Macroeconomic Update – Weekly Outlook (July 23 – 27)
It is expected from the markets to follow the results from the quarterly reports.
– This week, one-third of the companies from the S&P500 is expected to report results.
Some assumptions should be considered:
- Results should be strong
- led by the energy sector with a 20% growth with sales representing 8%
- Oil companies, due to increase in oil prices, add almost 3 points of inter-annual growth
- Industrials and technology should be solid too, with an estimated growth of over 20% and 30% respectively
- Even though results themselves are strong, the impact of the tax reform will prolong this strength two quarters more until next year, when results will start to normalize.
- Even at a global level, it will not be as high, in Europe, results will grow by 7.5% and in Emerging Markets by 15%.
- In Europe, even though results were downgraded by 2%, the effect of a strong US Dollar can generate some surprise.
Thus, hopefully this will put trade wars in the background. Although, it is hard with what measure Tump will come up it is forecasted to reach an agreement before November.
- Also, the measure taken by Trump to start using the oil reserves will lower oil prices that will reduce inflation concerns, creating a positive impact
Hence, recommendation for the week and summer period, with the Eurostoxx trading in a range of 400 points it will be key to pay attention during the next weeks in case the index approached the bottom of this range when it will create some investing opportunity.