April 21 Reuters European companies are set to exit a twoyear profit slump with a 60plus jump that outperforms U.S. peers and has spurred recordhigh stock prices, as the world economy rebounds from the worst downturn since World War Two.
One of the strongest earnings seasons on record has revived the regions equities that had lagged U.S. stocks in profit growth and market performance.
Profits for companies on the STOXX 600 index are forecast to have risen 61 to 79 billion euros 95 billion in the JanuaryMarch quarter, Refinitiv IBES said.
The performance looks good because it is compared to a year earlier, when the COVID19 pandemics outbreak prompted strict lockdowns, starting in China and rapidly spreading to Europe and the United States.
On an absolute basis, the profits are around 4 below those of the first quarter of 2019, before the pandemic impact was felt.
Investors expect the reaction to the bumper earnings numbers to be somewhat limited because of already lofty valuations, but fund managers and investors in Europe Inc are confident.
There is a lot of potential for significant growth here, said Tomas Hildebrandt, senior portfolio manager at Evli Bank in Helsinki. The U.S. economy has a good momentum and China has already recovered earlier. The two countries are some two thirds of the global economy, so their growth supports also Europe.
The expected firstquarter jump would mark a rare outperformance versus corporate America. SP 500 earnings are seen up…