Chart of the week: valuation as decisive factor
Valuation is often not the immediate trigger for a stock market turnaround. But it is a decisive factor in the amount of upward or downward potential for the market.
Re-rating
Since its low point in mid-June, the S&P 500 Index has risen 18 per cent. Over the same period, earnings per share rose by less than 2 per cent. There has thus been a considerable re-rating of equities over the past two months.
'Lack of guidance requires top-down approach'
The earnings season has started in Europe. But it’s a rather strange one. ‘All companies have stopped issuing guidance,’ observes Gilles Guibout, head of European shares at AXA IM. ‘That makes it difficult for bottom-up investors. So more than ever, we need a top-down approach now.’