European earnings recovery broadens beyond energy, lifting STOXX 600 forecast for ninth straight week
This digest was compiled by AI from multiple sources — links to the originals are below.
STOXX 600 companies are now expected to report aggregate earnings growth of 24.1%, up from last week's 23.4% estimate, LSEG I/B/E/S data showed on Wednesday. The rise marks a ninth straight weekly upgrade to European blue-chip earnings forecasts, with 59.9% of 282 reporting firms beating analyst expectations. Energy remains the largest profit driver at a projected 138.6% jump, while industrials and basic materials have become secondary growth engines.
Key Facts
- The energy sector is still forecast to lead the STOXX 600 with a 138.6% profit jump as the Iran war disrupts the international crude market.
- Excluding energy, STOXX 600 profits are expected to grow 13.1%.
- Industrial earnings are expected to climb 18.1% following forecast-beating results from manufacturers such as FLSmidth and Geberit.
- Overall sales are projected to increase 11.2% year-on-year, down from last week's 11.4% estimate.
- The STOXX 600 index slipped to a two-week low on Tuesday amid rising bond yields and inflation fears.
Earnings Forecast Upgrade
STOXX 600 companies are now expected to report aggregate earnings growth of 24.1%, up from last week's 23.4% estimate, LSEG I/B/E/S data showed on Wednesday. 59.9% of the 282 companies that have already reported beat analyst expectations in a historically strong season. The improvement marked a ninth straight weekly rise in blue-chip earnings forecasts. Energy companies remain the largest contributor with a projected 138.6% profit jump as the Iran war disrupts the international crude market.
Cyclical Sectors and Revenue
Cyclical sectors basic materials and industrials have become the market's secondary growth engines, with industrial earnings expected to climb 18.1%. Forecast-beating results from manufacturers such as FLSmidth and Geberit supported the industrial outlook. Excluding energy, STOXX 600 profits are expected to grow 13.1%. Overall revenue expectations remain more modest, with sales projected to increase 11.2% year-on-year, down from last week's 11.4% estimate.
Market and Geopolitical Pressures
Despite the earnings recovery, geopolitical uncertainty continues to weigh on the STOXX 600, which slipped to a two-week low on Tuesday. Rising bond yields and inflation fears contributed to the index decline. KBRA macro strategist Gordon Kerr said markets are focused on whether Europe can replenish its gas storage at reasonable prices ahead of winter.
1 source
European earnings recovery broadens beyond energy, lifting STOXX 600 forecast for ninth straight week
