By Marleen Kaesebier and Javi West Larrañaga
(Reuters) -The outlook for European corporate health has improved, the latest earnings forecasts showed on Tuesday, amid optimism over potential U.S. trading deals with key partners, especially China.
European companies are expected to report a drop of 1.7% in first-quarter earnings, on average, according to LSEG I/B/E/S data, better than the 3.5% drop analysts had expected a week ago.
According to the data of the STOXX 600 companies that have already reported first-quarter earnings, 60.4% reported results that exceeded analyst estimates.
Consensus for revenue remained unchanged from last week, with analysts expecting an increase of 1.4%.
This compares with a drop of 3.3% in earnings and a drop of 4.6% in revenues a year ago, the data showed.
Amid months of trade war talks, investors let out a short sigh of relief after U.S. President Donald Trump’s administration said on Monday it would scale down automotive tariffs.
In Germany, however, sports car maker Porsche on Tuesday slashed multiple forecasts for 2025, sending its shares tumbling about 4% as the global car industry stumbles through tariff disruptions and weak China sales.
British energy company BP also reported a deeper-than-expected 48% drop in net profit to $1.4 billion on weaker refining and gas trading on Tuesday.
Though banks are showing more resiliency in the face of uncertainties than other trade-exposed sectors, shares of Spanish lender BBVA slipped as much as 3.4% after it warned of the potential impact of U.S. tariffs on its Mexican unit.
As of Tuesday’s close, the Europe-wide STOXX 600 index was up 3.5% year-to-date, extending a six-day winning streak.
Results of companies including Airbus, Volkswagen and BASF later this week could showcase how European companies are faring amid market uncertainties in the first quarter.
(Reporting by Javi West Larrañaga and Marleen Kaesebier; Editing by Emelia Sithole-Matarise, Mark Porter and Rod Nickel)
