Wanted: signs of V-shaped recovery in earnings reports

Equity investors are no longer losing sleep over the short-term hit to company earnings from coronavirus lockdowns, instead they are looking for early evidence to support the V-shaped recovery narrative that has lifted stocks out of their mid-March crash.

Many companies pulled their guidance during the peak of the coronavirus crisis, leaving investors in the dark for the rest of the year, prompting them to write off the first-half of 2020. Rather than basing an investment decision on a company's earnings beating consensus, investors say they will focus on the outlook provided in press releases, press conferences and analyst presentations."What is more important ... is how the corporate sector views the outlook, the strength of the recovery in regions that have already exited lockdown and what impact the government measures are having on costs," they said in a note.

The latest data from Refinitiv on July 14 showed analysts expect on average profits from companies listed on the pan-European STOXX 600 to fall 56.2per cent year-on-year in the second-quarter.https://fingfx.thomsonreuters.com/gfx/mkt/yzdpxrbzdpx/Pastedper cent20imageper cent201594732142989.png

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