European majors' strong earnings growth expected to have continued in Q3

Major European companies are expected to report substantially ​higher third-quarter earnings, the latest LSEG ​I/B/E/S data showed on Thursday, ‌although the year-on-year ​growth should slightly temper from the previous quarter. Companies on Europe's benchmark STOXX 600 index are expected to report quarterly earnings ‌growth of 21% on aggregate, mostly buoyed by the energy and basic materials sectors.

That is an improvement compared to last week's forecast for 19.4% growth and would mark the second-best quarterly ‌profit growth in the past 14 quarters. Excluding the energy sector, the expected growth ‌rate for STOXX 600 companies is a more modest 9.7%. European blue-chip companies' revenues are seen increasing by 10.6% from a year ago, also above the average of the past couple of years.

"Demand is strong enough ⁠to allow ​companies to pass ⁠on higher prices which leads to higher sales. At the same time, energy costs make up a smaller ⁠share of sales than headlines would suggest," a Deutsche Bank report said earlier this week. European energy ​majors have been benefiting from the consequences of the US-Israeli war with Iran and ⁠from Ukrainian drone attacks on Russian refineries, which have sharply cut exports from some of the world's biggest ⁠producers ​of fossil fuels.

They are now expected to post profit growth of 115.9% for the third quarter, according to the LSEG report. Meanwhile, companies in the European real estate ⁠sector are seen delivering earnings 71.5% smaller than in the same period last year.

Next week, investors ⁠will be closely ⁠looking at results of chip equipment supplier ASML, Europe's most valuable listed company, and Swedish telecoms equipment maker Ericsson to assess the tone ‌of the earnings ‌season.