European Corporate Earnings Growth Nears US Levels
European corporate profits are forecast to grow by 23 percent in the third quarter, nearly matching the projected 24 percent increase for US companies.
Bloomberg Intelligence forecasts that European corporate earnings growth will rival that of the United States for the first time in over three years. Analysts expect MSCI Europe constituents to post a 23 percent surge in third-quarter profits, nearly matching the 24 percent increase projected for S&P 500 companies.
This shift is driven by moderate valuations and improving earnings momentum. European markets also benefit from a lower concentration of mega-cap technology firms compared to the US, where volatility has increased due to doubts regarding the sustainability of artificial intelligence demand. While companies such as ASM International, Deutsche Bank, and EssilorLuxottica reported strong results, consumer-exposed stocks including Unilever, Volkswagen, Kering, and Hermes International have struggled with inflation and weak demand.
Despite these headwinds, European earnings estimates have seen their longest streak of upgrades since 2022. However, some market participants warn of potential volatility surrounding the upcoming US midterm elections on November 3.
