European firms are reporting earnings significantly ahead of expectations, allowing for some relief in the market, but tariffs and the uncertain path of economic growth continue to cloud the outlook.
Companies on the MSCI Europe index are averaging earnings growth of 3.8% so far, outpacing preseason estimates of a 1.4% decline, with over half of the index’s market value having reported. Sales growth for the basket of European firms is also currently ahead of estimates, Bloomberg Intelligence data shows.
"First quarter earnings look solid with blended EPS starting to inflect higher, but top-line beats have been tepid,” said Barclays strategists including Magesh Kumar Chandrasekaran and Emmanuel Cau. Still, they add that "guidance has been weak and sentiment on capex has turned cautious owing to tariffs,” citing exposed sectors including commodities, discretionary, industrials and utilities.
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