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For Immediate Release
Chicago, IL – January 14, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Amazon AMZN, NatWest Group NWG and Tencent TCEHY.
Here are highlights from Monday’s Analyst Blog:
Global Week Ahead: Q4 Earnings Season Kicks Off
Zacks Equity Strategist Shaun Pruitt here, filling in for John Blank.
Markets will be put to the test this week amid recent volatility, as big banks kick off the heart of the Q4 earnings season on Wall Street.
Meanwhile, key inflation data from the U.K. and U.S. will be on tap, along with China’s growth numbers and the launch of several European IPOs.
Next are Reuters’ five world market themes, reordered for equity traders:
1. Inflationary Jitters Resurge
U.S. inflation data will provide a major test for the recent run-up in Treasury yields and investors’ tempered expectations for Fed rate cuts this year.
The December Consumer Price Index (CPI), due on Wednesday, is expected to show a 0.3% monthly rise, according to a Reuters poll, following a similar rise in the CPI in the prior month.
For investors, the pace of inflation is one of the main risk factors. At its December meeting, the Fed projected only two rate cuts this year as it braced for higher inflation than it had previously estimated. Market expectations are baking in about 40 basis points (bps) of easing in 2025.
A hot inflation number could further lift Treasury yields, whose swift ascent in recent weeks has rattled asset prices.
2. Big Banks Kickoff Q4 Earnings
Robust investment banking fees, strong trading income and easing pressure to boost deposit rates should make for a happy earnings season for U.S. banks.
Higher deal volumes and strong underwriting of bonds have helped lift revenues from investment banking fees in Q4 by 26% year-on-year, Dealogic data shows. Trading revenues hit record volumes of $224.6 billion last year, according to research firm Coalition Greenwich.
Much scrutiny will be on the outlook for net interest income (NII) — the difference between what banks earn from loans and what they pay for deposits.
3. Monitoring Stagflation in the U.K.
Britain’s economy is stagnating while inflation has rebounded to an eight-month high, putting the Bank of England in a bind.
As if that’s not enough, British gilts are firmly in the crosshairs amid a global bond squeeze. With the pound sinking and 30-year bond yields at their highest levels in more than a quarter of a century, finance minister Rachel Reeves faces her first major test, potentially forcing her to cut future spending.
Traders expect British interest rates to drop from 4.75% to 4.25% this year, but consumer price data on Jan. 15 will show whether the Labour government’s public sector pay rises and tax hikes on employers have made the risks of monetary easing unbearable.
Unless inflation moderates, the chances of the BoE becoming paralyzed by uncertainty look set to rise.
4. European IPO Market Heats Up
Companies in Europe are gearing up to go public.
Spanish travel technology group HBX Group, whose brands include Hotelbeds, is eyeing a 1 billion euro ($1.03 billion) offering in the coming week. German drug manufacturer Stada — potentially valued at 10 billion euros — and fast fashion retailer Shein are among those expected to follow suit in the first half of the year.
Prospects for European issuers have turned fairer as Deutsche Bank and Citigroup analysts turn bullish on European stocks for 2025.
Last year was a mixed bag: 101 European company IPOs raised $19.3 billion — 18% more than in 2023. But that is seven fewer transactions than in the previous year, LSEG data shows.
5. China’s Growth Offset by Tariff Concerns
Jan. 17 is expected to confirm that China’s stimulus-fueled fight against deflationary forces allowed it to achieve its 5% growth target for 2024.
But there is no time to celebrate, with a much bigger battle looming, and Beijing is already erecting defenses. Donald Trump’s return to the White House on Jan. 20 could mean a threat of 60% tariffs on Chinese imports becoming a reality.
The People’s Bank of China (PBoC) announced the sale of an unprecedented 60 billion yuan ($8.18 billion) worth of six-month yuan bills in Hong Kong. That will drain liquidity to protect the currency just ahead of Trump’s inauguration, although gaping yield differentials with the U.S. will keep pressure on the currency — already at 16-month lows.
Top Rank #1 (Strong Buy) Stocks
(1) Amazon: This is a $218 stock in the Internet-Commerce industry. The market cap is $2.3 trillion. I see a Zacks Value score of D, a Zacks Growth score of B and a Zacks Momentum score of A.
Coming off of what it said was a record Black Friday in November, Amazon is attractive as we move past the holiday season. As one the largest e-commerce providers, Amazon’s operations have continued to spread across the globe.
Amazon’s online retail business revolves around the Prime program, well-supported by the company’s massive distribution network. Further, the Whole Foods Market acquisition helped Amazon establish a footprint in the physical grocery supermarket space.
Amazon also enjoys a dominant position in the cloud-computing market, particularly in the Infrastructure as a Service (IaaS) space, thanks to Amazon Web Services (AWS).
(2) NatWest Group:This is a $9 stock in the Banks-Foreign Industry, with a market cap of 37.16B. I see a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of A.
Considering the risk to reward, NatWest Group looks attractive as a banking and financial services company. NatWest provides personal and business banking, consumer loans, asset and invoice finances, commercial and residential mortgages, credit cards and financial planning services, as well as life, personal and income protection insurance.
Formerly known as The Royal Bank of Scotland Group plc, NatWest is based in Edinburgh in the United Kingdom.
(3) Tencent: This is a $47 share price stock, operating in the Internet-Services industry, with a market cap of $432.1B. I see a Zacks Value score of D, a Zacks Growth score of F and a Zacks Momentum score of A.
Regarding Chinese stocks that may be in store for a continued rebound at some point, Tencent Holdings Limited is appealing as an Internet service portal provider. Tencent provides value-added Internet, mobile and telecom services and online advertising.
Tencent’s leading Internet platforms in China are QQ Instant Messenger, QQ.com, QQ Games, Qzone, 3g.QQ.com, SoSo, PaiPai and Tenpay.
Furthermore, Tencent has brought together China’s largest Internet community, to meet the various needs of Internet users including communication, information, entertainment, e-commerce and others. Tencent is headquartered in Shenzhen, China.
Key Global Macro Indicators and Events
On Monday: U.S. Federal budget is expected to reflect a deficit of -$75 billion from previous levels of -$129 billion.
On Tuesday: Producer Price Index (PPI) numbers come in along with core PPI and speeches from the Kansas City and New York City Fed Presidents.
On Wednesday: Consumer Price Index (CPI) data and Core CPI is due along with speeches from several Fed Presidents (Richmond, Chicago, New York).
On Thursday: Initial Jobless Claims, U.S. Retail Sales, Import Price Index and Homebuilder Confidence Index data are on tap.
On Friday: The market gets more home builder data including Housing Starts and Building Permits along with industrial production numbers and capacity utilization.
Conclusion
Let’s conclude with some key points from Zacks Research Director Sheraz Mian as the Q4 earnings season heats up.
1, The Q4 earnings season will take center stage with the bank results this week. However, the reporting cycle has actually gotten underway, with results from 22 S&P 500 index members.
2. These 22 index members, including bellwether operators such as FedEx, Nike, Oracle, and others, have reported results for their fiscal quarters ending in November. We and other data aggregators count these fiscal November-quarter results as part of the December-quarter tally.
3. This week brings Q4 results from 18 S&P 500 members, which, in addition to the aforementioned big banks, include UnitedHealthcare, Schlumberger, Fastenal and others.
4. Total earnings for the 22 index members that have reported results are up +22% from the same period last year on +5.5% higher revenues, with 72.7% beating EPS estimates and 68.2% beating revenue estimates.
Have a great week, trading and investing!
Kind Regards,
Shaun Pruitt
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