STOCKS | Barclays Strategists: European Earnings Stay Resilient as Growth Gap With U.S. Narrows

European equities remain attractive, with regional earnings proving resilient and the earnings-growth gap with the United States narrowing. According to Sina Finance, Barclays strategists Emmanuel Cau and Magesh Kumar Chandrasekaran said the current reporting season shows a slowdown, not a deterioration, with earnings per share growth at 28% in Europe versus 29% in the United States. They described Europe's relative risk-reward as reasonable. The strategists said earnings momentum is unusually strong at this point in the cycle, supported by AI capital spending and energy-related tailwinds. Weakening cash flow at large cloud service providers and rising capital investment could sustain concerns about AI, which would marginally benefit European stocks. The team maintained its barbell allocation approach and expects earnings growth to slow next year as base effects fade. They said U.S. midterm elections look more like a negative catalyst being cleared than a lasting headwind. Recent market moves suggest investors have started pricing in a Democratic sweep of both chambers, but the result is unlikely to change the fundamental backdrop for equities. Oil prices remain a key uncertainty. In a separate report, the strategists said higher energy costs and interest rates are becoming drags; the share of earnings that beat expectations has fallen from its second-quarter high, margins are under pressure, and earnings-upgrade expectations show signs of peaking.