European companies have mostly missed second-quarter revenue estimates due to weak Chinese demand, but cost-cutting meant that earnings remained stable.
Ahead of a busy week where more than 150 of the UK and Europe's largest listed companies are set to report results, analysts at Panmure Liberum said sectors to have outperformed so far include health care and banks, while underperformers chemicals and automotive faced challenges and tech has been mixed.
UBS analysts said earnings reports from major companies "highlight ongoing concerns about inflation, geopolitical risks, and shifting consumer demands, which have shaped market reactions across the board".
Market reactions have been varied, with political and economic uncertainties weighing heavily on investor sentiment, meaning attention will remain on "how companies navigate these complexities and adjust their forecasts accordingly", they added.
So far, 43% of the Stoxx 600 continent-wide index have reported, with overall revenue surprises were 2.6% below forecasts, while earnings exceeded estimates by 4.7%.
"European companies are missing top line estimates in Q2 due to persistent weak demand, particularly from China, which has become more apparent in consumer and resources sectors," wrote Panmure Liberum's Susana Cruz.
Earnings have managed to top estimates, "as some companies have extended cost cutting strategies and reduced their workforce, adapting to challenging market conditions", she adds, though weak demand "is evident".
Revenue beats, weighted by market cap, are concentrated in healthcare (AstraZeneca, Novartis, Roche, and Sanofi all topping revenue estimates), banks (Santander, BNP Paribas, DNB, NatWest and UniCredit have delivered the largest surprises) and tech (ASML), offsetting negative surprises elsewhere (BE Semiconductor, STMicroeclectonics).
This week 36% of the index market cap report, including heavyweights in the consumer space (L’Oréal), energy (Shell and BP), banks (HSBC) and industrials (Schneider Electric, Airbus and Safran).
Cruz suggested investors keep in mind that cost-cutting strategies have been put in place by Shell and BP, while HSBC is reportedly slowing down hiring and encouraging staff to control expenses, with Airbus having also put similar strategies in place but also dealing with a wave of cheaper airliners from China that has led it to reduce forecasted deliveries for this year from 800 jets to 770 jets.