Europe Inc earnings in no man’s land between recession and recovery

Europe Inc earnings in no man’s land between recession and recovery

Europe Inc’s fourth-quarter reporting season will test investor confidence in profit recovery as a new round of social restrictions is expected to have driven earnings down more than 25% while further blurring the outlook.

Boosted by COVID-19 vaccine roll-outs and massive fiscal and monetary stimulus, European stocks have rallied more than 50% since the March pandemic crash lows and analysts see them sticking to their bullish course.

But faced with the fresh dip in economic activity, management teams will most likely stay prudent, potentially creating room for disappointment on markets which look to have already priced in better times ahead.

“Third-quarter results showed how quickly the economy rebounded after the lockdowns. That clearly won’t be the story of the fourth quarter during which new social distancing measures triggered a loss of momentum”, said Emmanuel Cau, head of European equity strategy at Barclays in London.

The focus this season will be more about which companies are resilient rather than which ones will benefit from the recovery and investors will pay close attention to numbers from the likes of LVMH, SAP, Shell, Unilever and BNP over the next couple of weeks.

“Manufacturing should prove resilient in comparison with say, tourism or other discretionary sectors”, Cau added.

As a whole, companies listed on the STOXX 600 are expected to report 26% earnings drop in the fourth quarter, almost two percentage points worse than the fall recorded in the previous three months.

In any event the impact of results on share prices will be hard to call with CEOs being constrained by the current uncertainties to give a clear steer on profit recovery.

The pan-European Stoxx 50 climbed up by 0.80%  to 3,624.04 . In the cash markets, the DAX futures Germany was trading 0.77%up at 13,921.37. CAC 40 futures in France climbed up by 0.53% to 5628.44, while the FTSE 100 futures in the U.K. rose by 0.41% to 6,740.39 ,at the time of writing.



About Author

Related posts

Bitcoin prices

Bitcoin’s outlook for the quarter is bright, Miami conference to be majorly influential.

Bitcoin prices are up 0.14% at $46662.51 on early Tuesday trades. In Q1, Bitcoin prices witnessed a bearish trend, closing near its opening for the quarter, declining around 5%. Many analysts believe that Bitcoin is poised to break out and soar after a bout of profit-taking. The second quarter,...

Read More
Top 5 Stock

Top 5 Stock To Watch out Today March 31, 2022

1.MOODY’S:- Moody’s  said on Thursday it has withdrawn all ratings on Russia and its rated Russian sub-sovereign entities. The company said it had decided to withdraw the ratings for its own business reasons. Last week, Moody’s had announced its intention to withdraw its credit ratings on the entities, following similar...

Read More
Top 5 Stock

Top 5 Stock To Watch out Today March 30, 2022

1.UBS:-UBS spent 3.81 billion Swiss francs ($4.10 billion) repurchasing its shares equivalent to 6.49% of its share capital in its 2021 buyback, the Swiss bank said on Wednesday. The cancellation of most of the repurchased shares will be proposed at the bank’s upcoming shareholder meeting on April 6. The...

Read More