BlackRock: Corporate profit prospects have appropriately reflected tariff risks, European stocks are expected to continue rising.

Helen Jewell, Chief Investment Officer of BlackRock's Fundamental Equity Investment Division in Europe, the Middle East, and Africa (EMEA), said that the profit prospects of European companies have appropriately reflected the tariff risks. She believes that as long as there are no trade shocks, the uptrend in the European stock market will continue. Jewell said, "Earnings data have declined; this is not a complacent market. As long as European exporters continue to strive, there is still room for further upside in the market." Jewell's views sharply contrast with those of Goldman Sachs strategists, who warned that the current optimism in the stock market may be overdone due to ongoing trade uncertainty before the tariffs take effect on August 1. Analysts have lowered their earnings forecasts for the second quarter. The Stoxx Europe 600 index hit a low on April 9 when U.S. President Donald Trump suspended some of the most severe tariffs in nearly a century. Since then, the index has risen by 16%. However, a Citigroup index shows that analysts have been lowering earnings forecasts since mid-March, and over the past month, the stock market's gains have slowed as investors evaluate the impact of the trade war on consumer demand. According to data compiled by Bloomberg Intelligence, analysts expect a 4.8% decline in earnings for European MSCI index constituents in the second quarter, the largest year-over-year drop since the beginning of 2024. Jewell said, "If a company makes a misstep, there is not much room for recovery. Is this a complacent market? No. Is this a perhaps more fragile market? Yes." As trade agreements have not been finalized, Jewell warns that investors should not over-invest in U.S. or European stocks. Instead, she advises focusing on themes like artificial intelligence and sustainable energy.