Source: Zhitong Finance

This week, the global financial community will focus on earnings releases from a range of heavyweight companies, including tech giants$Apple (AAPL.US)$,$Microsoft (MSFT.US)$With Samsung Electronics, Japan, a leader in the automotive industry$Toyota Motor (TM.US)$, an oil giant in the energy sector$Exxon Mobil (XOM.US)$und$Shell (SHEL.US)$, and European retail giants$L'Oreal SA Unsponsored ADR (LRLCY.US)$und$adidas AG (ADDYY.US)$. However, as global consumer confidence was hit by factors such as rising interest rates and a weak economy, many companies had to lower their sales and profit expectations for the whole year. This trend overshadowed the highlights of their profit growth in the latest quarter.

Even some well-known companies such as$McDonald's (MCD.US)$, automobile manufacturers$Nissan Motor (ADR) (NSANY.US)$und$Tesla (TSLA.US)$, and a leader in consumer goods$NESTLE S.A SPONS (NSRGY.US)$und$Unilever (UL.US)$Their performance also fell short of investors' expectations. Currently, about 40% of US and European companies have announced financial reports. Although their profit situation is generally in line with expectations, after experiencing a round of strong growth in global stock markets, it is difficult to meet market demand simply by “meeting expectations”.

Brian Mulberry, client portfolio manager at Zacks Investment Management, commented: “Judging from the results already announced, this quarter's performance can be described as mixed. We are beginning to feel the pressure on companies from a long-term high interest rate environment, which affects their ability to continue to drive profitability and revenue growth.” This statement reflects market concerns about the future growth potential of enterprises, as well as close attention to the current macroeconomic environment.

In this context, investors and analysts are eagerly looking for companies that can maintain strong growth in the face of challenges, while also evaluating whether underperforming companies can quickly adjust their strategies to meet changing market conditions. As financial reports from more companies are about to be revealed, the market will have a clearer understanding of the health of the global economy and which industries and companies can lead the next wave of growth.

Global corporate profits are now divided

According to data from the London Stock Exchange, the earnings per share of US companies have increased by nearly 12% over the same period last year, making it the strongest quarter of the past 10 quarters. Bank of America Securities said that European companies' earnings per share increased by 4%, slightly higher than market expectations, and the first time since 2022 that European companies have achieved positive growth.

However, all industries have shown signs of weak consumption, and the guidelines have been lowered more and more. As of Friday, US companies had lowered their year-on-year growth forecast for the third quarter to 7.3% from 8.6% in early July, according to data from the London Stock Exchange.

Bank of America analysts said in a research report: “Despite the overall good results in the second quarter, signs of consumer pressure this quarter still frightened the market.”

Both Nestlé and Unilever reported lower-than-expected sales growth in the first half of the year. Businesses in the two largest economies in the Eurozone are becoming increasingly pessimistic, raising concerns about the weak recovery in the Eurozone.

Nestle CEO Mark Schneider said in a telephone interview with reporters: “Consumers pursue value behavior. There's pressure, especially among low-income people.”

In addition, automobile companies are also facing difficulties in the US, which are harmed by high inventories and logistics problems$Ford Motor (F.US)$,$Stellantis NV (STLA.US)$As well as Nissan's profit. Meanwhile, investors have been disappointed by the performance of electric vehicle leader Tesla, many still believe the company is overvalued, and electric vehicle sales are slowing down.

Electric vehicle battery company LG Energy Solution supplies batteries for Tesla and Hyundai. The company's revenue is expected to drop by more than 20% this year as global demand for electric vehicles slows more than expected. Its bigger rival is China's$Contemporary Amperex Technology (300750.SZ)$, announced a 13% drop in revenue for the second quarter.

Although earnings news isn't all bad news, the increase in cloud computing revenue for Google parent company Alphabet bodes well for other tech leaders later this week. The performance of industrial group 3M (MMM.US) brought its stock price close to the highest point in two years, while automobile manufacturer GM and pharmaceutical giant Johnson & Johnson announced strong profits. Bank giant J.P. Morgan Chase said its profits reached record highs.

Asian chipmakers are becoming more optimistic about demand prospects as they benefit from the global artificial intelligence boom, which has helped them withstand the gradual decline in demand for electronic products due to the pandemic.$Taiwan Semiconductor (TSM.US)$Chairman and CEO Wei Zhejia said at the earnings conference: “Artificial intelligence is very popular; now everyone, all my customers, want to incorporate AI capabilities into their devices.” TSMC's stock price has risen 56% since 2024.

Despite optimistic forecasts, the stock prices of major Asian chipmakers are still under pressure, making it difficult to keep up with rising expectations. Artificial intelligence leaders$NVIDIA (NVDA.US)$This is also reflected in the performance of, with its market capitalization soaring above $3 trillion earlier this year and then falling back in the summer.

Lee Min-hee, an analyst at BNK Investment & Securities, said, “Investors' expectations are too high and may be difficult to satisfy, and the stock price may not rise much in the short term.”

summed

The broad MSCI International Index has risen 11% so far this year, peaking at the beginning of this month and then being sold off, partly because investors expect the Federal Reserve to start cutting interest rates after other central banks take similar steps. Cherry Lane Investments partner Rick Meckler said, “If future interest rate cuts are still common, analysts are unlikely to lower the overall profit forecast for next year.”

In summary, despite the strong performance of some companies, uncertainty in the global economy and declining consumer confidence have made investors cautious about the company's future profit prospects.

Editor/jayden