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A positive surprise

Q1 results show a supportive picture for developed market companies in May’s monthly update from Zed.

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Date published
30 May 2023
Zehrid Osmani Head of Global Long-Term Unconstrained
The Q1 2023 results season is getting close to an end with a generally supportive picture from developed markets, and consensus estimates for 2023 getting closer to our top-down estimates.

A supportive picture for developed markets

A stronger picture coming from Europe compared to the US
European results season was supportive with consensus beats on both sales and earnings, and posting strong year-on-year earnings growth. But the US was less with companies posting negative year-on-year earnings growth.
Growth achieved in both Europe and the US has been stronger than expected, with year-on-year sales growth of +3.9% and +4.3% respectively, although there is more contrast on earnings growth, with +16% and -4% for Europe and US respectively.
Japan’s result season was supportive with strong growth, whereas Asia had more mixed growth, but with strong positive surprises coming through.

US ‘Big Tech’ beating on both sales and earnings
Big tech companies in the US have been beating on both sales and earnings, providing some support to the sector in general.
Some noticeable cyclical companies have also been posting strong results across geographies.
In contrast, Energy, Utilities and Materials companies have generally been weighed down during the results season by commodities and energy prices rolling over

Signs of a supportive inflection in earnings revisions
Earnings momentum has remained negative ahead of the results season, although downgrades pre- and post-results season have been less marked than in the previous twelve months, showing signs of stabilisation and/or inflection.
It is too early to call this stabilisation or inflection a trend at this stage, given the ongoing potential downside risks to the economic climate.
Europe and UK in particular are now seeing positive earnings revisions.
Consensus is now expecting +1% on Global earnings growth yearon- year, +0% for North America, +4% for Europe, and 0% for Asia.
Our top down estimates remain unchanged; we continue to forecast 2023 earnings growth of +0% at the Global level, -1% for the US, -5% for Europe, and +5% for Asia.

Source: Martin Currie and FactSet as at 14 May 2023.

Read the full document here

Generally, we have seen the proportion of companies beating expectations increasing compared to the last 4-6 quarters. In our May market insights, we look at the key aspects at both a regional and sector level.