European corporate earnings outlook improved on Thursday, according to LSEG forecasts. Energy majors are expected to see profits jump 134.1% due to market volatility. While the broader STOXX 600 index shows moderate growth, investors remain worried about high oil prices and rising government borrowing costs that could hurt future market stability.
Oct 22 (Reuters) - The outlook for European companies has slightly improved, the latest LSEG forecasts showed on Thursday, as energy majors are expected to deliver a big jump in third-quarter profit and investors digest a mixed bag of results.
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That is an improvement compared to last week's 20.7% forecast.
Energy majors are outliers as their trading desks profit from the volatility and disruption set off by the US-Iran war and are seen posting earnings 134.1% higher compared to a year earlier.
Excluding the energy sector, the rest of the companies in the STOXX 600 index are expected to book considerably more moderate gains, at 8.4%, on average.
The outlook for European blue-chip companies' third-quarter revenue has also improved and is now seen growing at 13.3% from a year ago, which would mark the best showing since the third quarter of 2022.
But despite the exceptional growth forecast, European corporations might struggle to convince investors weary of higher oil prices and soaring government borrowing costs, which are spurring fears of a replay of the euro zone debt crisis.