European corporate profitability is showing signs of improvement, with first-quarter earnings now expected to rise by 2.3%, up from the previous forecast of 1.9%, according to the latest LSEG I/B/E/S data.

Key highlights:

• 60.1% of STOXX 600 companies reporting so far have exceeded analysts’ earnings expectations.

• Revenue growth forecasts remain unchanged at 2.3%.

• This marks a recovery from Q1 2024, when earnings and revenues declined by 3.3% and 4.6%, respectively.

• The STOXX 600 index has gained approximately 9% year-to-date, approaching nine-week highs despite ongoing trade concerns.

However, macroeconomic uncertainty and the risk of renewed U.S. trade tariffs continue to weigh on sentiment. An Allianz Trade survey indicates that 42% of companies expect export revenue to decline, up significantly from just 5% before the tariff announcements on April 2.

Among recent corporate results, Vodafone reported earnings broadly in line with expectations, and upcoming releases from firms like JD Sports will provide further insight into Q1 performance under current market conditions.

Overall, while investor confidence is cautiously improving, geopolitical risks and trade policy remain key headwinds for European corporates.