“The latest US corporate earnings season exceeded expectations across sectors beyond technology. With the US government shutdown now over, markets will refocus on labour and inflation data to gauge the Fed’s likely policy moves.”
- The Q3 US corporate earnings season has boosted market sentiment, but concerns remain over high prices in some sectors.
- Markets now await new macro data as statistical services resume, following the end of the longest US government shutdown on record.
- With US concentration risk remaining high, diversifying into Europe and emerging markets is essential.
For the quarter ended 30 September 2025, over 81% of companies beat earnings expectations led by the information technology, consumer staples, and financial sectors. This is well above the historical average and the second-best since the last quarter of 2021. Along with some other factors, these earnings boosted sentiment in the stocks markets which have continued their ascent this year. Looking ahead, while US consumption may slow in the near term, we believe US stock markets remain very concentrated, with a handful of stocks driving the broader markets. In this context, diversification* beyond the expensive segments could be key. Additionally, the period saw the longest (six weeks) US government shutdown on record, but markets seemed to have taken this in their stride. On the economic front, the resumption of normal statistical services will now allow the Fed to get more evidence on labour markets and consumer prices as per its mandate.
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