European equities edged higher Tuesday as investors responded to shifting U.S. trade policy. The pan-European STOXX 600 rose 0.9% by 08:02 GMT, buoyed by auto-related stocks after President Donald Trump hinted at easing tariffs on vehicle imports.
While most major indexes in Europe advanced, France’s CAC 40 slipped 0.1%, weighed down by a sharp drop in LVMH (EPA:LVMH) shares. Germany’s DAX, Spain’s IBEX, and the UK’s FTSE 100 all gained between 0.6% and 0.7%.
The auto and parts sector surged 2.2%, leading the day’s sectoral gains. Trump suggested a potential modification to the 25% tariff on foreign-made autos and parts, offering short-term relief for carmakers with global supply chains.
According to Georgios Leontaris of HSBC Global Private Banking, “The market is reacting positively to what appears to be a temporary carve-out on auto tariffs. It adds to the easing sentiment after the electronics sector was spared last week.”
Luxury Stocks Slide After Weak LVMH Results
Despite broader gains, luxury and beauty stocks pulled back sharply, with LVMH plunging 7.7%, its steepest drop since March 2020. The world’s top luxury group reported disappointing Q1 results, citing sluggish U.S. demand for beauty products and continued weakness in China.
The drop in LVMH also hit industry peers:
- Kering (EPA:PRTP): down 2.6%
- Richemont (SIX:CFR): down 1.4%
- Moncler: down 2.0%
- L’Oréal: down 2.5%
- Puig: down 2.7%
The underperformance reflects broader concerns that rising tariffs and economic uncertainty are dampening high-end consumer spending, especially in key markets like China and the U.S.
Stock Movers and Market Outlook
Elsewhere in the market, notable corporate developments included:
- BE Semiconductor (AS:BESI): up 6.8% after Applied Materials (NASDAQ:AMAT) acquired a 9% stake
- Ericsson (BS:ERICAs): up 6.9% following a strong Q1 earnings beat
- Fugro (AS:FUGR): down 14.6% after revising Q1 revenue and profit guidance downward
Markets remain volatile amid Trump’s unpredictable tariff announcements. The STOXX 600 is still down 11.2% from its record close, reflecting weeks of turbulence sparked by shifting trade policies.
Looking ahead, investors are focused on the European Central Bank’s meeting Thursday, where a 25-basis-point interest rate cut is widely expected. This decision will shape sentiment for the next phase of Europe’s economic and market trajectory.