European equities rebounded sharply on Monday as easing trade tensions between the U.S. and China sparked renewed optimism in markets. The pan-European STOXX 600 index rose 2.1% by 08:24 GMT, reversing a multi-week downtrend fueled by tariff-related uncertainty.
The boost came after President Donald Trump excluded smartphones, computers, and select electronics from steep import tariffs on Chinese goods. The decision offered much-needed relief to global tech investors and helped reset sentiment following a nearly 12% decline in the STOXX 600 from its record peak.
Technology stocks were among the top performers:
- Infineon Technologies gained 3.3%
- ASML Holding rose 3.8%
- BE Semiconductor jumped 4.2%
The broader European tech sector advanced 3%, while banks rose 3.1%, reflecting a broader risk-on sentiment.
Germany’s DAX led regional gains with a 2.5% increase, while indices in France, Spain, and the UK climbed between 1.8% and 2.1%.
Trump’s Tariff Shift Buoys Sentiment
The market rally followed Trump’s announcement over the weekend that electronics would be temporarily excluded from his 145% tariff package targeting China. The move was viewed as a potential opening toward negotiations rather than escalation.
Still, caution remains. Trump indicated on Sunday that tariffs on semiconductors are forthcoming, and a decision on smartphones is expected “soon.”
Market experts urged restraint:
“There’s more than a little uncertainty around how this will play out,” said Richard Flax, CIO at Moneyfarm. “Investors see flexibility, but not a resolution.”
Amid continued ambiguity, Goldman Sachs revised its 12-month forecast for the STOXX 600 down to 520 from 570—its second downgrade this month.
ECB Meeting and Corporate Movers
Investors are also turning attention to Thursday’s European Central Bank meeting, where a 25-basis-point rate cut is widely expected. Traders are pricing in deeper easing, with deposit rates projected to fall to 1.63% by December, down from 1.94% a month earlier.
In corporate news:
- BNP Paribas climbed 4.1% after revising its return forecast on its €5.1B AXA asset management acquisition—seen as a positive by investors.
- Vallourec shares rose 5.1% following exclusive talks to sell Serimax to Aldebaran Investment.
As trade headlines evolve, investor focus remains split between macroeconomic policy shifts and corporate resilience across Europe.
