Europe’s Worst Earnings Are Coming From Luxury and Auto Sectors

Europe’s luxury firms, carmakers and hotels largely disappointed investors this earnings season, making consumer discretionary the worst-performing sector as rising inflation and geopolitical uncertainty derail a long-awaited recovery.

Earnings per share for the MSCI Europe consumer discretionary index dropped more than 12% in the first quarter, with companies representing more than 80% of the benchmark’s market capitalization having reported, Bloomberg Intelligence data shows. That compares with expectations of a more modest 2.4% decline, and with stronger-than-expected growth of 5.7% for the broader MSCI Europe index.