US and Europe exhibit ‘worrying divergence’
’Worrying divergence’ between US and European corporate markets.
The ongoing debt crisis in Europe has sparked a “worrying divergence” between corporate earnings in the US and Europe, Signature’s Andrew Morris has said.
Mr Morris, managing director of the discretionary fund management firm, a subsidiary of Rowan Dartington, said the recent equity rally had left markets “rosy” on the surface. But an analysis of second-quarter company results has shed light on a “worrying divergence between the fortunes of corporate US and Europe”.
While European companies have repeatedly failed to meet market expectations, US firms have continued to surpass analysts’ predictions, said the director.
“In addition, European analysts are continuing to reduce their earnings expectations as the malaise in Spain and Italy clouds visibility and drains confidence,” he said.
Mr Morris added markets were likely to remain “resilient” over the summer, but as politicians return from holiday and Greece takes centre stage in the eurozone crisis again, investors should remain wary, he warned.