The Q2 earnings season was again stronger than expected and contributed to the equity market rally up to mid-August. However, the results are of ‘low quality’ and are not a reason to turn bullish on equities. Ultimately, margins coming down from very high levels should drive the earnings downturn in our view.
The earnings season was positive once again; Q2 YoY earnings growth was +8.5% in the US on the S&P 500, and +29.8% in Europe on the Stoxx 600, based on Refinitiv figures as of 30 August. These are lower numbers than in Q1 (+11.4% in the United States and +42.1% in Europe), but are still excellent results and ahead of consensus expectations. As a first remark, it is worth noting that figures are stronger in Europe than the US, which has to be understood as Europe lagging the United States in the economic slowdown rather than being more resilient to it.
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