Relative earnings upgrades

European equities have outperformed their U.S. counterparts since the start of the year, and this trend isn't just driven by market sentiment, as illustrated in today’s graph. For the first time in two years, analysts have begun revising earnings forecasts for European companies upwards relative to their U.S. peers (white line). While the shift is still modest—both in impact and, admittedly, in the size of the graph—it marks a step in the right direction. The next challenge? European companies must now deliver strong results to solidify this regained confidence.