Shipping containers, Port of Singapore

Current earnings season results show that earnings growth is the strongest in years, reports Bloomberg. The numbers paint a reassuring picture amid mixed messages coming from economic data.

Reason for optimism

  • S&P 500 on pace for 16.5% growth in earnings per share for first quarter, versus estimates of 9.1%
  • European earnings expected to rise 14%
  • All major regions are projected to post earnings growth in 2017, the first time since 2010, according to Citi strategists
  • 69% of European companies and more than 70% of S&P 500 firms have beaten earnings per-share estimates
  • S&P 500 index earnings per share growth forecast at 12.3% in 2017, and 10.8% in 2018
  • “If we look at what the companies are saying, the evidence of recovery is there for all to see”: Bank of America Merrill Lynch strategists
  • Strong earnings growth for financials suggests the reflation trade still has life: Jean Boivin of BlackRock

Commodity worries

  • Slumping oil prices have raised concerns as higher prices have been central to strong earnings
  • Higher oil prices remain a necessary condition for a synchronized global recovery
  • Fading growth momentum in China will be a critical determinant of commodity prices
  • Prospects for tightening credit in China have surpassed Europe as key concern for investors: Bank of America Merrill Lynch