European earnings outlook: sunny Q1, but clouds on the horizon
The European earnings season suggests a stronger-than-expected Q1 for most sectors, even retail and consumer-related, despite economic headwinds. IGTV’s Angeline Ong explains why Q2 might not be as rosy.
Q1 earnings: not bad so far
About half the STOXX 600 companies have reported Q1 results and two thirds of them exceeded estimates. Cyclicals, says Barclays PLC, were behind the bulk of EPS beats.
Industrials, like Siemens AG, have done well, pointing to growth and investment across a wide number of sectors.
Banks like Barclays, BNP Paribas SA and Deutsche Bank AG have also beat forecasts.
STOXX 600 earnings are seen growing 7.3% in Q1, according to data from Refinitiv I/B/E/S.
This suggests that customers have been largely absorbing inflationary pressures, and the labor market has held up so far.
Clouds on the horizon
However, European stocks are down from a 14-month high in April. Net profit margins seen declining in Q3, show data from Refinitiv I/B/E/S.
Bank of America says European equities have seen nine straight weeks of outflows.
Retail has started to show signs of margin weakness, if numbers from Boohoo.com plc, ASOS PLC and even Watches of Switzerland Group PLC, which sits on the high-end retail spectrum.
Euro zone inflation is seen staying high this year.
If those consumers who have dipped into savings start to run dry, then it is only natural that consumption, along with earnings, will start to deteriorate.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
