Citi strategists say analyst earnings downgrade are contrarian ‘purchase’ sign
Analysts have downgraded earnings estimates for European firms to “recessionary” ranges, which may point out a contrarian “purchase” sign, in keeping with Citi’s fairness strategists.
Whereas European shares look like outperforming their U.S. friends this yr, Citi’s European fairness technique group, led by Beata Manthey, mentioned “[Earnings per share] downgrades have however continued to speed up, with our proprietary Earnings Revision Index (ERI) just lately hitting “recessionary” ranges of round -60%.”
The earnings per share estimates for the Stoxx Europe 600 index have fallen by 8.6% over the 12 months, in keeping with FactSet information.
However the Wall Avenue financial institution’s strategists additionally mentioned {that a} severely unfavorable studying of its proprietary measure additionally tends to be a contrarian sign to purchase shares. They pointed to information that confirmed shares had been about 25% greater after 12 months, after analysts turned bearish on shares. Nonetheless, the strategists cautioned that buyers may see three to 6 months for tepid returns.
“We due to this fact suppose it is sensible to selectively dip a toe into beaten-down Cyclicality; we Chubby Tech throughout the Cyclical Development bucket, and improve Autos to Chubby inside Cyclical Worth,” the Citi strategists added.
— Ganesh Rao
U.Ok. retail gross sales higher than anticipated
U.Ok. retail gross sales volumes rose for the third consecutive month in March by 0.4%, beating gloomy expectations of a 0.3% decline.
Clothes and out of doors retailers mentioned that good climate had boosted gross sales, in keeping with the Workplace for Nationwide Statistics, offsetting a decline in grocery store gross sales.
Nonetheless, some economists anticipate the optimistic development to be short-lived.
“Whereas right now’s retail gross sales information confirmed that households spent a bit extra freely than anticipated in Q1, that won’t final,” mentioned Alex Kerr, economist at Capital Economics.
“The decline in shopper confidence to a 17-month low, partially as a result of uncertainty stemming from the U.S. tariff regime and partially attributable to rising utility and water payments, is per the annual progress price of retail gross sales collapsing from 2.6% in March to round -1.0% in April.”
“If the drop in confidence is sustained, shopper spending progress could also be a bit softer than our forecast of 1.4% in 2025,” Kerr added.
Others had been cautious, however optimistic.
“Now the query is how a lot rising uncertainty will hit shoppers. We predict the central case is for less than a modest hit and would downplay the drop in confidence this morning,” mentioned Rob Wooden, chief U.Ok. economist at Pantheon Macroeconomics. “Uncertainty will crimp spending, however there may be solely a lot that U.Ok. shoppers care about U.S. tariffs on China.”
— Ganesh Rao
Jet engine maker Safran beats expectations amid commerce battle uncertainty
France-based jet engine maker Safran beat buyers’ expectations for the primary quarter and supplied “robust confidence” in reaching its full-year targets amid a U.S.-led world commerce battle.
Safran reported 7.3 billion euros in first-quarter 2025 gross sales, rising by 14% on an natural foundation and beating expectations of a 12.6% hike, in keeping with FactSet’s analysts’ consensus information.
The inventory has added 5% to date this yr.
The corporate, recognized for producing propulsion programs for airplanes, helicopters, and missiles, is predicted to be uncovered to any change within the world tariff regime.
“Whereas world commerce discussions are fluid, Safran is actively working to mitigate the financial affect from tariffs, notablyby adapting provide flows and fascinating with clients,” mentioned Olivier Andries, chief govt of Safran, in an announcement. “Precise efficiency and strong momentum in each the civil aerospace and protection sectors reinforce our robust confidence in reaching our steering, excluding any potential affect of tariffs, which it could be untimely to quantify at this stage.”
RBC analysts mentioned they anticipate Safran’s administration to offer some steering on “any preliminary estimate of the magnitude of the tariff affect.”
— Ganesh Rao
China might droop its 125% tariffs on some U.S. items: Bloomberg
China is mulling the suspension of its 125% tariff on sure U.S. items, Bloomberg reported citing sources aware of the matter.
The federal government is contemplating scrapping the additional duties on gadgets together with medical tools and industrial chemical compounds corresponding to ethane. Authorities are additionally reportedly debating scrapping the tariff on plane leases.
The offshore yuan strengthened barely to 7.284 in opposition to the dollar.
—Lee Ying Shan
Upcoming information circulation will drive short-term swings amid a market with elevated volatility, UBS says
Information circulation will proceed to dictate market strikes — at the very least within the quick time period, UBS wrote in a Thursday observe.
“We anticipate volatility to stay elevated as negotiations proceed, however latest developments recommend a much less aggressive strategy to resolving commerce disputes,” the agency mentioned. “The market’s robust rebound displays rising confidence that probably the most antagonistic end result might be prevented, although upcoming information circulation will doubtless proceed to drive short-term swings.”
— Lisa Kailai Han
S&P 500 futures open greater
S&P 500 futures rose on Thursday night time following one other profitable session for shares.
Futures linked to the broad market index traded 0.2% greater simply after 6 p.m. ET, and Nasdaq-100 futures climbed 0.3%. Futures tied to the Dow Jones Industrial Common fell 0.1%, in the meantime.
— Sean Conlon
