15th August 2016
-Asset management, IAM
Jean-Louis Richard, Senior Financial Analyst
Most companies have published their results for the first semester. In Europe earnings have shrunk by 9% (yoy). The explanation is mainly the drop in the petrol price, which has compromised the profitability of the energy sector, as well as the fall in interest rates, which has negatively influenced the margins of banks and insurance companies. Although not attractive these figures hide nevertheless some good news: first, investors were prepared for worth. Second, the increase in the petrol price since February has reduced the pressure on the petrol companies. Then, despite the rate levels, the “stress tests” performed by the European Union on its banks were globally reassuring; and finally worldwide growth, which is unusually slow, shows signs of strengthening. As a result the summer at the stock exchanges has been rather sunny, despite “Brexit”. To the opposite of their US counterparts, the European indices are not reaching all-time highs. But a large part of the losses from beginning of the year have been absorbed. For example, the SPI, index of all Swiss securities, is now at minus 1.0% since the beginning of the year. Several indices with little bank exposure have now again reached positive territory since the beginning of the year.