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Markets rallied modestly last week. The MSCI World Index gained 0.52% while the S&P 500 gained 0.46%.
Earnings Season
With most companies having reported, earnings season is drawing to a close.
US
Net positive earnings and revenues surprises. Disproportionate weakness in sales coming from the telecom and basic materials (chemicals) sectors, with the latter missing on both sales and earnings. Strongest performers were utilities (3.04%) on sales and oil & gas on earnings (13.94%).
Germany
Germany was showing net strength out of sales (0.82%) and earnings (2.74%). Worth noting that most companies have missed earnings expectations. There was an outlier coming out of consumer good that pulled the rest of the index up.
France
France has mostly reported this season (36/39). Strong weaknesses in sales (-7.79%) but earnings surprised (7.40%). Oddly, there was weakness coming out of the Oil & Gas sector (Revenues = -24.68%; Earnings = -14.18%). That weakness came primarily from the oil producer, Total.
UK
Continuing degradation is coming out of the UK. The country is continuing to report (27/43). Those that have are showing net weakness in sales (-1.02%) and earnings (-10.25%). Strength showing in consumer services in both sales (0.93%) and earnings (48.76%). Oddly, gains have been in the travel and leisure sectors.
Japan
Mostly completed reporting (222/225). Sales are showing -0.23% surprises while the earnings surprises net (4.91%). Much lower surprises than longer term reports. Strength came out of the Oil and Gas sector (3/3), with gains in sales (2.39%) and earnings (192.12%). This was in line with the broader sector recovery across the globe.
Brazil
Strong positive sales surprises (3.27%) while earnings disappointed (-1.10%). Weakness coming out of the financial sector (12/16 reported) on rev (-2.44%) and earnings (-29.9%). Basic materials (6/8 reported) showing weakness on sales (-2.86%) but really strong earnings (55.93%). Brazil, unsurprisingly as an emerging market is showing higher volatility. Compared to recent quarters, the country on the whole is showing stronger sales with earnings in line.
India
India showed strong surprises in sales (10.90%) and earnings (9.10%). Strong earnings out of the banking sector, led by the State Bank of India which showed positive surprises in sales (90.96%) and in earnings (57.99%). It is worth noting that this has been an uncharacteristically strong period for the SENSEX Index so there is a greater risk of chasing returns.
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