What can we expect from the forthcoming earnings season?

The next results season, when companies will publish their earnings for the first half of the year, is just around the corner in Spain, where the data will be known from next week. In the United States, things kicked off this Wednesday, although larger companies are holding off for a few more days.

Investors are always expectant around earnings season, and this time that expectation has been magnified due to the complex macroeconomic situation, strict monetary tightening and with macroeconomic data that have been better than expected in the United States, but worse in Europe. Alberto Matellán, chief economist at MAPFRE Inversión, reckons that the results will be good overall.

"The macro data in Europe is worse than the U.S., in terms of what was initially expected, and yet earnings are holding up quite well. They won't be bad," he points out.

Matellán believes that interest rate hikes will be the factor that has the greatest impact on the results for the first half. "Companies are suffering for many reasons, but rates are the main factor here. The rises in recent months are already being noticed, and those that are more sensitive to them will obviously feel the pinch more," he says. Sectors such as real estate or infrastructure in particular will be impacted, although the increases affect all those carrying long-term debt.

However, despite the possibility that the sectors most exposed to interest rates may suffer, earnings should hold up pretty well, and even better than expected in some cases.

Mid-sized U.S. banks will also present their accounts in the coming days. Faced with the difficulties experienced a few months ago, Matellán expects “relatively strong” earnings reports from these companies and believes that “the worst is behind us.”

“The macroeconomic data of recent months in the United States has been much better than was originally expected,” he points out, and that will be reflected in the accounts, given that there hasn’t been an increase in defaults, which usually spike in a slowdown. On the contrary, there is the asset problem, which can cause balance sheets to weaken.

Equity markets, for their part, still have a long way to go, although MAPFRE Inversión’s chief economist doesn’t feel that returns will be as good as they have been up to now. “The drain on liquidity, which is what is most worrying aspect, is there, but it’s on a slow burn, and is having less impact than expected,” he explains