From Morningstar:

The European earnings season is starting this week, with big companies across the continent reporting. Companies like Novo Nordisk, L’Oreal, ASML, and SAP will release earnings between January 24 and February 8. By March 8, 87% of European companies are expected to have published their Q4 earnings.

Earnings for Q4 are expected to have declined significantly, especially in the energy and industry sectors. High interest rates are squeezing stocks and industries with high levels of debt.

Earnings season will provide insight into how companies assess the current economic and geopolitical environment. However, with a tough backdrop, investors should not expect too much excitement in the short term.

BofA Securities expects -16% year-on-year EPS growth in Q4, making it the weakest quarter since Q3 2020. Energy is expected to be the major negative contributor, followed by industrials, while financials should be the bright spot.

Consumers are likely to struggle with the rising cost of living and elevated mortgage rates in the coming year. Companies are advised to be cautious regarding their 2024 outlook, and some may lower market expectations.

Despite a low bar of market expectations, combined with the hope of lower inflation and declining interest rates, European equities could have some room to rise. The earnings season will likely shed light on companies’ outlook for 2024.



Read more: European Earnings Season: What to Expect