Traders are holding their breath on evidence of a first earnings recession for three years

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  • Global stocks were mixed on Friday morning as traders waited to see whether US bank earnings would fuel market fears of a first-half earnings recession.
  • First-quarter earnings for the S&P 500 are forecast to fall 4.2% year-on-year, and second-quarter earnings are set to slide 0.3%, according to MarketWatch.
  • Market anxiety was tempered by positive employment and producer price data.

World stock markets were mixed on Friday as traders waited to see whether first-quarter filings from JPMorgan Chase and Wells Fargo would fuel market fears of an earnings recession.

The outlook for first-half corporate earnings continues to worsen. Nearly 75% of S&P 500 companies have issued earnings guidance that lowered market expectations, above the five-year average of 70%, a FactSet analyst told MarketWatch. The average analyst earnings per share (EPS) estimate has been cut by 7.3% during the first quarter - more than double the average decline of 3.2% over the past five years.

First-quarter earnings for the S&P 500 are now forecast to fall 4.2% year-on-year - their first decline in nearly three years - and second-quarter earnings are set to slide 0.3%, according to MarketWatch. Declines in two consecutive quarters would constitute an earnings recession.

"Investors' focus will squarely be on the US earnings season," said Konstantinos Anthis, head of research at ADSS in a research note.

"JP Morgan and Wells Fargo will kick off the season for banks and market participants will focus on customers' savings and loan trends as indicators for the overall performance of the economy."

Earnings anxiety was partially assuaged by the release of positive US economic data on Thursday. Weekly jobless claims fell to a 49-year low of 196,000 in March, while the Producer Price Index advanced by 0.6% in March, the biggest increase in five months and double the predicted 0.3% rise, according to CNBC.

Here's the market roundup as of 9.57 a.m. (5.57 a.m.):

  • Asian stocks were broadly down, led by declines of 0.4% for the China A50 and 0.3% for the SZSE Component, while the Shanghai Composite and Hong Kong's Hang Seng closed marginally lower. Japan's Nikkei climbed 0.7%.
  • US stocks are set to open higher, as the futures underlying the Dow, S&P 500, and Nasdaq rose by 0.4% to 0.6%.
  • European stocks were largely up as Germany's DAX and Britain's FTSE 100 climbed upwards of 0.4%, while the Euro Stoxx 50 gained 0.3%.
  • Oil continued its rally this week as Crude WTI rose 1.3% and Brent gained 1%.

Get the latest Oil WTI price here.

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