Geopolitical concerns have been dominating the headlines lately,
distracting investors from the overall favorable picture emerging
from Q2 earnings season. Early sentiment today is pointing towards
a positive open, building on the favorable momentum from Friday, on
hopes of easing tensions with Russia. But nothing concrete has
taken place yet and stocks remain vulnerable to negative headlines
The stand-off over Ukraine represents the bigger geopolitical
risk to global markets given the potential impact that any
escalation could have on Europe's economic outlook. The region's
economic recovery has become a lot more fragile lately, with Italy
back in a recession, France essentially stagnant and even Germany
losing momentum. The export-centric German economy appears
particularly vulnerable to the sanctions war with Russia since
roughly 30% of the European Union exports to Russia coming from the
country. That's why German stocks have been hit the hardest of all
major regional markets in the ongoing turmoil.
On the earnings front, we are steadily moving towards the finish
line in the Q2 earnings season, with results mostly from retailers
awaited at this stage. The
updated Q2 scorecard
, including this morning's Priceline (
) release, that we now have results from 454 S&P 500 members
that combined account for 92.8% of the index's total market
capitalization. Total earnings for these companies are up +8.8%
from the same period last year on +4.6% higher revenues, with 66%
beating EPS estimates and 61.2% coming out with positive revenue
As we have been stating repeatedly here since the start of this
reporting cycle, this is the best performance that we have seen in
more than year. This is having an effect on estimates for the
current period as well, which aren't coming down as much as would
be the case in other recent reporting cycles.
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