Earnings and Macro data to drive financial markets the week ahead

24 October, 2016

A pretty robust U.S. corporate announcements last week indicated that there’s a high chance for corporate America to get out of a profit recession which lasted for five consecutive quarters. According to factset, 78% of S&P 500 companies reported earnings that beat on the bottom-line and 65% beat on the top-line.

Upside earnings surprises is way above the historic average of 66%, which could be interpreted as good news for the overstretched equities valuations, however earning guidance is not showing the same trend with 10 out of 17 S&P 500 companies issuing a negative EPS guidance so far.

Another worrying signal is the level of cash sitting on the sidelines now. According to Blackrock, $50 trillion of worldwide holdings are in cash now, showing that many investors are concerned about the markets next move whether it’s in equities or fixed income.

The week ahead is very busy on the corporate front with more than third of S&P 500 companies reporting results. Many investors would like to know how many Iphones apple sold in the third quarter, while others are more interested in the Energy sector which was the main drag on earnings with companies such as Exxon Mobil and Chevron. General Motors, Alphabet, Caterpillar, P&G, Mylan, MasterCard, and Hershey are only a few among those reporting next week, so lot of data to digest.

On the macro front, third quarter GDP figures from UK and the US will be closely monitored by investors.

On Thursday, UK will offer a first glimpse into the performance of the economy after voting to leave the European Union. The flash Q3 GDP data is forecasted to show 0.3% growth compared to last year, less than half of second quarter’s 0.7%. Albeit growth is slowing, the immediate impact of the Brexit vote on the economy is far less than what had been expected, but this is likely to change if the divorce negotiations went the hard way, were a recession will be very hard to escape.

In the U.S. we’re looking for an opposite scenario, were economic activity likely picked up after a disappointing first half of 2016. Markets are looking for a 2.5% economic growth in Q3 from a 1.4% in Q2. Any figure below 2% will likely kill the idea of Fed raising rates in December, and thus pull back the dollar from its seven-month high. 

Source link  
Powell gives green light to interest rate cut

The S&P 500 reached a new milestone high on Wednesday breaking above 3000 for the first time ever as Fed Chair Jerome Powell...

Powell primes markets for July Fed rate cut

Fed chair Jerome Powell's latest dovish comments have removed market doubts over a US interest rate cut in July. Such signals have translated into...

Euro barely blinks on election results

The Euro has opened the new trading week marginally higher against the Greenback following initial results from the Parliamentary elections in Europe...

More bad news for Sterling as EURGBP

Backlash - that would be the word used to sum up the investor reaction from the latest attempt by UK Prime Minister Theresa May to push forward her...

EURJPY sinks to flash crash levels

A wave of risk aversion engulfed global equity and foreign exchange markets on Thursday after Donald Trump accused China of breaking...

US corporate earnings to drive global stock markets

Asian stocks, excluding Japan, are mixed on Monday, even after US stocks posted new record highs following the United States GDP report released at...

Mixed US corporate earnings reaction

Asian equities fluctuated mostly into the red on Friday, following the trend seen in their US counterparts on Thursday. As the latest US corporate earnings...

Brexit stalemate deepens

The drama, confusion and sheer uncertainty over Brexit intensified yesterday evening, after British MPs rejected all eight options aimed at...

Brexit chaos deepens

The British Pound fell yesterday afternoon, after the House of Commons Speaker John Bercow essentially banned Theresa May's Brexit deal from getting a third vote.


Share it on:   or