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Macroeconomic & Geopolitical

Weekly Update April 5, 2019

5 April 2019 - 5 min read

1Q earnings decline, worries on global services growth and the next leg of the Brexit saga.

Overview

1Q Earnings: FactSet’s Earnings Insights are estimating a -3.9% Y/Y decline in S&P 500 EPS for 1Q19, based on a bottom-up aggregation. This compares to expectations for 1Q19 EPS growth of 2.9% on 12/31/18. If 1Q19 Y/Y earnings do decline, it will mark the first Y/Y earnings drop since 2Q16. All 11 sectors have lower growth rates now versus December due to downward EPS estimates. The largest declines were in the Energy, Materials and Technology sectors.

Global Services Growth: Worries over global growth may be subsiding following better services PMIs out of China and Europe. China’s private Caixin services PMI rose to 54.4 in March (the highest since January 2018) from a four-month low of 51.1 in February. The Euro area services PMI improved to 53.3 in the final March reading from 52.8 in February and a weak preliminary reading.

Brexit Update: U.K. House of Commons passed a bill to prevent a no-deal Brexit by a razor-thin 313-312 vote. PM Theresa May’s government is holding intensive talks with the opposition Labour Party to find a compromise on Brexit.

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