Beyond Markets What we learnt from an unusual Q1 earnings season
May 27, 2025
Mathieu Racheter, Head of Equity Strategy Research at Julius Baer, shares his insights on the unusual Q1 2025 earnings season shaped by tariff disruptions and market uncertainties. He highlights how most companies exceeded expectations despite cautious investor sentiment. Racheter discusses the impacts on capital expenditures, particularly in the semiconductor sector, and offers strategies for navigating a volatile technology market. He also delves into opportunities in undervalued regions and the shifting dynamics toward software investments.
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Stronger Than Expected US Earnings
- Q1 2025 US earnings beat expectations with 78% better than estimates, above the 10-year average.
- Growth revised from 7% expected to 14%, though numbers are backward-looking pre-tariff impacts.
Europe Earnings Mixed But Positive
- European Q1 earnings generally beat expectations but less robust than the US.
- Banks outperformed while consumer cyclicals like autos disappointed.
Earnings Overshadowed by Tariffs
- Share price reactions to Q1 earnings were muted, with only small outperformance after beats.
- Tariff announcements overshadowed results, leading investors to discount Q1 numbers.