Important information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest.

FOURTH quarter earnings season gets into its stride this week. And the numbers have never been more important. How profits hold up will determine what kind of a year stock market investors enjoy in 2022. Other factors to watch include oil, inflation and the divergence in how different countries have handled the pandemic, as prime ministers and tennis players have all come to learn…

Earnings outlook

Last year profits growth for the S&P500’s constituents was safely above 40%. This year growth will most likely be in single digits - about 9% is forecast, with roughly the same pencilled in for 2023. That will be enough to keep the bull market bubbling but only if valuations are not undermined by worries about inflation and rising interest rates. Last week, JP Morgan Chase set the tone with good numbers but a warning that costs are rising. The next couple of years will most likely be harder work than the last two. This week the focus remains on banks (Morgan Stanley, Goldman Sachs) but earnings season broadens out too, with Netflix, Procter & Gamble and BHP Billiton due to report.

All eyes on China

The handling of the pandemic has been different around the world. Here in the UK, the political noise around the Prime Minister is likely to accelerate our emergence from Covid restrictions. Australia’s deportation of Novak Djokovic has shone the spotlight on its hardline approach. But perhaps hardest hit of all has been China, the country that was first in and, we thought, first out of the pandemic, but which has paid a high price for its zero-tolerance approach to the virus. Fourth quarter GDP growth has just emerged at 4%, well down on the 6.5% growth in the equivalent period in 2020 and off the pace of the 8.1% at which the Chinese economy grew for 2021 as a whole as it rebounded from the collapse in activity in early 2020. Quarterly growth in the world’s leading emerging market fell year-on-year throughout 2021.

Inflation station

The focus on inflation continues this week, after last week’s confirmation that prices are rising in the US at their fastest pace since 1982. The 7% Consumer Price Index (CPI) reading was in line with expectations and may well be close to peaking but it still represents the worst inflation reading since the Federal Reserve was battling to overcome the damaging price spirals of the 1970s. This week we get a look at prices in the UK, Japan, Germany, Italy, Canada and Japan.

Watch our video on inflation - what it is and why it matters.

Oil: what’s next for black gold?

The price of energy is a key component of the inflation rate everywhere so investor focus will be on the monthly oil market report from OPEC, the oil producers’ group that still exerts a big influence on the price of black gold. A barrel of Brent crude costs around $86 today. That’s within a whisker of the highest point reached both last year and at the previous peak in 2018 before the pandemic saw the price of oil plummet to historic lows.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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