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Understanding the impact of market volatility on earnings performance

What treasury and risk professionals need to know to help them navigate uncertain market conditions with confidence

30 April 2025

2 mins

Corporate & investment banking

Navigating market swings with confidence

Rising market volatility – driven by US tariffs, geopolitical risks, and shifting global policies – is reshaping how corporate finance leaders interpret earnings reports and manage risk exposure. Traditional market responses to earnings reports are evolving, and volatility is amplifying the impact of earnings surprises on equity prices.

Understanding how volatility affects stock performance is critical. For example, during periods of rising volatility, earnings misses have historically led to sharper equity drawdowns compared to more stable environments.

Download our latest insights to explore the relationship between earnings performance and market volatility, and uncover hedging strategies designed for treasury and risk professionals navigating uncertain market conditions.  

A table comparing how earnings misses have led to bigger drawdowns when the VIX was rising, versus when it was falling

Source: Bloomberg

Key takeaways

How do stock price outcomes differ when earnings miss or beat estimates during rising vs. falling volatility?

  1. Earnings misses during rising volatility led to larger stock price drawdowns compared to falling volatility.
  2. During rising volatility, corporates missing earnings estimates perform on average 1.25 per cent worse than their counterparts that beat forecasts. Conversely, when volatility is falling, the gap falls to below 0.5 per cent.
  3. Stock price outcomes following an earnings miss become wider and more left-tailed, amid increasing volatility.
  4. Consider hedging solutions to tackle volatility spikes.

At Standard Chartered, we offer a variety of hedging solutions to help you navigate through periods of extreme market volatility; including

To learn more about our hedging solutions, contact your relationship manager today.

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