Luminor financial markets overview: the longest period of price growth in history observed

“North Korea’s nuclear tests, the growing tension in the Middle East, the difficulties with the formation of Angela Merkel’s government coalition – all these recent events have raised questions about their impact on financial markets. It is fair to say that it was insignificant – the economy as a whole grows at a healthy pace”, - says Gints Belevics, Luminor economics expert.

We can observe that investors have been wise enough to concentrate on the real driver of equity markets – corporate earnings. As the Q3 earnings season is gradually coming to an end, it is evident that this year corporate earnings are showing robust growth across the globe, with growth rates in many regions reaching double digits.

Despite the widely held view that in case of Donald Trump’s victory in the elections, there would be a meltdown in the markets, it did not happen. The US market hasn’t witnessed even a 3% correction since the election. The S&P500 went up for 390 days without a 3% downside, the longest such period ever.

Third quarter earnings in the US increased by 8.3% from the levels of a year ago. 72.2% of the companies that have reported results so far have exceeded analyst earnings expectations, which are well above long-term average of 64%, confirming the strong earnings momentum of US companies.

Other last month’s financial markets’ highlights:

• European earnings were conservative in Q3, but strong growth is expected ahead
• Technology is taking over the global retail sector
• Robots are replacing humans in many sectors
• Technological enterprises contribute even more to stock growth in the emerging markets
• The stock market is growing, which increases optimism and signals the sustainability of this growth

Read more in the December issue of Luminor financial markets overview.

Media contacts: Lita Juberte-Krūmiņa