Equity Analysis and News
- Optimismover US earning season could support indices
- S&P 500earnings growth expected to be over 20%.
Technical Analysis on Dow Jones and S&P 500, click here
Earning Season Begins
US earning season is set to officially begin today with 4 large US banks (Citigroup, JP Morgan, Wells Fargo and PNC Financial) due to release their latest financial results for the second quarter. Optimism over the upcoming earning season has provided a helping hand to equity markets, which quickly rebounded from the latest escalation in the US-China trade war saga, whereby the US announced a decision to place tariffs on $200bln worth of Chinese goods.
Today’s Earnings Schedule
|
Company |
Market Cap |
Time of Release |
Expected EPS |
Expected Revenue |
|
PNC Financial (PNC) |
$64bln |
10:35GMT |
$2.58 |
$4.26bln |
|
JP Morgan (JPM) |
$353bln |
10:45GMT |
$2.22 |
$27.36bln |
|
Wells Fargo (WFC) |
$270bln |
12:00GMT |
$1.12 |
$21.71bln |
|
Citi (C) |
$170bln |
12:00GMT |
$1.57 |
$18.49bln |
*Implied volatility is expected to be around 2-3%. In the past 8 quarters, JPM has been down 5/8, C down 6/8, WFC down 7/8.
At the last earning season, US corporate results had reached its best level in over 7 years with earnings growth of 24.8% and revenue gain of 8.7%. This trend is set to continue for this season with S&P 500 earnings growth expected to be above 20% again, given the backdrop of strong economic growth in the US and a boost from the Trump administrations tax overhaul continuing to support US corporate names and boost confidence.
Tech Names Outperform
Since the end of Q1, the NASDAQ 100 had been the best performing US index amid the rally in the tech sector, while the S&P 500 had also been supported by tech names, alongside energy companies, given the surge in oil prices to around 4-year highs. The DJIA however, had only seen a modest gain as the index felt the weight from industrial names in light of trade wars.
US STOCK MARKET PERFORMANCE SINCE Q1
(Created on ProRealTime)
Earnings vs Trade Wars
If indeed US corporate results exceed expectations this could provide a nice distraction for equity traders and continue to buoy major equity markets. However, with trade wars continuing to unnerve investors and placing pressure on appetite for risk, a slew of soft financial results in which company forecasts are dampened by the prospects of a full-scale trade war, could limit demand for stocks, consequently resulting in a pullback in indices.
BACKGROUD ON TRADE WAR
– US China Trade War & a Brief History of Trade Wars – 1900 until Present
RESOURCES FOR FOREX & CFD TRADERS
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— Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.mcqueen@ig.com
Follow Justin on Twitter @JMcQueenFX
