(Bloomberg) -- Earnings season in Europe is picking up pace, as semiconductor suppliers and industrials join consumer-facing companies reporting quarterly results in the coming days.

Optimism the global economy can make a soft landing is growing, although the debate surrounding the time to slow interest rate hikes remains in full swing, with European Central Bank hawks coming out in force over the weekend to argue for continued half-point increases.

Signs the rally in European equity markets is overheating are also strengthening. 

That said, hopes are high for a rebound in air travel this year, with travel and leisure stocks leading gains on the Stoxx Europe 600 Index since Dec. 31. Budget airlines have gained more than most, indicating passengers’ eyes are clearly still on their wallets, even amid signs inflation may have peaked.

Just how eager Europeans are to take to the skies in the coming months may be revealed when EasyJet Plc and Wizz Air Holdings Plc offer clues on the extent to which travelers are trading down to cheaper carriers or scrapping foreign holidays altogether.

Fashion retailers Primark, owned by Associated British Foods Plc, and Hennes & Mauritz AB may also benefit from the trade-down effect, if shoppers put price over prestige when it comes to clothing. Early indications show that the Christmas period wasn’t quite as bad as previously feared, so the outlook for the full year will be in focus for both companies.

Cost inflation will come to the fore for Volvo AB, when it reports on Thursday. Volvo’s trucks unit has been beset with supply chain issues, a problem also dogging Atlas Copco AB’s vacuum technique business, which reports the same day.

And investors following developments in the chip industry will be closely watching ASML Holding NV and STMicroelectronics NV’s guidance after Asian giant TSMC indicated earlier this month that the semiconductor shortage may be nearing an end, just as consumer demand for end products like mobile phones appears to be softening.

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• For more on what’s going on in other regions, see the US Earnings Week Ahead or the Asia Earnings Week Ahead, and see the ESG Stock Watch for a selection of the environmental, social and governance themes that may come up on this week’s earnings calls.

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Highlights to look for this week:

Monday: No major earnings of note.

Tuesday: AB Foods (ABF LN) will disclose a trading update encompassing the Christmas shopping period at 7 a.m. in London. Analysts will be gauging how well the Primark chain performed over the peak season after its owner reported what it called an “encouraging” start to the full year. In a December statement following the Annual General Meeting, the company said its plans to open 27 new Primark stores in the current year, of which 10 were due before Christmas, were on track. AB Foods, which also owns sugar, agriculture and ingredients operations, reiterated expectations for “significant growth” in the group sales even though adjusted operating profit was likely to be lower than in the previous financial year.

Wednesday: EasyJet’s (EZJ LN) first-quarter update before the UK open will be scoured for year-ahead guidance as well as any indication of how the company fared over the winter period. While pent-up demand helped some European airlines during December, the next few months may be trickier as costs continue to rise, household budgets are further tested, and skiers wait for snow, according to Bloomberg Intelligence’s Conroy Gaynor. EasyJet may also benefit from travelers trading down from more expensive peers, behavior that would reveal crucial information about the state of the European consumer, Gaynor notes. EasyJet has expressed optimism about the continued recovery of the travel industry, with Chief Operating Officer David Morgan telling Bloomberg that there’s no sign consumers are cutting down on travel or holidays.

Thursday: STMicroelectronics (STM FP) reports its fourth-quarter earnings at 7 a.m. CET. The chipmaker guided to net revenue of $4.4 billion and a gross margin of 47.3% in the three months through December. Investors will also be eyeing the company’s expectations for the first three months of 2023 for signs of pressure from interest rates on higher-duration sectors such as technology. Equita analyst Gianmarco Bonacina expects first-quarter sales of $3.8 billion, factoring in indications from TSMC, according to a research note on Tuesday. For Credit Suisse analysts, companies in the sector look set for a “good 2023,” singling out STMicro as its top outperform-rated pick due to depressed expectations and an attractive valuation. Others — such as Goldman Sachs analysts, which cut the stock to sell from neutral — are not so upbeat, citing the company’s exposure to a weakened consumer market.

Read More: Tech Rally Faces Tough Test With Earnings Season: Taking Stock

• Volvo (VOLVB SS) is set to release its fourth-quarter report at 7:20 a.m. CET, with analysts forecasting a 24% increase in adjusted operating profit year-on-year from the Swedish truck maker, according to estimates compiled by Bloomberg. Continued supply chain problems in Trucks, its biggest business, are seen largely countering higher volumes quarter-on-quarter, DNB’s Mattias Holmberg said. The analyst also expects Volvo may have provided similar support to some sub-suppliers last quarter as it did in the third, to ease cost pressures, while prioritizing delivery volumes over margins. Citi analysts see continued margin pressure in Trucks, emphasizing their “relatively cautious” stance ahead of the earnings release.
• Atlas Copco (ATCOA SS), due to report at noon, is also expected to present another quarter hampered by supply chain restraints, particularly in the Vacuum technique business, according to Pareto analysts Anders Roslund and Magnus Behm. Carnegie analysts still expect “quite a solid” quarter, predicting adjusted EBIT to hit a record SEK8.6 billion ($839 million). Organic order growth may have turned negative for the first time since 2020, BI’s Omid Vaziri said. Still, the group’s order intake is seen up 15% year-on-year, according to Bloomberg’s consensus of estimates. Trading activity late in 2022 and the first-quarter outlook will also be in focus.
• Wizz Air (WIZZ LN) will report its third-quarter update at 7 a.m. GMT. The Budapest-based airline faces many of the same consumer dynamics as EasyJet, yet many of its routes are under-utilized, according to BI’s Gaynor and Rob Barnett. The company has halted some operations in Romania due to limited profitability and has opened a base at Suceava airport to capitalize on rival Blue Air Aviation SA’s struggles. Family visits around the festive period may have given an added boost. Investors should also keep in mind Wizz Air’s “strategically important” Middle East expansion, which connects places like Romania and Hungary to Saudi Arabia, Barnett said. Estimates compiled by Bloomberg indicate the company will make more progress towards cutting its adjusted diluted EPS losses this year, although it may take until next year to return to profitability.

Friday: H&M’s (HMB SS) fourth-quarter earnings are due at 8 a.m. CET. While recession fears are expected to linger in the near-term, these don’t seem to have weighed too heavily on apparel sales as consumers make up for reduced spending during the pandemic, Handelsbanken’s Nicklas Skogman said. Still, a decline in the gross margin by some 320 basis points year-on-year may be on the cards as price increases probably weren’t enough to offset higher input costs and currency headwinds, he said. Looking ahead to the first three months of 2023, sales in local currency are seen climbing sequentially, in part due to “easy” year-on-year comparisons.

--With assistance from Gabriela Mello, Antonio Vanuzzo, Jonas Cho Walsgard and James Cone.

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