Currency spikes and Trump tariffs take bite out of European results
1. U.S. tariffs and dollar weakness hurt Q2 performance and profits. 2. Companies face pressure to relocate jobs back to the U.S.
FAQ
Why Bearish?
The combination of tariffs and currency appreciation reduces multinational profits, negatively impacting S&P revenues. Historically, trade tensions have led to market declines, as seen during trade wars in 2018-2019.
How important is it?
The article highlights macroeconomic factors that could considerably affect S&P 500 performance. Tariffs typically influence profit margins across sectors, leading investors to reassess equity valuations.
Why Short Term?
The immediate effect of tariffs is visible in Q2 performance; thus, impact is short-lived. However, ongoing tariff negotiations could prolong negative effects.