Global stocks are under selling pressure once again as some US states roll back some reopening measures and investors anticipate a brutal earnings season.
Stocks in the US have returned to their pre-Covid levels with the S&P 500 briefly trading positive for the year yesterday.
The tech heavy Nasdaq has also set record highs as investors continue to drive the share prices of the big name stocks even higher.
The banks are among the 19 companies that will report results in the US this week.
Laura DeVoy, Senior Investment Manager with Goodbody Stockbrokers, said it was widely expected that the results would be poor.
"For the US, you're probably talking down 45% year on year. It will likely be slightly higher in Europe. There will be big variances depending on the sector and how hard they've been hit," Laura DeVoy said.
"So for energy, it could be down 150%, while for tech, it's only expected to be down 8%," she added.
She said much of the performance on stock markets in the months ahead will hinge on the outlook for companies, but cautioned that it would be hard to distinguish between what's pent-up demand and true underlying growth.
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"It's like investors are looking at 2020 and saying that it's akin to a one time restructuring charge for a corporate. This is a natural disaster and it doesn't change earnings power. The key will be whether, when we reach 2022, growth is higher or the same as it was pre-Covid," Ms DeVoy said.
Looming in the background, however, is the risk of a second wave of the virus, particularly in the US.
"It looks like the American public won't tolerate a return to mass shutdowns. That is the big danger to the V-shaped recovery coming through in the economic data."
"Given the speed and strength of the rally that we saw (on stock markets), investors can expect significant volatility in the months ahead."
