World shares mostly rise as investors brace for earnings hit

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World shares mostly rose on Tuesday though investors were bracing for news on how the coronavirus pandemic has hurt corporate earnings and the Chinese economy.

Asian indexes largely closed higher and Wall Street futures pointed to small gains on the open. European markets, however, turned slightly lower.

"In our baseline scenario, world trade falls 9% this year, but in a `worst case' scenario, the fall is 34%. Maintaining global value chains is likely to become more challenging and costly as protectionism increases, but is also a way of managing risks," ING said in a commentary. Cautious optimism that the outbreak in the U.S. has begun to plateau in some of the worst-hit areas and another big infusion of economic support by the Federal Reserve helped spur a big rally last week.

Analysts predict that earnings for all the companies in the S&P 500 will be down 9% in the first quarter from a year earlier, according to FactSet. That would be the biggest annual decline in earnings for the index since the third quarter of 2009 when earnings slumped nearly 16%. The closure of businesses and mandates for people to stay home to combat the coronavirus pandemic have forced record numbers of people out of work, raising the possibility that many businesses could end up bankrupt. That has many investors anticipating what may be the worst recession since the Great Depression.

 

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