The outlook for European corporate health has slightly worsened, according to forecasts released on Thursday, as relief from U.S. tariffs is outweighed by ongoing geopolitical tensions straining traditional Western alliances.
European firms are expected to report a 4.2% drop in 2025 fourth-quarter earnings, on average, according to LSEG I/B/E/S data, slightly worse than the 4.1% decrease analysts expected a week ago.
That would be the worst earnings performance in the past seven quarters.
REVENUES ALSO TAKE A HIT
U.S. president Donald Trump ruled out on Wednesday seizing Greenland by force and said he would not be imposing 10% tariffs on eight European allies after reaching a framework agreement regarding the Arctic island.
Although the details are unclear, the news pushed European stocks higher, with the STOXX 600 index rising around 1% as the current earnings season gathers steam.
Still, analysts and investors cautioned against complacency, warning of the Trump administration’s unpredictable approach to foreign policy.
The outlook for revenues also took a hit and are now expected to shrink 3.5% compared to last year, according to the LSEG data. That is worse than the 2.9% fall expected last week.
(Reporting by Javi West Larrañaga)
