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On Wall Street it is time for earnings season: starting today with US banks

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The earnings season begins today with the quarterly reports of the major US banks. Citigroup, JP Morgan and Wells Fargo will be among the first to publish their accounts today.

“We think earnings growth will be strong and better than expected in most sectors – and a necessary antidote to recent market volatility. We expect earnings growth of more than 20% in the US over last year and 50% in Europe, led by a 200% surge in the UK. Growth will be driven by cyclical sectors such as commodities and industrials. If anything, these earnings forecasts may be too low. Economic growth is accelerating and we have seen some stabilization of corporate cost pressures, “said Ben Laidler, eToro’s global markets strategist, commenting on the imminent start of the US earnings season.

Laidler also points out that US banks’ results may look messy, but underlying trends are set to be strong, underpinning the recent outperformance in stock prices. JP Morgan and Citibank are likely to see a decline in earnings, while Bank of America and Wells Fargo will see large increases. “This reflects – continues the expert – the different rates of reversal of loan losses and the presence in the expanding capital markets. More important, on the other hand, will be the common evidence of a strengthening of loan growth and greater profitability, with economies in recovery and bond yields on the rise “.

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