Stock Takes: Companies cutting jobs as Covid craze wears off

Disney announced it's laying off thousands of staff. Photo / 123RF

Investors have spurred a rally across stock markets this year, bringing a glow back to some growth stocks, but companies are cutting jobs amid what could be a hard economic landing.

Fisher Funds portfolio manager Harry Smith said the United States company earnings season revealed large-scale job cuts.

Technology companies were being forced to lay off the staff hired during the pandemic boom, he told the Herald’s Stock Takes podcast.

“Amazon, Meta, Google, some of those companies have completely ramped up the number of people they hired, sometimes by 50 per cent or even more. It seems now they’re just taking some off the top.”

More meaningfully, companies beyond the technology industry were bleeding jobs too.

“Disney came out and said they’re going to cut 7000 jobs and Goldman Sachs said they’re going to cut 3200.

“These companies are coming out and cutting around 5 to 6 per cent of their workforce. Companies are coming out and being a bit more cautious.”

Those redundancies had not flowed through to US employment data yet, he said.

The US Federal Reserve continued to hike interest rates this year, however, investors did not seem as perturbed as last year, with most stock market indices in the US up 14 per cent from October lows.

Smith said there was opportunity still to be had in growth stocks, specifically tech stocks like Meta, the owner of Facebook, which was up by 38 per cent year to date.

“You’ve just got to be a bit more selective about where you’re hunting for those growth opportunities.”

The year was already featuring geopolitical tensions, with spy balloons adding to US-China tensions.

Smith said it was difficult to assess the impact it would have on equity markets, but so far it had not changed any of Fisher Fund’s investment strategies.

“If we go back to the Trump years with the trade war with China, well markets actually did alright through that.”

The possible invasion of Taiwan was a larger, looming issue, he said.

“That is something we do really take quite seriously.”

Listen to the full podcast for more from Harry on the month in markets here and around the world.

Stock Takes is available on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts. New episodes come out every Wednesday and are brought to you with support from Fisher Funds.