Written by Millan Chauhan.
Last week kickstarted another earnings season in the US as companies disclose their financial performance over the last quarter. The big banks were the first set of companies to report and should provide insight into the strength of the economy. JP Morgan saw a 28% fall in net income as investment banking and IPO revenues dried up. Earnings expectations have been strong thus far despite having faced soaring inflation, restricted supply chains and dampening consumer sentiment surveys. However, there is a diminishing outlook for earnings upgrades as we haven’t seen reports on earnings be truly impacted by the challenging macroeconomic climate.
US inflation data saw a further increase as Consumer Price Index (CPI) reached 9.1% with gas prices up 11.2% during the month of June. Elsewhere, America’s five-year inflation expectations declined to 2.8%, its lowest level over the last year which has prompted the Federal Reserve to raise rates less aggressively with a 0.75% increase expected at the Fed’s meeting next week.