European Earnings Forecast: A Slump Amid Global Uncertainty

Fourth-quarter earnings for European companies are predicted to fall by 4.1% amid geopolitical tensions and potential U.S. tariff changes. Investors remain wary, but stocks have hit record highs. Meanwhile, U.S. firms are set to see significant growth, challenging European forecasts.

European corporate earnings are projected to experience a significant decline in the upcoming fourth quarter, recent forecasts revealed on Thursday. This comes amid rising geopolitical tensions and as the market anticipates a U.S. Supreme Court decision regarding the legality of President Donald Trump's tariffs.

Analysts estimate a 4.1% drop in earnings for European companies, marking the worst performance in seven quarters. While European markets grapple with sluggish growth and trade uncertainties, investors have paradoxically driven major indexes like FTSE, DAX, and STOXX to new highs.

In contrast, U.S. companies are expected to outperform, with the S&P 500 poised for 8.8% growth. Despite the gloomy outlook for Europe, past predictions have been off, as seen in the third quarter when earnings beat expectations with a 7.3% increase.

(With inputs from agencies.)