Trump's tariff fog clouds outlook for Europe Inc after robust first quarter

By Samuel Indyk and Danilo Masoni

LONDON (Reuters) -Europe Inc has weathered the turbulence sparked by U.S. President Donald Trump's tariff policies to present resilient first-quarter earnings, but successful spite of the newly-minted commercialized truce, investors inactive look a fog of uncertainty.

According to LSEG I/B/E/S, archetypal 4th net are expected to person accrued 1.9% from the aforesaid 4th a twelvemonth ago, marking the 4th consecutive 4th of growth. Excluding the vigor sector, net are expected to person risen 7.3%.

The interaction of Trump's tariffs and macro-economic uncertainty dominated firm communications, portion immoderate companies warned astir the beardown euro and its interaction connected revenue. Cyclical parts of the marketplace struggled, portion slope net remained robust.

Here are 5 cardinal takeaways:

UNCERTAINTY REIGNS

Trump's tariff plans formed a shadiness implicit net and companies mostly reacted by maintaining oregon pulling guidance, adjacent arsenic concern got disconnected to a comparatively beardown commencement to the year.

"The past clip we had this benignant of uncertainty astir guidance and companies pointing to a deficiency of visibility was Q1 successful 2020 erstwhile COVID started," said Magesh Kumar Chandrasekaran, equity strategist astatine Barclays.

"This has been the astir unclear, oregon uncertain, net play from a guidance standpoint."

Despite the comparatively upbeat archetypal 4th - wherever 60% of companies person beaten estimates, compared to a accustomed 4th of astir 54% - statement estimates for the afloat twelvemonth person inactive been chopped aggressively implicit the past 2 months.

"It's going to beryllium hard to task archetypal 4th net further down the twelvemonth due to the fact that truthful overmuch has happened since the extremity of the quarter," said Kevin Thozet, subordinate of the concern committee astatine Carmignac.

MISSES PUNISHED BY MOST IN A DECADE

As has been the lawsuit successful caller quarters, net misses person been heavy penalised by the market, successful portion due to the fact that expectations had been downgraded heading into reporting season.

According to Goldman Sachs, the mean comparative terms absorption for companies reporting beneath expectations has been a 2% drop, the astir terrible of the past 10 years. Rewards for net beats stay successful enactment with the humanities average.

"There was astir apt anticipation that immoderate of the numbers successful Q1 would person the payment of front-loading and companies pulling enactment guardant due to the fact that they were unsure what was going to hap successful Q2," said Maarten Geerdink, caput of the European equities squad successful cardinal equity astatine Goldman Sachs Asset Management.