A weak end to Q3, but fundamentals have room to improve in Q4 | 11 October 2021
Description
• The third quarter was more subdued than the previous ones. Equities ended the quarter on a weak note, but still eked out a small positive return for the full quarter. Bond markets also had a tougher end to the quarter delivering a flat performance for the overall.
• This quarter was the first this year where GDP forecasts for 2021 were reduced. Global GDP growth was cut from 6.0% to 5.7% driven by cuts to US and Asian forecasts as the Delta variant impacted on consumption and production in Asia. Profit expectations remained robust with 2021 earnings growth increased from 39% to 48%. Europe saw the biggest upgrades and by sector it was again Industrials, Energy and Materials that led the way.
• Some of the factors dragging on markets in late Q3 are likely to reverse or have less of an influence through Q4. Rampant energy prices could undermine this and this remains a concern but any easing in energy prices here would clearly be a major positive.
United States
