The outlook for European corporate earnings improved on Tuesday, according to Reuters, citing LSEG I/B/E/S data, after the European Union reached a framework trade agreement with the United States on Sunday, easing concerns over a full-scale tariff hike. Second-quarter earnings for European companies are now expected to grow by 1.8 per cent year-on-year—a sharp revision from last week's forecast of a 0.3 per cent decline. The improved outlook reflects reduced trade uncertainty following weeks of negotiations. Under the new deal, most EU goods will face a 15 per cent import tariff starting next month, lower than the 30 per cent threatened by US President Donald Trump earlier in July, though still higher than many businesses had hoped. Despite the earnings boost, revenue forecasts worsened slightly, with analysts now expecting a 3.3 per cent drop for the quarter—marking the weakest performance in over a year. The automotive sector has been hit particularly hard. Stellantis on Tuesday warned of a €1.5 billion ($1.7 billion) tariff impact for 2025, while Volkswagen last week reported a €1.3 billion hit for the first half and lowered its full-year sales and margin guidance. Major firms including Adidas, Anheuser-Busch InBev, and Santander, are due to report results later this week. Attribution: Reuters Subediting: Y.Yasser
