Europe Earnings Recession Risk Is Back as Stock Rally Stumbles
- Citi index shows profit cuts beat upgrades by most in 5 months
- Bernstein sees ‘real’ risk of earnings recession in the region
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Last week’s stock optimism may be short-lived as investors head into an earnings season that looks set to deliver more bad news than good.
The pace of profit downgrades is exceeding upgrades by the most since January, according to Citigroup Inc.’s earnings revisions index for continental Europe, posing a threat to this month’s equity rally spurred by dovish central bank comments. Sanford C. Bernstein strategists said on Monday that although global earnings recession isn’t their base-case scenario, there’s a “real” possibility of one in Europe amid trade-war and policy uncertainty.