European earnings set to power past the US

As the mid-year earnings season accelerates, here are four tailwinds driving European profit growth past the US.

The euro has fallen by about a fifth against the dollar over the past year. It averaged $1.11 in the second quarter, down from an average of $1.37 in the same period a year earlier.

Industrial, pharmaceutical, and technology companies with a strong exposure to the US market, such as Airbus, Sanofi, and SAP, are set to benefit the most. SAP earlier this week reported a larger-than-expected 20% jump in quarterly sales, helped by the weaker euro. Contrast that with results from IBM: the US technology giant saw a 9 percentage-point drag on revenue from the stronger dollar.