European shares rose on Tuesday as investors weighed trade negotiation between the US and EU. Trump said he was considering a modification to the 25% tariffs imposed on car imports.

The EU member states most impacted by the increased tariffs will be Ireland, Slovakia, Germany, Hungary, Italy, and Austria based on their reliance on exports to the US, according to credit rating agency Moody’s.

European companies are expected to report a 3% drop in Q1 earnings, LSEG I/B/E/S forecasts showed on Tuesday, as the uncertainty caused by Trump's tariffs persists.

Analysts also lowered their consensus expectations for revenue to a 2.5% increase. Results from this earnings season so far suggest the luxury sector is among those facing difficulties.

LVMH had a difficult start to the year, as shoppers in the US pulled back on beauty products while sales in China stayed weak. It has been overtaken by l Hermes as Europe’s largest luxury company by market cap.  

Some companies have started to withdraw, or refrain from giving financial forecasts, while investors and analysts expect many to issue profit warnings in the coming weeks.

The STOXX 50’s rally may have more room to run, but it seems hard to overcome the resistance at 50 SMA given the report that EU and US made scant progress bridging trade differences this week.

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