Finance company Nordea expects economic growth in the United States of about 10 percent, which is higher than the 6 percent consensus in analyst forecasts.
“Earnings growth of around 6% is currently expected in the US, but we believe it is more likely that the result will be closer to 10%,” Nordea says in its weekly report.
Nordea’s main market strategy is based on Nordea’s stock market views Antti Saari.
The results of the companies have grown strongly last year. Globally, earnings growth was 50 percent compared to the previous year’s interest rate shock.
Nordea’s ten percent growth this year is also slightly faster than usual, the weekly report says.
The island justifies a higher consensus view of earnings growth in history.
“Analysts currently expect U.S. companies to grow about six percent. However, in a typical earnings period, these forecasts are exceeded by a few percentage points, and we believe this will happen again this time, ”Saari writes.
“What is particularly striking now, however, is that while the U.S. economy has grown slightly in the last quarter compared to the previous quarter, results are expected to have fallen 5 percent from the last quarter of last year.”
Strongest growth in raw materials and industrial products and services
The strongest growth figures in the United States are expected from raw material producers and industrial product and service companies.
According to Saari, these companies will benefit from either rising raw material or energy prices or the removal of interest rate restrictions on industrial products and services.
The year-on-year comparison also favors strong growth figures. Double-digit earnings growth is also expected in the technology, healthcare and real estate sectors.
In the financial sector, the normalization of loan loss provisions and rising costs weigh on results.
According to Nordea, quality companies and industries should do quite well in the current market environment.
“The higher margins of these companies protect their earnings growth from rising costs and, on the other hand, lower indebtedness reduces the impact of rising interest rates,” Saari writes in the weekly report.
The stock market is still overweight
Nordea’s recommendation for equity investments is overweight, but the bank has already dropped the recommendation strong overweight.
In March, global stock markets recovered close to year-end levels. According to Nordea, the sharp rise in interest rates in the bond market will gradually open up opportunities.
The financial and earnings outlook continues to support the stock market. Nordea’s recommendation is to overweight North American equities and underweight Western European equities.