Must read: Apple, Mag7, HSBC, Next

Next week looks set to be another busy period on the economic and corporate agenda. Central banks are in focus with rate decisions from the Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of China. In terms of economic data, we get a slew of inflation and GDP readings from euro zone countries and the US.

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On the corporate side, US earnings season continues with results from most of the Mag7 - Alphabet Inc Class A (NASDAQ:GOOGL), Meta Platforms Inc Class A (NASDAQ:META), Amazon.com Inc (NASDAQ:AMZN), Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT) plus oil majors Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX). In the UK, investors will be watching out for updates from HSBC Holdings (LSE:HSBA), Standard Chartered (LSE:STAN), WPP (LSE:WPP), and Next (LSE:NXT) among others.

APPLE / MAG7 EARNINGS

Victoria Scholar, Head of Investment, interactive investor says, “We’re at a critical juncture for markets with growing concerns about the risk of an AI bubble. Therefore, a lot is riding on earnings season particularly from the tech giants that have been investing heavily in AI and driving most of the wider market gains. Most Magnificent 7 names will report next week namely Alphabet, Amazon, Apple, Microsoft and Meta. So far out of the Mag7 only Tesla has reported, and its results were largely viewed as a disappointment.

Apple has enjoyed a strong performance this week with shares hitting an all-time high thanks to a report suggesting iPhone 17 sales have fared very well since the release last month, much better than the previous model 16 over the same period.

CEO Tim Cook has been more involved in politics this year than he probably would have liked, finding himself stuck right at the centre of the US-China trade war. Cook is faced with the unwanted and rather daunting balancing act of trying to keep US President Trump onside, without jeopardising Apple’s long-term dependence on China for manufacturing. This month Cook pledged to continue investing in China while earlier this year he also promised to invest $100 billion in US manufacturing.

According to Refinitiv, next week Apple is expected to report quarterly revenue of $102 billion up from $94 billion last quarter. Earnings per share is seen coming in at $1.77 versus $1.57 last quarter. In the previous three months, Apple enjoyed a top and bottom line beat with strong iPhone and services revenue, while iPads underperformed.

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Focus will be on the size of Apple’s tariff burden, with expectations for around $1.1 billion in tariff costs over the last quarter following $800 million in the previous three months. Investors will also be looking for any clues into what Apple is doing in terms of AI investments as the tech giant looks to play catch up in the generative AI race.

Ahead of Apple’s earnings, the company has enjoyed some price target upgrades from the analyst community including from Wells Fargo and Goldman Sachs. A strong set of earnings could propel Apple to a valuation of $4 trillion for the first time. Only Microsoft and Nvidia have reached these heights before. However, Apple’s share price has lagged some of its Mag7 peers this year, up just 3% versus Microsoft up 23% and Meta up 25%."

HSBC Q3 – TUES 28 OCT

Richard Hunter, Head of Markets, interactive investor says, “HSBC’s most recent announcement put a dampener on the share price, but there is little reason to believe that the move derails the group’s progress – indeed, the longer term payback could well be positive.

The group revealed that it would be buying the remainder of Hang Seng Bank which it does not already own for an estimated £10 billion. However, in order to finance the acquisition, HSBC also announced that its share buyback programme would be suspended for at least three quarters, leading to a 5% dip in the share price on the day, despite payments of the dividend, which currently yields 5%, being unaffected.

Traditionally the market frowned on buybacks as evidence that companies could not find a progressive use for excess capital, whereas the current mantra from boardrooms is to buy back its own shares, which in turn improves some of the key metrics such as earnings per share.

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In the meantime, investors will be searching for more evidence of growth and investment in the business, while keeping a cautious eye on any further impairments as disclosed at the half-year results in July. In particular, the Wealth business has been ploughing ahead strongly, while the Hong Kong commercial real estate sector has been something of a headwind.

At that time, the group fully recognised that heightened uncertainty and a faltering economic outlook are already having a negative effect on business and consumer sentiment in its core regions. For investors, another area of concern is that with the convoluted tariff situation still playing out, the implications are as yet unclear and in some cases yet to come into full effect.

Its strategic plan is significant but simple. Whereas HSBC had been moving towards becoming a business with a slavish reliance on interest rate movements and levels, the revised and increasing focus on the growth in affluent wealth, especially in Asia, is key to the new offering. The recent Hang Seng announcement has done little to upset a share price which has risen by 27% this year alone, and by 106% over the last three years, with the building blocks in place for further growth."

NEXT Q3 – WED 29 OCT

Richard Hunter says, “Next is one of the best run and most respected stocks within the FTSE100 and walks the continuous tightrope of becoming a victim of its own success, as expectations for its results are extremely high.

By the same token, the group is a past master in managing those expectations by under-promising and then over-delivering on a regular basis.

Indeed, at its half-year numbers in September, the strength of any caution was warranted, with the second half being unlikely repeat the tailwinds of the first. Favourable weather and the additional business gained from the Marks & Spencer cyber incident will not be repeated, while the effects of National Insurance increases washing through (net margin declined by 0.5% to 8.9% as a result) and strong comparatives could combine for a lower result.

Even so, guidance for the full year was unchanged, with full price sales expected to grow by 7.5% (4.5% in the second half) and pre-tax profit to reach £1.1 billion.

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The numbers underlined once more the group’s unparalleled understanding of the market in which it operates and its ability to capitalise on new opportunities, such as the potentially exciting opportunities in the international business. The group believes that international tastes in clothing are beginning to converge, not least of which is due to the increasing visual power, appeal and presence not just of the internet, but also the rise of streaming services which are now increasingly used by younger audiences.

Meanwhile, the share buyback programme is currently on hold, possibly for the rest of the year, since the share price has exceeded the group’s own target (currently £118 per share) of triggering such a buyback. This is further evidence that Next is defiantly at the top of its game and has every intention of staying there. Followers have been well rewarded over recent times, with the share price having risen by 36% this year alone and by 173% over the last three years. Based on past performance, it would appear that the naysayers who have doubted the stock’s trajectory may continue to do so at their peril."