What do first quarter earnings tell us about global equity markets?

In this week’s video update:

  • What do first quarter earnings tell us about global equities?
  • Does the French presidential win by Macron create more eurozone upside?
  • What’s the outlook for a June rate increase by the U.S. Federal Reserve?

Senior Quantitative Investment Strategy Analyst Kara Ng said that U.S. earnings are good, but Europe, Japan and emerging markets earnings are even better.

On this week’s episode of Market Week in Review, Ng was joined by Rob Cittadini, regional director, consultant relations. Ng stated that U.S. earnings were better than expected, primarily driven by a stable energy sector.

Looking at Japan and Europe, Ng noted that earnings there are tracking significantly higher, reinforcing Russell Investments strategists’ view that there are better equity opportunities outside the U.S.

What does a Macron win mean for European markets?

Speaking of outside the U.S., the immediate market impact of the French presidential election seems negligible, primarily because a win for Emmanuel Macron appeared so likely that it was already priced in. However, Ng explained that the win from Macron eliminated the biggest source of eurozone political risk in 2016. According to Ng, this, combined with strong fundamentals, could unlock some upside potential for European equities.

Ng and Cittadini concluded the episode with a look at some U.S. economic data. Ng pointed out that results from the U.S. Federal Reserve Senior Loan Officer Survey indicated a deterioration in loan demand for two consecutive quarters. Retail sales numbers rebounded in April, but was still below consensus projections. In conjunction, Consumer Price Index inflation was also weak for a second month in a row. Ng mentioned that the combination of these numbers still points toward a June rate increase by the U.S. Federal Reserve, but that slower, more gradual ongoing increases seems likely.

Watch the video now.