Market Commentary: Q2 reporting season is doing well but annual growth has peaked

En bref

As the reporting season is close to 50%, positive surprises are appreciable. Indeed, expectations on quarterly growth were flat providing good positive revisions, given the upgrade of the economy in the last three months.
Market Commentary

Highlights:

  • As the reporting season is close to 50%, positive surprises are appreciable. Indeed, expectations on quarterly growth were flat providing good positive revisions, given the upgrade of the economy in the last three months.
  • Margins are on the rise as capacity utilization is increasing and unit labour costs are still under control.
  • Such positive revisions ultimately increase the fair value of equities more rapidly than expected, with additional support coming from lingering low yields. We see total returns of 6% in 12 months for EMU and 4% for the US.
  • That said, Q2 will represent the peak of the yearly earnings growth in this cycle. This is due to a less positive base effect in the quarters ahead, toppish economic acceleration and confidence indicators in addition to the peak in policy support.
  • For this reason, we maintain a prudent OW in equities, with only a slight OW of EMU vs US and a more defensive sector allocation within Europe.

Download the full publication below

Market Commentary: Q2 reporting season is doing well but annual growth has peaked

Also interesting

Picture

© Generali Investments, tous droits réservés. Ce site internet est publié par Generali Investments et est considéré comme une communication marketing et une promotion financière liée aux produits et services des sociétés du groupe Generali suivantes : Generali Investments Partners S.p.A. Società di gestione del risparmio, Generali Insurance Asset Management S.p.A. Società di gestione del risparmio, Generali Investments Luxembourg S.A. et Generali Investments Holding S.p.A. (ci-après dénommées ensemble Generali Investments). En outre, le site peut contenir des communications de marketing et de promotion financière de produits et services de sociétés faisant partie de la plate-forme Multi-Boutiques coordonnée par Generali Investments Partners S.p.A. Società di gestione del risparmio, et en particulier de Generali Global Infrastructure, Sycomore Asset Management, Aperture Investors LLC, Plenisfer Investments SGR, Lumyna Investments et Generali Real Estate S.p.A. Società di Gestione del Risparmio.