LONDON (Reuters) - Waves of cheap money from central banks have shielded stocks from the volatility besetting currency and commodity markets, but increasing disparities in company earnings forecasts suggest that could soon change.
Analyst forecasts for European and U.S. companies have reached levels of dispersion not seen since 2010 and 2011 respectively, according to Thomson Reuters data, at a time when stock market volatility as tracked by the U.S. VIX .VIX and European VSTOXX indexes is closer to 2012 levels.
The higher the dispersion, the more spread out the numbers.
So on both sides of the Atlantic, corporate earnings expectations are no longer as benign as the market whose multi-year rallies they have underpinned, in a world where eye-popping moves in - for instance - the price of crude oil and the Swiss franc have hit firms in ways that are sometimes hard to predict.
Rock-bottom interest rates and central bank stimulus measures have cushioned stock markets against volatility, so potentially nasty surprises from company earnings may be a catalyst for even bigger trading swings.
"We have become used to relatively low volatility... Now we are getting into a slightly 'noisier' stage of the economic cycle," said Nick Nelson, a strategist at UBS, who said knock-on effects on companies from volatile currencies would feed through to the stock market.
"There is going to be an increasing spread of analyst views... The gap between (corporate) winners and losers is getting larger."
(Earnings estimate dispersion in Europe: link.reuters.com/gut34s
Earnings estimate dispersion in U.S.: link.reuters.com/ren92t
Dispersion in Europe by sector: link.reuters.com/tag93w)
For some, currency swings have already rocked the earnings boat.
U.S. multinationals DuPont (DD.N) and Procter & Gamble (PG.N) recently took earnings hits from the strong dollar, which according to some estimates could shave up to $12 billion off U.S. companies' fourth-quarter 2014 revenues.
Swiss companies are also under the microscope after the country's central bank last month scrapped its Swiss franc cap against the euro, which sent the franc through the roof. On the flipside, euro zone company earnings are seen getting a lift from the euro's weakness and the European Central Bank's scaled-up stimulus program.
The biggest uncertainty, however, remains oil.
Earnings forecasts for the energy sector are by far the most dispersed. While cheaper oil is cited as a good thing for consumers of oil and most companies, the ripple effects of energy majors cutting back on projects and writing down assets remain unclear - notably in the context of a four-day rally that has propelled crude prices back toward $60 a barrel.
"Earnings dispersion is going to pick up mainly because of energy," said William Hobbs, strategist at Barclays Wealth. "There will certainly be some sectors in the U.S. which will hurt from the stronger dollar, but that will be more of an immediate ...impact."
Regular stock market volatility indicators are not at panic stage yet and central bank support is still there.
But with pockets of the market showing increasing signs of uncertainty, equity investors might do well to brace for a bumpier road ahead.
"What does seem different is that there are more key factors driving the uncertainty now than three years ago," said Tim Edwards, director of index investment strategy for S&P Dow Jones Indices. "Russia, China, energy prices, currency wars... are all currently higher in many investors' minds."
Reporting by Lionel Laurent; Additional reporting and graphics by Vincent Flasseur; editing by John Stonestreet