LIVE MARKETS-Q1 earnings: expect tight-lipped caution

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Q1 EARNINGS: EXPECT TIGHT-LIPPED CAUTION

"Q: How should we think about earnings going forward? A: Who knows."

That's how Natixis Investment Managers portfolio managers put it in a note on Tuesday.

Companies will start releasing first-quarter results in just days, at a time of maximum uncertainty for investors. European stocks' 2025 performance has already wiped out amid U.S. Donald Trump's sweeping tariffs.

Natixis flags key questions surrounding demand destruction, capex grinding to a halt, the impact of slowing growth on profits, and torn apart supply chains.

So what should we expect to hear from companies?

"Expect to see ‘uncertainty’ repeated over and over. And this won’t help analysts with their earnings forecasts. Less Visibility. More uncertainty. Expect downgrades to say the least," says Natixis.

Luxury goods earnings will be closely watched, after shares in key players were pummelled in recent days, and JPM strats covering the luxury sector say the focus might be less on the Q1 numbers themselves.

"...we expect the vast majority of discussions to focus on mitigating actions from the tariffs and on the outlook on the American (and global) consumer from here" they write.

Overall, Q1 earnings could prove a welcome distraction, says Matt Britzman, senior equity analyst, Hargreaves Lansdown, though he says management teams are facing a tough patch,.

"Expect a lot of cautiousness, and possibly even a lack of quarterly guidance in some cases, as uncertainty takes centre stage," he writes.

First quarter earnings in Europe are expected to decrease 1.5% from Q1 2024, according to the latest data from LSEG I/B/E/S Excluding the energy sector, earnings are expected to increase 1.9%.

(Lucy Raitano)

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