Following the US court challenge to Donald Trump's complex network of new tariffs and 'reciprocal' levies there has been an added layer of uncertainty to global stock markets.
Analysts at Panmure Liberum said UK and European earnings forecasts have been hit with sharper downgrades than in the US despite having less direct tariff exposure, so shone a spotlight on sectors where they believe downgrades look "inconsistent and possibly excessive".
The broker said 2025 EPS estimates have fallen 4.6% for the FTSE 100 and 3.7% for the Stoxx Europe, compared to a 2.0% drop for the S&P 500.
It follows new tariff threats by President Trump, including ramping up steel tariffs and new threats to the EU and China, tied up with a legal twist involving the Court of International Trade. As that decision was stayed pending appeal, most tariffs remain in force.
Among those, a 10% reciprocal tariff on UK goods is already in place, while a proposed 50% tariff on EU imports has been delayed to July.
Panmure strategists Susana Cruz and Joachim Klement said European sectors such as autos, basic resources, consumer products, financials and technology have seen notable estimate cuts.
In many cases, it said, these were steeper than for US peers despite similar or lower trade exposure.
Financial services have seen downgrades exceeding 5% for "a sector largely untouched by tariffs," the analysts said. Technology also showed regional divergence, with US tech forecasts broadly unchanged while European tech fell by around 5%.
EU carmakers, which earn nearly 24% of their revenues in the US and have been downgraded by 16%, which is ahead of the US sector, even though supply chain disruptions are likely to be similar.
Travel and leisure, media, and financials have all been cut by around 5% despite having limited US exposure and no direct tariff impact, "a potential case of overreaction".