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Investing.com -- Global equities have started the third-quarter earnings season on a strong note, with better-than-expected results helping markets look past geopolitical uncertainty, according to Barclays.
In a note led by analyst Emmanuel Cau, Barclays said, “Strong start to the reporting season has helped stocks to shrug off geopolitical noise. EPS beats are firmer in U.S. vs. Europe, mainly due to FX. Yet, EU Banks and Cyclicals are delivering well, driving the most positive share price reaction in two years.”
With about a quarter of companies having reported, Barclays said year-on-year earnings per share growth is tracking at 14% in the U.S. and 4% in Europe, both “better than expected.”
The bank added that blended EPS growth is now “at 0% for Europe and 9% for U.S.”
Barclays highlighted that foreign exchange effects remain a key factor, with a strong euro “continuing to hurt” European earnings compared to the U.S.
However, “EU Domestics, Banks and Cyclicals have delivered well so far,” led by sectors such as Materials and Technology.
The bank added that European share price reactions have also been strikingly positive. Barclays said, “Positive price reactions to results have been the strongest since Q4 ’23,” adding that strong results from several heavyweights helped European equities “break out from their six-month range and finally make new highs.”
While consensus still sees “no growth” in European earnings this year, Barclays noted that the “EPS revisions gap” between the U.S. and Europe is narrowing as the euro-dollar exchange rate stabilizes.
The bank concluded that “earnings resilience” remains a key support for equities amid ongoing macroeconomic and geopolitical uncertainty.