European corporate recovery broadens beyond energy sector

Europe's corporate earnings recovery is extending beyond the energy sector, with blue-chip forecasts rising for a ninth consecutive week, according to LSEG I/B/E/S data. Companies in the STOXX 600 index now project aggregate earnings growth of 24.1%, up from the previous week's 23.4% estimate. Energy companies remain the leaders, with a projected 138.6% profit jump due to the ongoing Iran war disruption in the international crude market.

However, cyclical sectors like basic materials and industrials have become the market's secondary growth engines. Industrial earnings are expected to rise 18.1%, following strong results from manufacturers such as FLSmidth and Geberit. Excluding energy, STOXX 600 profits are anticipated to grow 13.1%, while overall revenue expectations remain modest, with sales projected to increase 11.2% year-on-year.

Despite the earnings recovery, geopolitical uncertainty persists, weighing on the STOXX 600 index, which dipped to a two-week low on Tuesday due to rising bond yields and inflation concerns.