Corporate Earnings At Record Highs, But Peak Growth Likely Behind Us

• Corporate earnings have continued to strengthen over recent months, with Q2 2021 results showing record growth across several sectors. While these growth rates will ease due to base effects, earnings will nonetheless remain elevated and will help to underpin the cyclical recovery in global capital expenditure (CAPEX) and growth over the coming quarters.
• Earnings per share (EPS) reached new highs for the S&P 500, and 87% of companies posted a positive surprise in their earnings the most in almost three decades. The MSCI World Index saw a new high in EPS, and while the MSCI Emerging Market (EM) Index has seen an improvement in EPS from the lows in 2020, it has not hit a new high.
• Ongoing fiscal and monetary policy support globally, combined with the continued easing of restrictions as vaccination rates continue to rise, will help to underpin corporate profits over the coming quarters, which in turn will support CAPEX and economic activity.

(Source: Fitch Solutions)