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Update Equities: Strong start to earnings season

Over the past week, there was a lot of news flowing into financial markets. In general, investor sentiment is positive, as company results have been, on balance, strong, especially in the US. In addition, we also noted some recovery in Chinese equity markets. It is driven by a stabilising yuan and the State Council saying it would adopt a more proactive fiscal policy.
Update Equities: Strong start to earnings season
Update Equities: Strong start to earnings season

Over the past week, there was a lot of news flowing into financial markets. In general, investor sentiment is positive, as company results have been, on balance, strong, especially in the US. In addition, we also noted some recovery in Chinese equity markets. It is driven by a stabilising yuan and the State Council saying it would adopt a more proactive fiscal policy.

There has also been some relief on trade tariff worries, based on a meeting between US President Donald Trump and European Commission President Jean-Claude Juncker. They agreed to suspend new tariffs and renegotiate existing tariffs between the US and Europe. However, on a company specific level we saw China failing to approve the Qualcomm bid for chipmaker NXP Semiconductors, implying that trade tensions remain.

The second-quarter earnings season is now in full swing. So far, we have seen strong results from companies such as Alphabet and Microsoft in the US; and Roche, Randstad and Nestlé in Europe. However, there were also some negative surprises. Facebook, for instance, lowered their margin guidance for the next couple of years, given the need to invest in innovation, content and data protection. This move hurt sentiment on internet stocks. It remains to be seen if this incident is company-specific or has consequences for the sector.

Veolia, which was recently added to our best ideas list, has opened, together with PV Cycle and the Syndicat des Énergies Renouvelables, the first factory in Europe to recycle solar panels. The recovery capacity of a solar panel is estimated to be 95%. There is an increasing demand to recycle solar panels, as within coming years, many solar panels will reach the end of their life span.


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