With 89% of companies having so far reported quarterly earnings in the US and 77% in Europe, second quarter earnings are down around 9% year-on-year (yoy) in the US, but have come in a lot better than expected – a sign that consensus expectations were very conservative.
The second quarter reporting season is once again showing marked differences between a much stronger-than-expected US earnings season and that of European companies. As mentioned previously, this is a good reminder that sector composition matters when assessing the prospects for regional equity markets.
This earnings season is showing that markets are far from efficient in forecasting growth prospects. Amid our more constructive macro view, we maintain our overweight equities and our regional and sector views are unchanged, with holdings in the information technology and healthcare sectors amongst others, and, regionally, a greater exposure to US equities and emerging market equities over their European and Japanese counterparts.
Q2 EPS Summary
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