S&P500 HIT THE HIGHS: TIME TO HIT THE BEACH?

SP500 HIT THE HIGHS: TIME TO HIT THE BEACH?

The stronger than expected earning season for US equities that we were looking for has indeed now happened. Work from Deutsche Bank below shows SP is moving in line to typical earnings season rally.

After earnings where to from here?

In Europe while clarity around US tariffs is welcome relief it is no better than consensus. Instead the EURUSD dominates as the strong Euro has removed earnings momentum for now which is why European markets have been range bound. Thus, it would not be unreasonable to assume European indicies continue to chop around in line to moves in the currency.

In the USA with earnings season completing we move from micro back to macro. Here comments from Powell this week have seen bond markets largely price out rate cuts and thus it is back to earnings as the driver. With some months till we hear from corporates again, liquidity set to dry up over the summer months and with valuations at the upper bound it would not be illogical for US markets to consolidate and chop around with perhaps a shallow correction from here.

Medium term there remain strong stimulus tailwinds to come from the US OBBB stimulus and Germanys massive stimulus programme into 2026.

Enjoy the beach.