Live Markets: Earnings expectations are still too stingy

Ageas SA/NV

15/09/2025 12:19

STOXX 600 up 0.5%

Fed set to cut rates this week

Banks, defence, luxury gain

Nasdaq futures steady

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EARNINGS EXPECTATIONS ARE STILL TOO STINGY

Earnings growth in Europe and the UK has lagged the U.S. this year, hurt by a strengthening euro and pound, but strategists at Panmure Liberum expect an acceleration next year as fiscal stimulus provides a boost to companies with domestic exposure.

"The fiscal stimulus from defence and German infrastructure spending accelerates in 2026, providing an important boost to EPS growth for domestic earners in the UK and EU," Panmure Liberum writes.

The investment bank expects FTSE 350 .FTLC companies to grow earnings towards 10% by mid-2026, well above current consensus of 3.9% in the next 12 months.

"We are particularly optimistic about the aerospace and defence sector, as well as travel and leisure, telecoms, and technology," Panmure Liberum says.

They also expect STOXX 600 .STOXX earnings growth to accelerate to slightly below 10%, again exceeding consensus expectations of 5%.

"Our sector earnings forecasts indicate again that travel and leisure stocks may see the fastest earnings growth in the next 12 months, followed by the automotive sector and the construction sector," they add.

Around 10% earnings growth in Europe and the UK would be roughly the same as they expect for the U.S. next year, in sharp contrast to consensus which expects U.S. earnings to grow at a faster rate.

"We end up in a position where we are more bullish on UK and European stock markets than consensus," Panmure Liberum says.

(Samuel Indyk)

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EARLIER ON LIVE MARKETS:

WHY MORE INSURANCE M&A COULD BE COMING CLICK HERE

        EQUITY POSITIONING OVERWEIGHT, BUT SENTIMENT STILL SHAKY CLICK HERE

FINANCIALS AND DEFENCE LIFT THE STOXX CLICK HERE

BEFORE THE BELL: FRENCH STOCKS SHRUG OFF FITCH CLICK HERE

IT'S ALL ABOUT CENTRAL BANKS THIS WEEK CLICK HERE

panmure earnings https://tmsnrt.rs/4nwvE6q