It may feel like déjà vu as equity performance is again concentrated in a few big names, but in his latest video update, Rathbones co-CIO Ed Smith discusses how positive earnings surprises are spreading more widely and why this is good news for active investors.
Looking beyond today’s superstars for tomorrow’s winners
21 June 2024
Article last updated 21 June 2024.
A key positive trend in equity markets recently is that more companies are receiving earnings upgrades than downgrades. This is made more notable by the fact that it’s been the opposite for most of the last 2 years, and stronger and broader earnings momentum today tends to herald ongoing market gains tomorrow.
It may come as a surprise to many UK investors, but as Ed explains in his latest video, over the past three years the FTSE 100 index of the largest UK companies has delivered the same return as America’s S&P 500 – home to the Magnificent Seven tech giants. In other words, it’s important to keep an eye on trends among less exciting companies.
Turning to the macroeconomic environment, Ed notes how the global recovery continues, but with some lingering risks to the economic outlook and that’s why we aren’t very overweight equities.
