Earnings Season Could Be the Next Big Market Theme

U.S. quarterly earnings season is kicking off this week, with Wall Street bracing for an ugly earnings season due to the coronavirus pandemic.

The market is anticipating that Q1 reporting season is going to deliver bad news. The Covid-19 virus has forced the US, and significant parts of the global economy to grind very close to a halt. Given the limited economic activity, the consequence of which is expected to have already fed through into corporate revenues, with the worst, still very much likely to come.

Earnings season will be about market participants gauging how big of a knock, collectively, corporate America sees this Covid-19 crisis on earnings. Getting an understanding of what businesses foresee for the coming quarters, in terms of their outlooks. Gauging how long this drag on earnings and persist into the future.

Two big financial players will be getting things going today, with JP Morgan and Wells Fargo both due to report their quarterly earnings.

How could this earnings season impact the financial markets?

If these reports start showing much worse than expected earnings, in addition to bad outlooks, expect some flows coming firmly back into safe-haven. Gold is already itself rallying, as a large hedge by the markets, JPY and CHF can further gain some ground. A scramble for Dollars (USD), can not be ruled out, behaviour that was seen early in March.



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