⏳ Reading Time: 2 minutesIf your only source of news was the US equity market, what would you think? Well, given that the market is basically at an all-time high, you’d think that the world was in pretty good shape. No hint of US$100 per barrel oil, no suggestion of rising inflation and higher bond yields.
So what’s going on? We think there are a few drivers, but strong corporate earnings are an important part of the answer. The chart below shows expected earnings growth for equities in the US, Europe and Emerging Markets in 2026 – and how those forecasts have changed over time. We can see that across the three regions, earnings growth is robust and has been drifting higher, even in the wake of the Middle East conflict.
Looking at the most recent data, first quarter earnings from US companies have generally been pretty strong. The percentage of companies beating expectations is higher than in the past. As always, we are seeing some differentiation. Tech and energy businesses are generally doing better. The big tech companies still see strong demand related to Artificial intelligence.
Overall, investors have been optimistic about the outlook, although there are still concerns about the level of investment spending. Energy companies’ earnings are benefiting from higher oil prices as you might expect. Outside of those two sectors, the results are a little more mixed, suggesting that some consumer facing businesses are seeing an impact. Nonetheless, the overall message has been that corporate earnings growth remains resilient.
