Trump-Xi Meeting Takes Backseat as Deutsche Bank Expects Stellar Q3 Earnings
Investors are likely to be distracted by the upcoming Trump-Xi meeting this week, but Deutsche Bank's top US equity strategist advises them not to sweat it too much. The summit aims to iron out a trade deal and reduce tensions between the two global superpowers. However, Binky Chadha, the chief US equity strategist at Deutsche Bank, believes that Q3 earnings will be the real market mover.
Chadha expects stellar results from third-quarter earnings season, which is set to kick off around mid-October. The S&P 500 is expected to show 28.9% earnings growth year-over-year in Q3, according to FactSet. This would mark the third consecutive quarter of annual earnings growth above 25%, a remarkable trend.
The surge in manufacturing activity since this past winter is another indicator of upcoming earnings strength, Chadha said. Stocks have recently come out of a rough patch, and the Federal Reserve's rate hike last week helped tame long-term Treasury yields. As a result, stocks are now well-positioned for a rally after Q3 earnings reports.