Before the Bell Your Daily Best of Barclays Research

Research evidence excerpt

Before the Bell Your Daily Best of Barclays Research

nfirm market leadership after recent

positioning-driven volatility. Consensus looks for Q2 EPS growth of 13% in Europe and 26% in

the US, setting a high bar. The elevated headline forecasts are mainly driven by strong

expectations for Energy and Tech; excluding those sectors, growth is expected to be more

modest. Cyclicals should account for most earnings growth in both regions, while Defensives lag

and healthcare appear particularly weak. They highlight ASML earnings as an increasingly

important SX5E event, given the stock's growing influence on the index and the potential for

broader market read-across. The team notes that amid recent positioning jitters and

Momentum pullback, EPS momentum should prevail again for sector returns. AI/capex

beneficiaries still offer the strongest earnings profile, with Semis, Cap Goods, Banks, A&D,

Mining and Energy screening well on their earnings quality framework. Yet strong performance

means Q2 results will need to demonstrate not only growth, but also margin durability and

returns on investment. On the other hand, the bar is lower for laggards, which could see a more

sustained reversal if earnings start to inflect higher. Energy is an attractive hedge against

renewed US-Iran tensions, having given back some outperformance despite resilient earnings.

China: Demand trails supply (07/15/2026). Yingke Zhou and team note that China’s headline

GDP growth slowed to 4.3% y/y in Q2 from 5.0% in Q1, missing both consensus and the team’s

forecast as fiscal stimulus fade, credit impulse decline, and domestic demand weaken.

Reflecting the weaker-than-expected Q2 real GDP growth, they revise down their 2026 full-year

GDP growth forecast modestly to 4.5% from 4.6%.