Economic and earnings data have begun to exceed pessimistic projections and the earnings guidance is expected to pick up, however consumers remain more willing to spend on goods than services, according to State Street Global Markets (SSGM).
The company’s multi-asset strategist, Marija Veitmane, said that despite the stockmarket trading on more optimistic expectations, analysts were reluctant to revise their forecasts.
“Whilst companies have begun to issue positive guidance, the improvement is not uniform, as evidenced last week when a large number of consumer discretionary companies reported strong earnings,” she said.
Consumers were more willing to spend on automakers and luxury brands than airline companies, which continued to report very disappointing results, and other services.
At the same time, large technology companies would be expected to continue to deliver strong performance this year, suggesting high expectations were built into those stocks.
