Graph of the Week – What can investors expect from Q2 earnings?

As companies start reporting on second-quarter earnings, market expectations range widely. For the tech-heavy US NASDAQ 100 index, earnings are forecast to come in 14% higher than in the same quarter a year ago. The figure is similar for the US Russell 2000 index of small capitalisation stocks. In emerging markets, it is again tech sectors that are expected to show the most robust increases in profits. The outlook is poorer for value indices. For the US Russell 1000 Value, analysts are forecasting lower year-on-year earnings, partly reflecting lower oil prices, though this is not the only factor. The outlook for Europe is similar. Japan is different only insofar as the estimates for a contraction in earnings are not a function of what is happening in the energy sector, but among carmakers.

Important information

Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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