Global Market: European bluechip earnings set for strongest growth since 2022 as energy sector powers profits

European blue-chip companies are on track to post their strongest quarterly earnings growth in nearly three years, supported by a sharp rebound in energy sector profits and improving performances across basic materials industries, according to the latest LSEG I/B/E/S data reported by Reuters.

The data showed companies on the benchmark STOXX 600 index are now expected to deliver earnings growth of 22.4% for the second quarter, marking the strongest pace since the third quarter of 2022. The estimate is based on reported results from 236 companies and analyst forecasts for firms yet to announce their earnings.

The stronger outlook reflects broad-based improvements as the reporting season has progressed. While soaring profits from oil and gas companies remain the biggest contributor, forecasts for several other sectors have also strengthened compared with expectations at the start of the earnings season, Reuters reported.


Excluding the energy sector, companies in the STOXX 600 are now projected to post aggregate earnings growth of 11.5% from a year earlier. That marks a significant improvement from the 5.5% growth forecast in early July before most companies had begun reporting quarterly results.

Revenue expectations have also moved higher. Second-quarter sales for STOXX 600 companies are now expected to rise 12.6% year-on-year, up from the 11.7% estimate released a week earlier. If achieved, it would represent the fastest revenue growth recorded in the past 16 quarters, Reuters data showed.

Among sectors, energy is expected to lead earnings growth with profits projected to surge 135.8% from a year earlier. Basic materials, which include chemical companies, steelmakers and mining firms, are forecast to post earnings growth of 57.6%, making them the second-best performing sector during the reporting period.

The upbeat earnings season has also supported investor sentiment in European equities. European shares ended at record highs for a third consecutive session on Thursday as investors welcomed a largely positive batch of corporate results.

Market sentiment was further boosted by optimism surrounding geopolitical developments, with investors also assessing prospects for a potential U.S.-Iran peace agreement and the possible reopening of the Strait of Hormuz, Reuters reported.

The improving earnings outlook across multiple sectors suggests that Europe's corporate profit recovery is becoming more broad-based, providing additional support for equity markets despite ongoing global economic and geopolitical uncertainties.