Quarter 3 margins likely to be pinched due to ongoing trade war

With the onset of coming week earnings season for third quarter, this will help analysts to decipher how much money companies have lost due to trade war. As per one of the reports major financial companies and banks are out viz. Wells Fargo, Goldman Sachs, J.P Morgan and Citigroup. Then on Wednesday names of several transportation and technological as well as many other companies dealing in several sectors were reported including, IBM and Netflix.

For Q3 it is estimated that earnings of S&P 500 will get down by 3.1%, which had showcased a rise of 3% during Q2. During a personal chat with the media, Patrick Palfrey stated that at present most of the companies will focus on their growth i.e. whether it would be negative or not.

Palfrey also stated that there are several areas in which margins will get pinched which include energy sector due to decrease in the prices of oil. Worries regarding global growth have direct relation with prices of oil. During Q3 the crude oil of West Texas Intermediate was down by 7.5%.

In one of the events, Palfrey stated that most of the companies will dedicate a significant amount of time in measuring the impacts which are caused by trade tariffs. He also stated that it is very essential to ascertain the total percentage of earning decline which is caused due to those pressures.

The decline in the prices of oil will lead to decrease in overall profit in energy sector. Energy sector earnings are expected to go down by 32% and revenue will fall near around 9.5%. As per sector margins, it is expected to get lower by 22.7%. Palfrey said that 5.9% will get subtracted from growth of EPS and overall earning will get decreased by 4.2% and stock market won’t make much profit during present earnings season.

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