Overview
Goldman Sachs has outlined three focal points for analysts as Europe’s corporate earnings season commences in less than two weeks, noting that an elevated performance bar could amplify market reactions to earnings misses. The three factors are: the transmission of the energy shock down the value chain, earnings developments for European firms facing competition from China, and management commentary on AI usage and related cost reductions.
Reporting Timeline
More than 90% of the market capitalisation of the STOXX 600 index is expected to be reported by the end of August, with the last week of July identified as the busiest reporting window.
Earnings Growth Expectations
Consensus forecasts project an 11% year‑on‑year earnings growth for the first half of 2026, primarily driven by commodities. When commodities are excluded, the growth estimate falls to 6%. Goldman Sachs continues to anticipate a 10% earnings increase for the STOXX 600 in 2026, with commodity producers expected to post earnings growth exceeding 50%.
Energy Sector Revision
Energy earnings have been revised upward by 28% since the start of the second quarter, reflecting strong margin performance. Outside of commodities, aggregate earnings and margin expectations have remained broadly stable since Q2 began.
Macro Environment
Goldman described the macro backdrop as "benign" and "supportive," citing a robust Current Activity Index and a modest uptick in area‑wide Q2 GDP tracking estimates. Manufacturing PMI averaged 51.7 in Q2, up from 50.6 in Q1. A weaker EUR/USD in Q2 relative to Q1 is expected to provide a modest tailwind for companies with dollar‑denominated or overseas earnings.
Oil & Gas Outlook
Analysts expect strong Brent price realisations but anticipate investor focus shifting toward capital‑expenditure outlooks. Unlike 2022, higher profits are unlikely to translate into materially higher shareholder returns, as reinvestments are projected to rise from historically low levels.
Risk Considerations
The analysts noted that the impact of the Iran conflict is expected to be relatively short‑lived, yet it contributes to raising the performance bar for the upcoming earnings season.