Good earnings ease growth worries

10/15/2021 | 05:44am

Good quarterly results from Taiwan Semiconductor Manufacturing Company and US banks calmed investor worries about slowing growth. This led to a large rebound yesterday. The FTSE 100, up 0.2% this morning.

Earnings season is going well so far, and analysts are starting to issue forecasts. According to Liberum “In Europe, where growth concerns have intensified due to the energy shortages, analysts picture a less optimistic outlook for cyclical companies and forecast higher earnings for defensive sectors.” Over the last three months, only six out of 18 sectors have seen net upgrades in analyst expectations, “mostly sectors that are exposed to the normalisation of travel and leisure.”

Source: Liberum

However, some obstacles to global growth are still present: oil continues its assent, with Brent crude futures reaching $84 a barrel, while supply chain disruptions and labour shortages threaten Christmas trade.

Oil and banking shares are still the best performing stocks. Global education group Pearson tumbled 9.2% after it said that the pandemic and labour shortages had hit enrolments at U.S. community colleges.

 

Things to read:

Shortage nation: why the UK is braced for a grim Christmas (Financial Times)

What Bank Earnings From JPMorgan, Bank of America Tell Us About the U.S. Economy (WSJ)

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