Which economic sectors are in good health and which ones are a little weak

Investors are worried about the deteriorating macro environment, but some sectors are holding up. Numbers and forecasts in the analysis by Luca Finà, Head of Equity of Generali Insurance Asset Management

Second-quarter earnings season kicked off last week, with investors worried about the deteriorating macro backdrop after a very strong first quarter when nearly 70% of companies beat estimates. In the last 2-3 weeks earnings expectations for the second quarter have been significantly reduced by analysts, lowering the bar for possible positive surprises. Currently, second-quarter yoy growth is expected to post double-digit declines in Europe, ~8% in the US, and even a better-than-expected earnings season may not be enough to push markets above current levels.

Investors will be much more inclined to understand the outlook for the third quarter, as the macro backdrop continues to deteriorate, especially in Europe, and expectations of a solid recovery in China are faltering. The first indications show the persistence of a difficult context in the chemical sector (in which many companies have already anticipated worse than expected results in the weeks of results previews), still weighed down by destocking and weak demand, as well as in the European segment of technological and telecommunications infrastructures. Still positive results in financials, mainly banks. In particular, in Europe, petroleum and basic materials are expected to be the sectors that will show the least (strongly negative) YoY growth in the second quarter while travel, leisure and financials are the sectors that most support the evolution of earnings and also those with the best earnings revision since the beginning of the year.

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This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/quali-sono-i-settori-in-buona-salute-e-quelli-acciaccatini/ on Sat, 22 Jul 2023 06:18:14 +0000.