Why Q3 earnings season is 'make or break' for equity markets

Analysts have suggested the rest of October will be a 'make or break' period for US equity markets as companies continue to report their Q3 earnings.

The results so far have largely surprised on the upside, lifting markets, but analysts have pointed to the prospect of an "earnings recession" if there are any major disappointments, which could drive equity prices down from near record highs. Consensus earnings forecasts at the start of the reporting season pointed to a 3%-4% year-on-year decline in earnings growth in Q3. If correct, it would represent the first negative quarter since 2009, and has heightened speculation the US could be set for consecutive quarters of declining earnings in the final half of this year. Managers’ fa...