LIVE MARKETS-European earnings beat the blues

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EUROPEAN EARNINGS BEAT THE BLUES

The market panic around Liberation Day just before the Q1 season had the effect of lowering expectations. With European companies now reporting and trade rhetoric softening, it's perhaps not too surprising that the season is turning out relatively well.

According to Bank of America, Q1 earnings have kicked off on a strong note, with EPS growth now running at 10%, above the 5% consensus estimate, largely driven by the tech sector, with companies like ASML and SAP leading the charge.

The US bank notes that companies with domestic exposure are faring much better than those geared towards the United States. The EPS beat rate is 56% for European-exposed companies, compared to 45% for US-exposed names - the third largest divergence since 2015.

Looking ahead, what can we expect? BofA doesn't make a firm forecast, however, it notes that the analyst consensus doesn't expect earnings strength to last, with an 8% earnings decline expected for Q1 as a whole.

Meanwhile, Deutsche Bank anticipates that earnings revisions could turn more positive again in the coming weeks after the tariff scare caused sharp cuts. As a result, the German bank is sticking to its FY growth estimate of 4% for European profits.

Also, the latest LSEG I/B/E/S forecast points to a drop of 1.7% in first-quarter earnings, less than half the 3.5% drop analysts had expected a week ago.

(Danilo Masoni)

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