European quarterly reports, BofA: monetary tightening and decline in US fiscal impulse weigh

European quarterly reports BofA monetary tightening and decline in US

(Finance) – The third quarter earnings season is about to start, with 10% of European companies publishing their financial statements by the end of next week, rising to 50% by the end of the month. Consensus expectations for the EPS growth on an annual basis of Stoxx 600 in the third quarter they stood at -15%, down from -11% in the second quarter, which would mark the weakest quarterly growth rate since the third quarter of 2020, with growth expected to remain negative in the fourth quarter, at -8%. Bank of America Global Research stated this in a note.

It is expected that thepower (-13 percentage points) will represent the main negative contribution to growth in the third quarter, while i financial (+6 percentage points) will provide the greatest boost.

Consensus expectations onStoxx 600 EPS for 2023 and 2024 they saw a pullback of about 3% each around the middle of the year, but have since rebounded 1.5%. The revisions pushed trailing 12-month EPS to a new high, as it gradually incorporates higher 2024 EPS.

“Our expectations of a further slowdown in global growth in response to the lagged impact of monetary tightening and the fading of US fiscal stimulus, combined with reduced inflation support, imply a decline of almost 15% for 12-month EPS of the Stoxx 600 by the third quarter of next year,” the note reads.

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