Barclays sees 'unavoidable' short-term tariff pain for European capital goods

Barclays sees short-term pain from U.S. tariffs across the European capital goods sector as "unavoidable"

The broker says tariffs add to an already subdued backdrop for the sector, which faces muted recovery in industrial activity globally and minimal capex growth outside of hyperscaler investment

It foresees likely effects such as cuts to output and operational expenditure, a pause on investment decisions, and potential double-digit price increases in the U.S.

"We think this downturn could be characterised by an absence of a 'V' shaped recovery due to the lack of available stimulus support in U.S. and Europe" in comparison with to the Covid pandemic and the global financial crisis of 2008

It cuts Gea Group G1AG.DE, SKF SKFb.ST, Morgan Advanced Materials MGAMM.L, TT Electronics TTG.L and Autostore AUTO.OL to "equal-weight" from "overweight"

Downgrades Metso METSO.HE to "underweight" from "equal-weight"

"The medium- to long-term silver lining is that the re-cutting of global supply chains/reshoring should bring stronger growth to industrials as companies would build it, but perceived near-term demand shock is winning," broker says

SKF flagged on Friday like-for-like sales are likely to weaken in Q2 as tariffs threaten already muted demand