European profits set for a comeback

Continental stocks have disappointed so far this year. But as Andrew Van Sickle explains, that's all set to change.

"Of all the winning trades predicted for 2016 that have backfired spectacularly, buying European equities tops the list," says Gavin Jackson and Rochelle Toplensky in the Financial Times. European equities, as measured by the pan-European Euro Stoxx 600 index, have fallen by 6% this year. Unlike many indices, it has not recovered the ground lost in January this year during the growth scare. It remains down more than 15% from its 2015 peak, and has also lagged America's S&P 500 since 2011.

So what's gone wrong? A recurring problem, as Switzerland's Finanz und Wirtschaft points out, is constant disappointment on the profit front. The latest season was no exception. Most firms in the index have reported, and so far earnings are down by a fifth year-on-year, with sales falling by 7%.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.