US earnings season in full swing

US earnings season in full swing
US earnings season in full swing
Share post:


US earnings season showing strong figures particularly for banks

The US earnings season is back in full swing, with companies presenting figures for Q3 of 2018. The first results are promising, particularly in the banking sector, where things are going well thanks to higher US interest rates, the US tax reform, and a healthy economy. JPMorgan, Citigroup, and Wells Fargo each reported profits in the billions for Q3, with growth rates of 12 to 33 per cent compared with the same quarter of the previous year. Morgan Stanley and Goldman Sachs also reported billion-dollar profits, exceeding analysts’ expectations.

Technology shares have presented a mixed picture so far, but the results of several major industry players such as Apple, Amazon, and Google parent Alphabet are still pending. While Netflix was able to acquire nearly seven million new users in the last quarter alone, increasing its revenue by around a third, tech giant IBM’s figures disappointed with both lower revenue and profits.

In the healthcare sector, the full-year forecasts showed promise above all. US health insurance company UnitedHealth raised its profit forecast for the fourth time this year. US pharmaceutical and consumer goods group Johnson & Johnson (J&J) also raised its annual targets following an unexpectedly strong increase in earnings in the third quarter.

Robust economy generates profits

One reason for the largely promising figures and the continuing optimism is the strong US economy, which again saw a fair increase in the second quarter. According to data from the Washington Department of Commerce, the world’s largest economy grew by a projected 4.2 per cent year-on-year between April and June, marking the strongest growth since Q3 of 2014, i. e. in the last four years.

The sentiment in the manufacturing sector also remains positive. The purchasing managers’ index, provided by the Institute for Supply Management (ISM), stood at 59.8 points in September, remaining clearly above the growth threshold of 50 points. However, this also constitutes a significant retrace from August, where the barometer stood at 61.3 units. The ISM index, an important lead indicator for economic activity in the USA, is derived by polling US corporate managers.

The data currently still paints a robust picture, but corporate concerns about an economic downturn are increasing further. While the risk factors are primarily geopolitical, all eyes also remain firmly on the international trade wars. One of JPMorgan CEO Jamie Dimon’s major concerns is inflation: having dropped to 2.4 per cent year-on-year in September – from 2.7 per cent in August – it still lies well above the target of around two per cent set by the US Federal Reserve.


Forecasts are not a reliable indicator for future developments.



Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH.Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version.Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the web site within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the web site A summary of investor rights is available in German and English on the website as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to § 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.