European stocks recover after Trump delayed EU tariffs in hopes of trading
By Nikhil Sharma and Purvi Agarwal
(Reuters) – European stocks began the week on Monday with a positive note as markets sighed for relief after President Donald Trump delayed the threat of imposing a 50% tariff on the region.
The Pan-European Stoxx 600 index rose 1%. He lost 0.9% on Friday after Trump unexpectedly called for sharp tariffs on goods from the European Union, saying negotiations with the region aren’t moving fast enough.
On Sunday, Trump extended the tariff deadline from June 1 to July 9 after European Commission President Ursula von der Leyen said the 27-nation bloc would need more time to generate deals.
The automotive and parts index, which is sensitive to tariff-related pressures, led to a 1.8% increase, resulting in a wider profit. However, it was limited by a 3.3% decline in Porsche.
The defense company is one of the biggest boosts in the Stoxx 600 index, with Rheinmetall and Leonardo each earning more than 3%, while the aerospace and defense indexes rose by 1.7%.
The stock also raised its industrial products and services division by 1.5%.
The defense and automotive sector helped German stocks rise 1.7% near record highs.
They also acquired high-end stocks that are highly exposed to the US market. Shares of Kering, LVMH and Richemont each rose about 1%.
“While the good news is that there will be more time for EU-US negotiations, the speed of stock rebound suggests that investors may have been too optimistic on the road to trade debate.”
The euro jumped alongside other risk-sensitive currencies, but the Eurozone government’s bond yields remained largely unchanged as it recedes from his tariff threat.
The slowdown in the US economy and growing concerns about the fiscal misery, highlighted by the May 16 downgrade of Moody’s credit rating, urged investors to limit their exposure to U.S. assets.
“If you want to have a low-risk portfolio, the US is where you go first, but trade tensions and geopolitical tensions have changed this positive sentiment,” said Ipek Ozcaldeskaya, senior market analyst at Swissquare Bank.
Due to public holidays in the US and UK markets, trading volumes were lighter than usual. However, US stock futures each increased by more than 1%.
Thyssenkrupp rose 8.8% after the weekend report said submarine and auto parts manufacturers were scheduled to hold a shareholders meeting on August 8 to approve the expected spin-off of the warship division. Thyssenkrupp could not immediately comment.