Don’t pin your hopes for inventory markets within the U.S. and Europe on first-quarter earnings updates.
That’s the message from London & Capital’s Roger Jones, who argues that now’s now not the time to load up on probability resources. As investors prepare to shift their focus from macroeconomic drivers to earnings reports, they would possibly maybe well additionally create neatly to temper their expectations, he says. His plight counters that of steadfast
bulls who negate earnings momentum will inspire underpin equity markets going forward.
“I create now not specialize within the important-quarter numbers are going to be titanic in opposition to expectations –- that are reasonably excessive,” Jones, head of equities on the wealth and asset supervisor, acknowledged in emailed comments. “We’ve had climate-affected first quarters in Europe and the U.S. There is a probability that in desire to turning markets spherical, this would possibly maybe well pour fuel on the fire.”
In Europe, the reporting season will kick off amid a marked slowdown in economic boost momentum, which has clouded the outlook for the plight’s shares and threatens to curtail the rally in cyclical shares. A Citigroup Inc. gauge measuring economic surprises within the U.S. has also retreated in April, though it’s restful in distinct territory, now not prefer it’s
In the intervening time, equities in both areas receive been struggling to create up the losses incurred since a sizable selloff began in leisurely January. Escalating replace tensions between the U.S. and China receive further dented sentiment, though the worst fears of a paunchy-blown replace battle receive subsided in most modern days.
“It does now not feel just like the time to be transferring up the probability scale – last with stable, resilient companies with correct earnings and excessive visibility is largely the most prudent route of motion,” Jones acknowledged.