Trump's tariffs create uncertainty for European companies despite strong first-quarter earnings

From Yahoo Finance: 2025-05-15 01:04:00

Europe Inc has demonstrated resilience in the face of Trump’s tariffs, with first-quarter earnings expected to rise 1.9%. Uncertainty looms, with companies cautious in their guidance due to global economic uncertainties and a strong euro. Bank earnings remain strong, while energy sector earnings are expected to decline by 28%.

As Trump’s tariff policies cast a shadow, companies are uncertain about future guidance, reminiscent of the uncertainty seen during the start of COVID. Despite a strong first quarter, consensus estimates for the full year have been cut aggressively. Earnings misses have been heavily penalized by the market.

The rally of the euro against the dollar adds to the challenges faced by European companies, with about 60% of revenues generated abroad. Export-oriented companies are particularly affected by the strong euro, with currency movements flagged as potential headwinds by major companies like SAP and Unilever.

Banks have largely weathered market volatility, with many beating expectations and sticking to forecasts. Despite moderating interest rates, the sector remains resilient in the face of global uncertainties. Financial stocks are expected to be the best performers this year, with banks attracting investors for their high payouts and strong balance sheets.

Energy earnings have suffered, with the sector expected to report a 28% decline in earnings. Lower economic activity and OPEC producing more than anticipated have contributed to this decline. Oil prices, which hit a four-year low last month, have rebounded slightly as trade tensions ease.

Read more: Trump’s tariff fog clouds outlook for Europe Inc after robust first quarter