Investors have cause for optimism
A big splurge in spending in China after Beijing lifted COVID-19 lockdowns will help cushion quarterly results of the world’s biggest companies, investors say, even as forecasts suggest the United States and Europe are heading into a corporate recession.
In the United States, where major banks have already reported first-quarter results, earnings for S&P 500 companies are seen falling 4.7% in the quarter, an improvement from an expected 5.2% drop seen earlier in April. Barclays’ European Equity Strategy Emmanuel Cau said there are signs that inflation is easing and the bulk of interest rate rises is done, but that markets are “still very defensive.”Euro zone producer prices fell for a fifth consecutive month in February, and surveys on Thursday showed the bloc’s economic recovery unexpectedly gathered pace this month.Fears of a major bank crisis have eased after U.S.
European financials are expected to report first-quarter earnings growth of 31%, according to Refinitiv.But investors are also watching for signs that tightening credit conditions are having an impact, with major consumer products companies Nestle, Durex-maker Reckitt and Unilever reporting results this week.
Margins may start falling, however, as it will be difficult for many companies to continue passing higher costs on to consumers, Ekolo said.
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