Stock markets: corporate earnings a rock?

For stock market players, the first nine months of 2022 were simply forgettable. High inflation rates and the resulting more restrictive monetary policy of the central banks, the energy crisis triggered by the Russian war of aggression against Ukraine and a global economic slowdown that is becoming ever more apparent have taken a heavy toll on the stock markets. September is traditionally the weakest stock market month of the year, while the period from October to December, with a few exceptions, has historically mostly shone. This year, too, the first trading days in October were positive and the stock markets were able to recover some of their recent losses. Nevertheless, the environment remains challenging in the near term and it is still unclear whether markets have already bottomed.

Although most global leading indicators have weakened in recent weeks and months, many companies seem to be coping well with the more negative environment so far. Despite a weakening economy and inflationary pressures that are very likely to ease, stronger earnings growth is expected next year. This is not plausible in our view. In this respect, the upcoming reporting season promises to be the most exciting in recent years.