Sunset on Q3 2022 earnings season
The last few weeks were eventful for global equity markets as the world’s largest companies released their financial figures for the third quarter. Overall, results were better than feared even though companies were facing extremely tough year-over-year comparisons amid a deteriorating macroeconomic backdrop. Nonetheless, companies that missed the low projections set by markets were severely punished. In the US, seven out of the 11 sectors of the US economy are on track to post negative earnings growth, with the S&P 500 marking its slowest pace of annual profit growth in two years. What is more concerning, however, is that a growing number of industry leaders are starting to downgrade their future guidance as management teams brace for slowing consumer demand and narrowing margins. Yet, despite this overall poor performance, major US indices are currently trading at higher levels relative to the beginning of the earnings season, with the broad S&P 500 Index having rallied by over 12 per cent since mid-October. This positive market response is most likely attributed to a relief in investor sentiment that the original bearish earnings scenario did not materialise. In addition,...