Fraser Hammond - Investors Fear Trade War Will Hurt 2019 Profits

Fraser Hammond - Trade war fears fuel massive sell-off in stocks as investors worry about impact on earnings.

Fraser Hammond analysts say concerns over trade tensions were a big contributing factor to the recent sell-off in global stock markets of nearly 8 percent.

The big worry has been that next year’s profit forecasts will have to be downgraded but so far, predictions have remained stable. Typically in the third quarter of each year, forecasts for the following year are downgraded.

Fraser Hammond analysts say that elevated borrowing costs, cooling economic growth and concerns over trade tariffs are considered the primary causes of the sell-off in the markets. From the 1st of October this year, the S&P 500 is down approximately 8.2 percent while the Dow Jones has lost around 6.5 percent.

Industries that could be most affected by trade tensions have felt the impact the most this month with materials falling 12 percent followed closely by industrials, down 11 percent and consumer discretionary, also down 11 percent.

Despite the prevalent concerns, Fraser Hammond analysts say most economists have not yet taken the impact of trade tariffs into their predictions for next year’s earnings. This could be because there is uncertainty surrounding the duration of the trade tariffs and whether US President Donald Trump’s threats to impose additional tariffs on Chinese exported goods will materialize.

Analysts at Fraser Hammond say that although companies have reported some impact from the trade tariffs, most have been able to offset these by shifting supplies or pricing the loss through. It is still too early to gauge the scope of the impact that will be felt next year.

Source: Fraser Hammond


Categories: For Profit

Tags: earnings forecast, Fraser Hammond, FraserHammond, stock market selloff


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