S&P 500: Profit expectations clash with turmoil concerns – Deutsche Bank

Market Turbulence Amid Rising Geopolitical Tensions

Strategists at Deutsche Bank note that S&P 500 futures have declined as the situation between Iran and other nations intensifies, causing energy prices to surge and dampening global risk appetite. Despite these challenges, their US equity team maintains a positive outlook, believing that the current macroeconomic conditions support expectations for S&P 500 earnings growth in the mid-teens. They even anticipate stronger results, particularly from large technology firms and financial companies during this earnings season.

Balancing Geopolitical Risks with Earnings Expectations

Markets experienced a clear shift toward caution early today, following unsuccessful negotiations between the US and Iran over the weekend. The US is now preparing to block the Strait of Hormuz for ships entering or leaving Iranian ports.

Although last week brought hope with the announcement of a two-week ceasefire, sentiment has turned negative once more. Brent crude oil has jumped 7.39% to $102.24 per barrel, reigniting concerns about stagflation. As a result, both equities and bonds are experiencing losses worldwide.

In this environment, S&P 500 futures are down 0.73% this morning, while DAX futures have dropped 1.47%. This trend reflects the greater vulnerability of European assets to energy-related shocks.

Key Events to Watch This Week

The ongoing Iran conflict will dominate market attention in the coming days, but several other important events are also on the horizon. The first quarter earnings season is about to begin, with multiple US financial companies set to report results this week.

Deutsche Bank's US equity strategists have prepared a comprehensive preview, asserting that analyst forecasts for S&P 500 earnings growth reaching 16% are well-founded, thanks to a supportive macroeconomic backdrop.

This article was produced with assistance from an AI tool and reviewed by an editor.