Jan 15 (Reuters) - European corporate earnings are set to decline in the fourth quarter, the latest forecasts showed on Thursday, as geopolitical uncertainty mounts and the market awaits a decision
European Corporates Anticipate Worst Earnings Decline in Seven Quarters
European Corporate Earnings Outlook
Jan 15 (Reuters) - European corporate earnings are set to decline in the fourth quarter, the latest forecasts showed on Thursday, as geopolitical uncertainty mounts and the market awaits a decision from the U.S. Supreme Court on the legality of President Donald Trump's tariffs.
European firms are expected to report a 4.1% drop in 2025 fourth-quarter earnings, on average, according to LSEG I/B/E/S data, worse than the 3.9% decrease analysts expected a week ago.
That would be the worst earnings performance in the past seven quarters.
Impact of Geopolitical Factors
WHY IT MATTERS
As Europe reels from sluggish growth prospects and a more uncertain trade environment, the Supreme Court's ruling could have far-reaching consequences for the global economy if it overturns a wide array of tariffs imposed by U.S. President Donald Trump.
Though European investors seem negative towards the upcoming results season, they have pushed bourses to records, with the FTSE , DAX and STOXX indexes recently hitting their highest levels ever.
Comparison with U.S. Earnings
Revenues are also expected to shrink 2.9% compared to last year, according to the LSEG data. That is worse than the 2.6% fall expected last week.
CONTEXT
Meanwhile, earnings of U.S. companies are forecast to significantly outperform European ones with S&P 500 companies expected to deliver 8.8% average earnings growth, according to a different LSEG I/B/E/S report published on Friday.
Historical Context of Earnings Performance
Early forecasts are not always good predictors of the end result. For months, investors expected unremarkable or even negative growth for 2025’s third-quarter results, but STOXX 600 companies ended up delivering 7.3% year-on-year earnings growth in the quarter.
(Reporting by Javi West Larrañaga; Editing by Matt Scuffham)
