Market bounce quickly fades after encouraging earnings
We’re seeing another mixed session in Europe on Wednesday, with stocks here and in Asia clearly not encouraged by the earnings reports in the US that prompted a record close in the S&P 500 and NASDAQ
In an otherwise quiet week and at a time when central banks have become much more dovish in response to a more downbeat assessment of the economic outlook, this seasons earnings reports are all the more important. Especially as a driver for market sentiment. So far, investors have reason to be encouraged but it’s worth noting that expectations heading in were low.
Even on the back of a good batch of earnings and record closing levels in US indices, futures on Wall Street are pointing to a slightly negative open which suggests the optimism is somewhat limited. Perhaps investors are nervous around the current levels or they aren’t hopeful that it’s reflective of the overall reporting season and that on average it will revert closer to prior expectations. We’ll have to wait and see.