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Analysts are upgrading their expectations for Europe’s fourth-quarter earnings season, which has seen a steep increase in companies announcing consensus-beating results, according to the latest data from Refinitiv I/B/E/S.

Earnings at companies listed on the pan-European STOXX 600 equity benchmark are expected to have risen 55% year-on-year in the last three months of 2021, a steep upward revision from last week’s forecast of a 51% rise.

Refinitiv said 67.4% of companies which reported their results as of Monday had exceeded expectations, a figure well above the 52% beat of a typical quarter.

“We are seeing corporate earnings expectations revised higher and that is a sign that markets don’t expect economic momentum to fade yet despite the extent of policy tightening being priced in globally”, said Ankit Gheedia, head of equities and derivative strategy at BNP Paribas.

“This is a positive tailwind for stock markets”, he added.

The reporting season in Europe will reach its peak in three weeks time and by the end of February more than 72% of companies will have already reported their results, according to UBS.

Earnings for companies listed on Wall Street’s S&P 500 index are seen rising at more modest 25% pace in the fourth quarter but that is seen as a reflection of the European economy being some time behind the United States in the COVID-19 recovery cycle.

On Feb. 1, Refinitiv stated that out of the 184 S&P 500 companies which had reported earnings, 78.8% exceeded analyst expectations, well above the historic average of 66%.

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