By Frank Ulom
Global equity markets are entering the Q1 2026 earnings season on edge, as Brent crude oil prices have surged above $110 per barrel amid the escalating US-Israel-Iran conflict disrupting flows through the Strait of Hormuz.
The S&P 500 has shed nearly 7% from its January peak above 7,000, with analysts citing stagflation risks and compressed valuations. While corporate earnings forecasts hold steady at 11.5-11.6% year-over-year growth for the index, per FactSet and Zacks data, the energy shock threatens to erode margins across sectors, particularly in oil-importing emerging markets.
S&P 500 Earnings: Resilient Projections Face Correction Risks
Analysts project S&P 500 Q1 earnings growth of 11.6%, down slightly from initial 12.7% estimates, with technology driving 23.7% gains while the rest of the index lags at 5%. Goldman Sachs maintains a year-end target of 7,600, implying 12% total returns via 12% EPS expansion to $309, though it flags downside to 6,300 (10% correction) if oil persists high. JPMorgan warns of a “domino effect”: oil above $90/bbl could trigger 10-15% S&P drop with global spillovers; beyond $120, selling intensifies. Ameriprise’s Anthony Saglimbene highlights stretched valuations meeting mixed data and fewer Fed cuts.
Oil Surge Drivers: Geopolitics and Supply Disruptions
Brent hit $119.50 intraday on 8 March before settling near $107 by late March, up 45% monthly, as Hormuz flows collapsed from 20 million b/d. IEA’s record 400 million barrel strategic release (US: 172m, Japan: 80m) failed to stabilise prices. EIA forecasts Brent at $91/bbl in Q2 amid lingering premiums, with supply outpacing demand by 1.9m b/d in 2026.
India: Acute Vulnerabilities from Oil Dependence
India, importing 85% of oil with 38% via Hormuz, faces GDP growth slashed to 5.9% (from 7%) and inflation up 70bps to 4.6% by Goldman Sachs. UBS sees bank EPS down 4-8% in FY27 (to March 2027) on $20-30/bbl hikes, curbing loans and fees. Crude derivatives hit 10-15% of FMCG costs, 25% for paints (Pidilite, Asian Paints worst exposed); FY27 earnings growth may slow 5pp to 11% per UBS/Goldman.
Vietnam: Sectoral Divergence Amid Mixed Pressures
Vietcombank Securities forecasts Q1 earnings split: strong in industrial parks (leasing boom), construction, retail, rubber (export prices up with oil); lags in banking, securities, steel. Oil aids upstream gas but hikes CPI (baseline 4-4.5% if $90/bbl two months; >5% at $105 to June) and logistics costs. Government cut fuel prices via stabilisation fund, advancing E10 biofuel.
The Central Tension: Earnings vs Macro RealityQ1 results may affirm 11-12% growth, but oil at $100+ challenges delivery, especially ex-tech. US resilience as exporter tempers blows, unlike import-heavy India/Vietnam. Reporting from mid-April will clarify if AI/productivity offsets inflation, or if JPMorgan’s domino triggers broader sell-off. Markets await CPI data and Hormuz flows for directional cues.
