European stocks rebounded on Monday, driven by relief over U.S. President Donald Trump’s decision to extend the tariff deadline for the European Union. The STOXX 600 index rose 0.9% by 08:22 GMT, recouping losses from Friday when the index fell 0.9% following Trump’s abrupt call for 50% tariffs on EU goods.
Trump’s move to shift the tariff deadline to July 9 from June 1, announced after discussions with European Commission President Ursula von der Leyen, eased immediate trade tensions. The shift buoyed sentiment across sectors.
- Automobiles and parts gained 1.1%, with Stellantis rising 2.5%, Mercedes up 1.9%, and Valeo surging 4.9%.
- Luxury goods stocks, including Kering, LVMH, and Richemont, advanced between 0.9% and 1.4%, reflecting optimism about U.S.-exposed sales.
- Banks and technology shares rose 1.2% and 1.7% respectively, while aerospace and defense led sector gains at 1.8%.
The market bounce came as Trump’s tariff threats, which had rattled global trade outlooks, appeared less imminent, fostering a brief reprieve for risk assets.
Investor Sentiment Shifts Amid U.S. Economic Worries
Market analysts emphasized the rapidly evolving narrative surrounding trade and geopolitics. Swissquote Bank’s Ipek Ozkardeskaya cautioned that “whatever is true right now may not be true in about 10 minutes,” reflecting the volatility induced by Trump’s shifting policies.
The euro rose alongside other risk-sensitive currencies as the U.S. dollar extended losses against a basket of peers, reflecting investor sentiment shifting away from the dollar’s safe-haven status.
- Rising concerns about a U.S. economic slowdown and the impact of the May 16 Moody’s credit downgrade are persuading global investors to diversify away from U.S. assets.
- U.S. stock futures climbed over 1.3%, while trading volumes remained thin due to public holidays in the U.S. and UK.
Key Movers and Market Outlook
Shares in Thyssenkrupp jumped 6.7% after reports over the weekend suggested the company plans to seek shareholder approval on August 8 for spinning off its warship division. This strategic move comes amid broader sectoral realignments in European defense.
Looking ahead, markets await remarks from ECB President Christine Lagarde and key European economic data later this week, which could further influence risk sentiment.
- Watch for updates on trade negotiations, central bank decisions, and fiscal developments.
- Investors are recalibrating portfolios, balancing sector rotations with broader macroeconomic risks.
In the short term, continued caution prevails as markets weigh tariff dynamics, U.S. economic indicators, and geopolitical headlines.
