Dubai: First quarter earnings will likely sideline investors concerns over Saturday US-led strikes on Syria.
The US along with France and the United Kingdom launched more than 100 missiles targeting three chemical weapons sites in Syria, a move that resulted in a knee-jerk reaction in markets. But analysts are wary about the potential impact on geo-politics and markets.
The Dow Jones Industrial Average closed 0.50 per cent to 24,360.14 on Friday, after gaining 1.8 per cent last week. The S&P 500 index also shed 0.29 per cent to 2,656.30, paring 2 per cent gains registered through the week. The Nasdaq Composite Index closed 0.47 per cent lower to 7,106.65 after the index gained 2.8 per cent last week.
“With Syria strikes turning out to be more limited than anticipated earlier, the focus of investors would shift to the earnings season. A relatively strong start to the earnings season should reaffirm investors’ confidence and provide strength to equities. Regional markets should also benefit as Syria overhang disappears for the moment,” Aditya Pugalia, Director at Emirates NBD said.
About 6 per cent of the companies in the S&P 500 index have reported first quarter earnings, and among them 70 per cent have reported a positive Earning Per Share, while 72 per cent of them have reported a positive sales surprise. The aggregate earnings growth has been 17.3 per cent for the first quarter
Overall amid rising volatility, which had been subdued since 2012, Templeton has reduced the overall risk in their portfolio.
“We found some opportunities among financial companies, including financial exchanges and brokerage firms or securities dealers, that have the ability to prosper even when volatility rises,” Dylan Ball, head of European equity strategy and vice president Templeton Global equity Group said.
The asset manager prefers to invest in companies with inflation-resilient pricing power could potentially offer opportunities to outperform amid a rising-volatility environment.
“For example, intellectual property rights and legal patents have traditionally offered support to certain health care names,” Ball said in a note. Also rising commodity prices, particularly oil, have historically tended to be correlated with higher volatility.
“So, the opportunity to buy large integrated energy companies at discounts to their long-term average price also proved attractive to us in our search for potentially higher returns and lower risk than the benchmark,” Ball said.
Bitcoin prices hit their highest level in March and analysts say the cryptocurrency may extend gains.
“The Bitcoin is witnessing a turnaround. The moves have just started and bitcoin may see a non-stop rally to $9,200 [Dh33,764],” said CapitalTA, an advisory firm on financial markets, on Twitter.
Bitcoin prices traded 4.67 per cent higher to $8,310.65 on Sunday, according to coinmarketcap.com, after gaining 20 per cent since the start of the month. The cryptocurrency witnessed a sudden revival in interest last week after volumes took a beating ever since Bitcoin hit a record high of more than $19,000 in December.