European outperformance even extends to tariff stocks

• Stoxx down 0.2%
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• U.S. share futures down 0.3%
• Ubisoft biggest gainer on Stoxx on Tencent tie up

European shares have outperformed U.S. in the first quarter of the year - you may have noticed one or two mentions of it - but one interesting sub facet of that genre is that this applies to tariff sensitive stocks relative to the broader market as well, probably not a good sign for the future.

UBS have been taking a look at what's priced in when it comes to tariffs - basically some escalation is, but not all - and they find that U.S. and European equities have been reacting differently.

They find that their baskets of tariff-sensitive stocks have underperformed broader markets by 17% in the U.S. but only 9% in Europe.

This also applies to analysts, and UBS find "US analysts have been downgrading sales and earnings growth broadly, but more so in tariff-sensitive sectors like consumer durables, autos, and retail."

Meanwhile in Europe, "analyst expectations have been resilient and there is not yet a downgrade trend for tariff-sensitive sectors like autos, luxury, or pharma."

"This leaves us wondering if EU investors are not yet pricing enough of the actual earnings impact of tariff escalation," say the analysts, led by Gerry Fowler.