Q2 earnings end above consensus, with the US leading. Expect better growth ahead

Compared to our latest – positive – comment on the 20th of July, the yearly earnings growth of the median
sector has improved both in the US and Japan, while the picture is less clear in Europe.

  • Market Commentary

Highlights:

  • The Q2 reporting season has contributed to sustain equity momentum and next earnings
    development should continue to do so.
  • Surprises and growth for Q2 look better than feared and we notice an improvement in earnings since our last update in late July. Instead, sales have worsened.
  • The US maintains leadership and the appreciating trade-weighted euro along with oil price trend should add to the positive S&P 500 earnings momentum.
  • In the next quarters numbers should improve thanks to the policy action and continuing recovery.
  • While it will be a bumpy road, earnings development should be enough to sustain positive returns ahead and a rotation towards the value-cyclical names and sectors.
  • Among risks we consider: higher-than-expected Covid infections, Hard Brexit, US election with a
    blue wave as a threat to IT, energy, pharma and tobacco sectors, in particular.

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