European Profits Lag The World, Putting A Brake On Its Stock Market

European Profits Lag The World, Putting A Brake On Its Stock Market
Andrew Rummer

over 2 years ago1 min

When it comes to corporate profitability, COVID-19 has hit Europe far harder than the US or Asia. 

As the chart shows, projected earnings at eurozone companies (in blue) fell more than for both US companies (in green) and Asian companies (in pink) as the pandemic swept around the world last year. And while the situation has improved in 2021, profits are still 10% below where they were at the start of 2020 – while those elsewhere have more than recovered.

Eurozone profits have been hit by a heavy mix of lockdown-susceptible businesses, higher-than-average coronavirus infection rates, and lockdowns that have lingered far longer than elsewhere. 

Taken in aggregate, it’s not hard to see why eurozone stocks have lagged behind those elsewhere since COVID struck.

Chart of European stocks versus the world

If Europe can finally put the pandemic behind it in coming months, there may be potential for the region’s profits to finally regain their pre-COVID levels.

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