May 8, 2024


May 8, 2024

A mid-week analysis of what’s happening in global financial markets from the perspective of AGF’s investment management team.

May Flowers

Global equity markets seem to be on a roll again after going through a rough patch in early April that resulted in some indexes like the S&P 500 falling more than 5% in about three weeks. The pullback was hardly surprising given how aggressive the run up in stocks had been since late October and may also be seen as one of the necessary conditions for triggering the next leg up.

The other key of course is the relationship between central banks and investors and whether they can continue to see eye-to-eye as the former tries to navigate the current environment of stickier-than-expected inflation.

Not Missing a Beat

Over 80% of the S&P 500 Index’s market capitalization has reported quarterly earnings thus far, with results generally stronger than expected. Just under 80% of companies beat consensus earnings per share (EPS) estimates and did so by an average of roughly 8% — one of the strongest positive surprises since 2021. The strongest magnitude of “beats” was seen in the Communications, Consumer Discretionary, and Real Estate sectors, while Energy and Utilities showed the weakest beats.

However, we have witnessed asymmetric stock price reactions, with earnings beats rewarded much less and misses punished much more than history, highlighting lofty expectations in many areas of the market. As of earlier this week, companies that beat on both EPS and sales traded up roughly 0.8% on their reporting day (versus 1.3% historically) while those missing on both traded down 4.4% (versus. 2.8% historically) per Morgan Stanley. Furthermore, stocks that are crowded or “overweight” by fund managers have underperformed those that are “underweight” in both beat and miss scenarios, highlighting potential opportunities in out-of-consensus parts of the market.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.

Commentary and data sourced from Bloomberg, Reuters and other news sources unless otherwise noted. The commentaries contained herein are provided as a general source of information based on information available as of May 8, 2024. It is not intended to address the needs, circumstances, and objectives of any specific investor. The content of this commentary is not to be used or construed as investment advice, as an offer to buy or sell any securities, and is not intended to suggest taking or refraining from any course of action. Every effort has been made to ensure accuracy in these commentaries at the time of publication, however, accuracy cannot be guaranteed. Market conditions may change and AGF Investments Inc. accepts no responsibility for individual investment decisions arising from the use or reliance on the information contained herein.

This document may contain forward-looking information that reflects our current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. 

For Canadian investors: Commissions, trailing commissions, management fees and expenses all may be associated with investment fund investments. Please read the prospectus before investing. Investment funds are not guaranteed, their values change frequently, and past performance may not be repeated.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFI is registered as a portfolio manager across Canadian securities commissions. AGFA and AGFUS are registered investment advisors with the U.S. Securities Exchange Commission. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The term AGF Investments may refer to one or more of these subsidiaries or to all of them jointly. This term is used for convenience and does not precisely describe any of the separate companies, each of which manages its own affairs.

AGF Investments entities only provide investment advisory services or offers investment funds in the jurisdiction where such firm, individuals and/or product is registered or authorized to provide such services.

Investment advisory services for U.S. persons are provided by AGFA and AGFUS. In connection with providing services to certain U.S. clients, AGF Investments LLC uses the resources of AGF Investments Inc. acting in its capacity as AGF Investments LLC’s “participating affiliate”, in accordance with applicable guidance of the staff of the SEC. AGFA engages one or more affiliates and their personnel in the provision of services under written agreements (including dual employee) among AGFA and its affiliates and under which AGFA supervises the activities of affiliate personnel on behalf of its clients (“Affiliate Resource Arrangements”).

® ™ The “AGF” logo and all associated trademarks are registered trademarks or trademarks of AGF Management Limited and used under licence.


Previous article Next article