US-EUROPEAN EQUITIES
Earnings growth is surprisingly expected to accelerate despite the war in the Middle East
S&P 500
- 2025 was marked by robust earnings growth for the S&P 500, driven by a few dominant sectors. For the full year, EPS rose by 14% according to LSEG I/B/E/S estimates. The technology and financial sectors, which account for 25% and 19% of S&P 500 earnings, were the main contributors, with earnings growth of +28% and +13%, respectively. The only sector to see a decline in 2025 was energy, down 9%, but its contribution to total earnings is small: 4%.
- For 2026, despite the ongoing energy crisis, the consensus anticipates a significant acceleration in earnings: +19.0% for the year. All major sectors are expected to grow, with 7 out of 11 sectors seeing accelerating growth. In particular, technology remains the main driver, with an estimated +43.3% for 2026. Next is basic materials, a small sector in terms of earnings (~2%), which is seeing its earnings growth rise to 28% compared to 1% in 2025. Finally, although energy earnings are set for a strong rebound in 2026 (+18%), they will account for only 4% of S&P 500 earnings. Earnings in other sectors will grow between 6% and 11% in 2026.
STOXX 600
- In Europe, 2025 was a year of declining earnings. The STOXX 600 posted negative growth of -1.9% for 2025. The only real pillar of strength was the financial sector (+12.5%), which accounted for 35% of the Stoxx 600’s earnings. No other sector accounted for more than 13% of the index, and 4 out of 10 sectors saw declines in 2025.
- The turnaround expected in 2026 is dramatic. The LSEG consensus projects +12.7% earnings growth for 2026, with growth expected to accelerate further during the course of 2026 (+4% earnings growth expected in the first quarter of 2026). However, this acceleration depends more on other sectors than on finance, where earnings are expected to decelerate sharply to +4.4%. Although the energy sector’s earnings growth outlook stands at +28%, its share of total earnings is relatively low (7% in 2025).
Despite the ongoing major energy crisis, S&P 500 companies can count on powerful growth drivers. The expected earnings growth of the Stoxx 600 appears to be more at risk given the current economic climate. In our portfolio management, we remain selective and focus on resilient, growth-oriented stocks. The release of Q1 2026 earnings reports and management comments at that time will allow us to assess the impact of the energy shock on their respective businesses, following six weeks of high energy prices.
Source: LSEG I/B/E/S – Data as of April 2, 2026
