Earnings Watch: Market focus moves to China, trade war Earnings Watch: Market focus moves to China, trade war Earnings Watch: Market focus moves to China, trade war

Earnings Watch: Market focus moves to China, trade war

Peter Garnry

Head of Equity Strategy

Next week, 283 companies out of the around 2,000 firms we track during earnings season are reporting their latest results. The US earnings season is already 80% done, so there will be no more fuel coming from source. Revenue is up 10% year-on-year and EBITDA is up 10.4% y/y, showing robust performance and no margin pressure.

US stocks have consequently outperformed European, Japanese, and Chinese equities over the summer months, rising close to their all-time high set on January 26. 

Watch China and keep Italy on your radar

With the earnings season almost over, investors will concentrate on the trade war that could escalate over the coming weeks and then the recent depressed sentiment out of China that is seeing massive weakness in CNY and its equity market. Given China’s global importance, it’s staggering to watch the complacency in financial markets.

(Find more of our thoughts on China in our recent Equity Monthly update.)

As of the last couple of days, government spreads have widened on BTPs (Italian government bonds) in a sign that investors are nervous over comments coming out of Rome regarding to its debt and fiscal situation. The new government says it will put Italian interests first, which is an indirect way of saying that Italy will challenge the European Union, most likely on fiscal and debt constraints.

The message from the bond market is clear: go down this route and we will lose confidence in Italy.

The most interesting earnings next week

Walt Disney reports FY18 Q3 earnings on Tuesday (after-market). Analysts expect EPS to grow by 27% y/y helped by the US tax reform; revenue is expected to grow 8% y/y driven by a probable strong quarter for the films segment. 

Novo Nordisk reports Q2 earnings on Wednesday (before-market) with analysts expecting negative revenue growth as the pricing environment remains challenging on insulin in North America.

Adidas reports Q2 on Thursday (before-market). Investors are prepared to see slower growth than the 2015-2017 period so the focus will be on outlook and particularly margin improvements. Adidas has a 12-month trailing EBITDA margin of 12.6% compared to Nike’s 14.3%, so margin expansion will continue to be the dominating theme and potential driver of performance for Adidas.

Below is a table of the 30 largest companies reporting earnings next week, including earnings and revenue estimates.

Sources: Bloomberg, Saxo Bank

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.