The European earnings season is set to start in earnest on July 17, with results from chipmaking equipment group ASML (AS:), according to analysts at UBS.
In a note to clients this week reviewing the latest quarterly earnings from the region, analysts added that expectations have been mostly on the rise in recent months after a surprisingly strong set of estimates in the first quarter.
Positive sentiment was also boosted by improved business activity, which itself was fuelled by the European Central Bank’s move to cut interest rates.
Analysts noted that confidence was most evident in the services sector, which helped offset weakness in manufacturing.
“There are still some striking differences in sectors that are expected to grow (healthcare equipment, retail, commodities, building materials and insurance) versus those that are expected to contract (transportation, semi-finished goods, software, mining and automotive),” the analysts said.
They said second-quarter earnings would also serve as an important indicator of European companies’ progress toward their long-term goals.
Analysts claimed that any data on the broader outlook was also “critical”, especially as many of these companies reached the halfway point of the fiscal year.