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US Q2 earnings
With the Greek crisis and the Chinese stock markets’ collapse being pushed down the pecking order of financial news headlines, the 'news' that should traditionally take center stage at this time of year is the US Q2 earnings. Over the coming weeks, key corporate representatives in America will share Q2 results and, more importantly, visibility of their respective businesses into the second half of the year. For the year to date, markets have on the whole been disappointed that the benefits of a ‘fuel tax cut’ have not funneled through to an increase in consumer expenditure, the mainstay of GDP growth for the US economy. According to FactSet Research System, an independent US research house, Q2 2015, year-on-year earnings for the S&P500 are projected to decline by 4.5%. Furthermore, they have reported that 80 companies have issued negative EPS revisions, with only 27 companies issuing positive guidance going into their quarterly reports. With the current forward PER for the S&P500 at 16.5x, versus a historical five-year average of 13.9x, any disappointment in guidance or earning reports may send stocks the wrong way. For example, when Advance Micro Devices warned and lowered guidance for their Q2 numbers due to a slow PC market environment. Tonight, key companies reporting in the US will include Wells Fargo & Co, JP Morgan Chase and Johnson and Johnson, just to name a few. Watch this space.
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