The financial world braces for an action-packed week as major U.S. stock futures fell early Monday, setting the stage for a crucial earnings season. Investors are on edge with nearly 90 companies from the S&P 500 scheduled to reveal their quarterly earnings. Amidst this, the technology sector faces a sharp 4% decline due to mounting competition from China's DeepSeek. This downturn significantly impacts the market, especially as four out of the "Magnificent Seven" tech giants—Meta Platforms, Microsoft, Tesla, and Apple—prepare to report their earnings.
The week kicked off with earnings reports from AT&T and Nucor on Monday. Tuesday will see a slew of corporate giants including Starbucks, Boeing, Lockheed Martin, Royal Caribbean Group, and others disclosing their financial performance. The mid-week spotlight will be on heavyweights such as ServiceNow, IBM, Meta Platforms, and Tesla. Thursday's lineup is equally formidable with Apple, Visa, Intel, and Mastercard among the key players revealing their figures. The week will close with earnings from Phillips 66, Colgate-Palmolive, Exxon Mobil, Chevron, and AbbVie on Friday.
Concerns over DeepSeek's AI model have notably spooked investors in the tech sector. DeepSeek's innovation is reportedly more cost-effective and operates on less advanced chips compared to OpenAI's ChatGPT. Nigel Green commented on this shift, stating:
"Deepseek is going to challenge Silicon Valley's leadership, disrupting the global tech landscape and reshaping the direction of the AI arms race," – Nigel Green
While the technology sector grapples with these challenges, Ryanair reports a surprising upside. The airline experienced stronger-than-expected after-tax profits for the December quarter. This was driven by higher fares and robust Christmas and New Year bookings. Ryanair CFO Neil Sorahan shared insights into their performance:
"Disappointed that we're not going to hit the traffic numbers that we would have hoped," – Neil Sorahan
Despite a cautious tone about current traffic numbers, Sorahan remains optimistic about future bookings:
"I'd be optimistic into next year. Bookings are very strong into the summer, although it is just too early to call where they may go," – Neil Sorahan
In Europe, investors await Germany's Ifo business climate survey results set for release on Monday. Simultaneously, market participants are keenly observing upcoming monetary policy decisions from both the European Central Bank and the U.S. Federal Reserve scheduled for Thursday.
As earnings reports unfold throughout the week, LVMH, Shell, ASML, Roche, Deutsche Bank, and Nokia are also expected to contribute to the financial narrative with their earnings announcements later.