Global week ahead: Trade tensions cloud earnings and the G20 heads south
The newsroom approaches each quarter with a nervous energy, but this summer it feels especially heightened. Recent market records in both the U.S. and Europe, alongside an unpredictable economic environment, paint a complicated picture for the second half.
It all kicks off on Tuesday with America's banking behemoths, as attention switches from the White House back to Wall Street.
But U.S. President Donald Trump's policies still loom large, with Goldman Sachs predicting that, this quarter, U.S. earnings will start to show the impact of the tariffs.
The investment bank's economists see "conflicting messages on the margin outlook" as companies have only announced modest price increases, despite the cost hikes associated with higher tariffs.
Earnings-per-share growth is also set to come under pressure, with Goldman suggesting, "the consensus estimate among analysts sees S&P 500 companies' earnings-per-share growth decelerating to 4% this quarter relative to the same quarter last year — down from 12% in the first quarter."
With the banks set to dominate next week — JPMorgan, Citi, Goldman Sachs, Morgan Stanley and Bank of America are all reporting within just two days — maybe Europe can provide some optimism.
As reported by CNBC's Jenni Reid, European banks just recorded their best first half since 1997. Gains were driven by strong investment banking returns — something their U.S. counterparts are also likely to capitalize on — as well as stock rallies based on both deal speculation and actual M&A.
As someone who grew up in Cape Town, seeing this year's G20 meetings take place in South Africa makes me pine for the sunshine of the Southern hemisphere.
Next week's meeting in Durban between finance ministers and central bank governors comes at an interesting time for the country.
An Oval Office meeting between South African President Cyril Ramaphosa and Trump went spectacularly wrong back in May, when the latter, flanked by his South African (now former) right-hand man Elon Musk, made false claims of a "white genocide."
It seems tensions have not abated.
U.S. Treasury Secretary Scott Bessent will skip the meeting altogether, opting to head to Japan instead, according to Reuters. South Africa is also subject to a new 30% tariff rate, the only country in sub-Saharan Africa to be singled out in the latest round of announcements.
It does not bode well for the G20 Leaders meeting, due to be held in Gauteng on Nov. 22-23. It remains to be seen if Trump will attend.
In May, South Africa's golfing greats — who traveled to the White House with Ramaphosa — failed to win over Trump. But maybe the lure of some of the best courses in the world, along with a South African summer, could see a seasonal change in his mood toward the country later this year.
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