STOXX Europe 600 Q3 Earnings Expected to Grow 20.7%; Consumer Cyclicals Face Sharp Downgrades
nashnova research
STOXX 600 constituents are forecast to post 20.7% Q3 earnings growth, but consumer cyclicals swung from +26% to −2.6% in a single week — Volkswagen and BMW's China slump dragged the entire sector into reverse.
Growth of 20.7% — but who is actually earning the money?
LSEG I/B/E/S data puts STOXX 600 Q3 earnings growth at 20.7% year-on-year, slightly below last week's 21% forecast; revenue growth was revised up from 10.6% to 11.0%.
This means → the headline looks strong, but a handful of sectors are pulling up the average while others drag it down.
Energy and tech are the two engines; consumer cyclicals are the anchor — sector divergence is the real story in this data.
Why did energy and tech suddenly accelerate?
Energy earnings-growth expectations jumped from 115.9% to 124.0%, driven by two supply shocks: disruptions from the Iran conflict and Ukrainian drone strikes on Russian refineries.
In plain terms = demand didn't improve — supply got knocked out, and higher oil prices flowed straight into energy-company profits.
Tech sector growth forecasts leapt from 24.4% to 32.7%, lifted mainly by ASML and Ericsson beating expectations, which pulled the whole sector's estimates higher.
How did consumer cyclicals flip in just one week?
Consumer cyclicals — autos and luxury goods — saw an abrupt reversal: last week the sector was forecast to grow 26%; this week it shows a 2.6% decline.
The trigger: Volkswagen and BMW reported Q3 delivery drops, both pointing to sharply weaker demand in China. Volkswagen's decline was its steepest in over four years.
This means → Chinese consumers pulling back on car purchases is now hitting European listed companies' earnings forecasts directly.
Will the "polarisation" persist?
Morningstar EMEA equity strategist Michael Field said: "We expect to see a real polarisation in earnings."
He noted that companies squeezed by high energy costs and weak consumer confidence will face the most pressure — this reflects European corporates being caught between rising costs and falling demand at the same time.
Next week 44 STOXX 600 constituents report. Markets will focus on software giant SAP, engineering group ABB, and UK lender Barclays — spanning tech, industrials, and financials, their results will test whether this divergence holds.
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