European companies are heading into the third-quarter reporting season with analysts forecasting a 20.7% year-on-year rise in earnings for the STOXX 600, according to LSEG I/B/E/S estimates cited by Reuters. That would be slower than the 24% growth recorded in the second quarter but still one of the strongest performances in years.
The outlook is being supported by energy producers and companies linked to the expansion of data centres, but analysts are also seeing signs of strength across other sectors. Earnings at technology companies are forecast to rise nearly 33% year on year, while industrials are expected to post an 11% increase.
Energy firms have benefited from higher oil and gas prices since the start of the US-Iran war. The boost is also a potential vulnerability: an easing in geopolitical tensions or demand reduced by sustained high prices could reverse some of the benefit.
European banks have faced market pressure amid political uncertainty, yet analysts do not expect a weak earnings season. The consumer staples sector is also expected to show resilience, with third-quarter profits forecast to rise by more than 7%. With more than half of the STOXX 600’s market capitalisation due to report over the next two weeks, investors will look closely at companies’ outlooks for the final quarter and beyond.
