Global market sentiments soar on upbeat earnings

Investors see positive streak continuing for global stocks markets

With most markets rallying worldwide, investors and analysts see the current positive momentum continuing for global stocks in the weeks to come.

In the US, stocks ended the week up, with the S&P 500 returning 1.4 per cent. The returns were broadly seen across almost every sector — and a similar pattern was seen in most markets elsewhere. Analysts expect corporate earnings to be the major focus for investors in the week ahead, as they evaluate whether rising costs are squeezing margins and signalling a build in inflationary pressures.

Earnings in focus

This upcoming week sees a diverse array of earnings including Netflix, Coca-Cola, IBM and Johnson & Johnson. Moreover, existing home sales in the top economy will be announced on Thursday, and new home sales are announced Friday.

So far, with one week of a busy quarterly company earnings in, companies are beating earnings estimates by a wide margin of more than 84 per cent. Earnings growth for the S&P 500 is 30 per cent, based on actual reports and estimates, making it the best quarter since the third quarter of 2010.

Companies are finding new ways to cut costs, so when revenues come back, analysts view margins soaring in the shortterm. This implies that some of the Covid-related costs will come down, making it one of the main positive catalyst for earnings this time around.

Inflation, margin pressures

While investors are not only closely eyeing how margin-related commentary from companies can impact individual stocks, but also for what they broadly say about inflation seeping into the economy.

Major US banks, like JPMorgan Chase, Goldman Sachs and Bank of America reported better than expected profits in the past week.