SaltWire's Atlantic regional weather forecast for October 27, 2023 | SaltWireLONDON - European companies are getting punished harder for earnings misses than at any time in at least 16 years as investors grow increasingly unforgiving in the face of soaring global interest rates, war in the Middle East and a murky economic outlook.
European companies that missed earnings per share expectations this reporting season have seen their share prices fall by an average of 6.18% in the five days after reporting, versus a 2.04% average gain for those that beat them, according to Morgan Stanley. "Worldline cutting its cash flow estimates without giving a real reason, Campari coming out below expectations without explaining where that comes from, Siemens Energy having to ask for a state guarantee, Volkswagen and Volvo Cars giving messages that are clearly too optimistic given the macro picture."
The scale of the selling has also been huge. Almost as much volume traded in Worldline shares in one day as in the whole of the last month, according to LSEG data. Barclays, meanwhile, saw three times as much volume on the day of its results, as the daily average of the last five years.Some of this vulnerability is coming from tighter credit conditions.