Europe looks to ‘messy’ earnings that may test market’s optimism

Investors are gearing up for a potentially tumultuous European earnings season that may offer clues on whether the stock market’s rapid rebound since the start of the Covid-19 pandemic has been wise or foolish.

The second-quarter reporting season kicks off this week with the likes of Volvo, Electrolux and Nordea Bank set to shed light on the virus’s profit impact. And with the region’s stock market having rallied 30% from March lows on bets that companies will start recovering in the second half of 2020, investors will be hungry for guidance that shows whether such optimism is well-founded.