LIVE MARKETS-Earnings in full swing, watching the guidance
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EARNINGS IN FULL SWING, WATCHING THE GUIDANCE
Earnings season is now in full swing and while Q1 reporting has so far been ok, companies are in a gloomy mood on future prospects due to the uncertainty around U.S. tariff policy.
According to Barclays, with almost 25% of reporting already done, EPS beats have been running above average in both the U.S. and Europe.
"Cyclicals have started the season well in Europe, delivering the bulk of the earnings beats," Barclays says.
Yet the guidance paints a different picture, with uncertainty high around the impact of tariffs.
"Arguably, earnings guidance this time round is the most important it’s been since the pandemic, given the uncertain backdrop," says Rory Dowie, a portfolio manager at Marlborough.
"We expect companies that are able to reiterate or upgrade their full-year earnings guidance to be rewarded by the market, particularly given that full-year earnings expectations remain elevated."
Most firms, according to Barclays, have so far stuck to guidance, albeit citing low visibility, or cut considerably.
Next week is the busiest in Europe for this reporting season, with results from banks (Deutsche Bank, HSBC, BBVA, Soc Gen among others), energy (BP, Shell, Repsol) and healthcare (Novartis, AstraZeneca).
Except for banks, the other sectors have underperformed notably in the past month, Barclays notes, so better than forecast results could potentially lead to a bounce. For banks, it may be more difficult.
"Banks have recovered some of the post liberation day losses recently and their EPS momentum has been largely resilient so far," Barclays adds.
"So the bar to clear may be higher for the sector."
(Samuel Indyk)
FOR FRIDAY'S OTHER LIVE MARKETS POSTS
WHERE IS EUROPEAN EQUITIES' OUTPERFORMANCE AS INFLOWS POUR IN? CLICK HERE
ALL ABOARD THE YEN TRAIN CLICK HERE
STOXX RISES ON EASING TRADE TENSIONS, Q1 RESULTS MIXED CLICK HERE
EUROPE BEFORE THE BELL: FUTURES TICK UP AS TRADERS EYE EASING US-CHINE TENSIONS CLICK HERE
FOCUS ON EARNINGS WHILE US AND CHINA QUIBBLE CLICK HERE
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