LIVE MARKETS-Europe braces for worst earnings in five quarters

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EUROPE BRACES FOR WORST EARNINGS IN FIVE QUARTERS

The reporting season in Europe kicks off in earnest next week, with updates due from heavyweights like ASML, Saab Novartis, Volvo, and Nordea, just to name a few.

By the end of July, around two-thirds of companies will have reported. A key headwind will be the strength of the euro, which BofA says will help make the second quarter the weakest for earnings in five.

Here are the main takeaways from the U.S. bank's preview:

• Earnings to fall: Consensus expects STOXX 600 EPS to decline by 3% from last year, the weakest reading in five quarters, weighed down by falling sales and adverse currency effects.

• Sector drags: Energy and consumer discretionary are expected to be the top drags on profits, while financials are set for a muted season.

• Cuts: While positive macro data could imply some earnings beats, BofA warns the strong euro will likely dampen them. It sees more EPS estimates cuts in the months ahead.

  (Danilo Masoni)

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