Another corporate earnings season is upon us, and between the virus, the upcoming U.S. election, earnings announcements will bring their usual share of volatility. With most of the negative macro backdrop behind us and many firms no longer communicating guidance on their outlook, we think this reporting season is likely to be less eventful as we are in the middle of the recovery phase with lingering COVID uncertainty. On a sector basis, however, there could be greater scrutiny to sectors that have either benefited or suffered the most as COVID continues to distort how consumers spend.
Overall, we expect analysts to continue revise up their 2021 earnings expectations (Chart 3) as economic activity normalizes and society learns to live with the virus. Rolling out a vaccine in 2021 would leave upside risk to those expectations while moving beyond the U.S. election should also be positive for equities.