US earnings season is off to a strong start. The percentage of companies beating estimates is the highest in over a decade, notes Bank of America. It’s early days, but Barclays analysts say aggressive cuts to estimates “leave room for beats”.

The growth rebound in China, coupled with better-than-expected economic data in the US and Europe, are also potential positives.

How markets respond is another matter. Analysts at Jefferies note we have already seen the strongest rally into earnings season in 14 years. That might suggest good news is already priced in but Barclays notes investor positioning remains cautious, so positive earnings may well “extend the pain trade”.

The 2024 outlook, however, may be too positive. Growth estimates of 7 and 12 per cent for Europe and the US look “quite optimistic”, says Barclays. If so, consensus analyst estimates may be too negative for the current quarter, but too positive for 2024.