In a note, Morgan Stanley said: “We expect first quarter 2019 will be the first quarter year over year earnings growth is negative for the S&P 500 since the second quarter of 2015.”
Despite the prospect of an earnings recession, S&P 500 analysts remain bullish on the outlook for the benchmark index, according to FactSet’s John Butters.
“Industry analysts in aggregate predict the S&P 500 will see a 7.5 per cent increase in price over the next 12 months.”
Locally, the RBA will return to the stage this week. Deputy governor Guy Debelle will give a speech tomorrow on The State of the Economy at midday in Adelaide.
“The speech could prove important given the RBA tweaked the policy paragraph of its interest rate decision in March, which was the first change in years,” NAB economist Kaixin Owyong said.
“We expect the RBA to cuts twice this year, pencilling in the first cut in July, but see a clear risk that the RBA acts quickly given we expect it will downgrade its outlook in May.”
On Friday, the RBA will release its latest Financial Stability Review, which Ms Owyong said “may shed light on whether the deterioration in the housing market is having a greater impact on households”.
Overseas this week, Brexit is in focus ahead of an EU leaders summit on Wednesday.
UK Prime Minister Theresa May has asked the EU to delay Brexit until June 30 as she continues to seek a way forward at home.
On Thursday, the ECB meets to discuss policy and while no changes are expected, president Mario Draghi could reiterate heightening downside risks.