European earnings: mind the banks

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If you squint, and ignore the banks, early signs from the European earnings season are really not so bad.

Data from Goldman Sachs show that following results from 48 of 494 companies, 2015 earnings have beaten expectations by 1.3 per cent on an equal-weighted basis, but missed expectations by 7.9 per cent on a market-cap weighted basis.

The major culprits dragging down the headline figures were BP (for obvious reasons), Deutsche Bank and UBS.

The banking sector was not unanimously weak, however. While Deutsche Bank strongly disappointed, Danske Bank saw a large earnings beat, “driven by solid trading and provision write-backs”.

Still, as Goldman says, the earnings season is still young. “We would be cautious of over interpreting the results at this early stage, as very few companies have reported,” the bank said.

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