By Marleen Kaesebier and Javi West Larrañaga
(Reuters) -The outlook for European corporate health has improved, the latest earnings forecasts showed on
Tuesday, after the European Union struck a framework trade deal with the U.S. on Sunday after weeks of negotiations.
European companies are expected to report growth of 1.8% in second-quarter earnings, on average, according to LSEG I/B/E/S data, a large improvement from the 0.3% fall analysts had expected a week ago.
The framework trade agreement sets out a 15% import tariff on most EU goods from next month, lower than the 30% U.S. President Donald Trump had threatened to apply earlier in July, but likely higher than businesses had hoped.
Before the agreement, Trump's tariff policies had changed frequently since April, the most common start of the second fiscal quarter. Some were imposed while others were proposed and then delayed.
This earnings season is the first to expose the impact of Trump's tariff-fuelled trade war on corporate health.
Revenue meanwhile is expected to be slightly worse than last week's estimate, the LSEG report showed, with analysts expecting a 3.3% fall versus a 3.1% drop previously.
That would be the worst quarterly performance in more than a year. It compares to a 3.0% increase in earnings and a 0.8% drop in revenues a year ago.
Milan-listed Stellantis said on Tuesday as it reported its half-year results that it expected a 1.5 billion euro ($1.7 billion) impact from U.S. tariffs this year, at the higher end of a forecast range provided last week.
Volkswagen last Friday cut its full-year sales and margin forecasts when it reported a 1.3 billion euro hit from tariffs for the first half, in the German carmaker's first assessment of the damage from Trump's trade war.
Companies still to report this week include Adidas, Anheuser-Busch InBev and Santander.
As of Monday's close, Europe's benchmark STOXX 600 index was up about 8% since the start of 2025.
($1 = 0.8674 euros)
(Reporting by Marleen Kaesebier and Javi West Larrañaga, Editing by Alexandra Hudson and Milla Nissi-Prussak)
