, and the overall macroeconomic situation.


3) Chinese services activity surges after termination of Covid policy and Chinese new year holiday

Chinese services sector activity roared back into positive territory in January with support from the end of strict Covid policy and the Lunar New Year holiday.

The Caixin Services Purchasing Managers Index (PMI) rose to 52.9 in January, beating expectations of 51.6 by polls and rising from the negative territory in December of 48.0. A reading above 50 indicates growth, with the services sector logging to expand after four straight months of declines.