EUROPEAN shares kicked off the week on a positive note on Monday, recouping the previous session’s losses, as markets heaved a sigh of relief after US President Donald Trump delayed his threat to impose a 50% tariff on the region.
The pan-European Stoxx 600 index closed 0.99 per cent higher at 550.50. It had lost 0.9 per cent on Friday after Trump unexpectedly called for sharp tariffs on goods from the European Union, saying that negotiations with the region were not moving fast enough.
On Sunday, Trump extended the deadline for tariffs to July 9 from June 1, after European Commission President Ursula von der Leyen said the 27-nation bloc needed more time to produce a deal.
The automobiles and parts index, sensitive to tariff-related pressures, led broader gains with a 1.8 per cent rise. However, they were limited by a 3.3 per cent decline in Porsche.
Defence companies were among the biggest boosts to the Stoxx 600 index, with Rheinmetall and Leonardo gaining over 3 per cent each and the aerospace and defence index advancing 1.7 per cent.
The stocks also pulled up the industrial goods and services sector by 1.5 per cent.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The defence and auto sectors helped German stocks rise by 1.7 per cent, near a record high.
Luxury stocks, highly exposed to the US market, also gained. Shares of Kering, LVMH and Richemont rose about 1 per cent each, as did the broader index
“While more time for EU-US negotiations is good news, the speed of the rebound in stocks suggests that investors may have become too optimistic on the path for trade discussions,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
The euro jumped along with other risk-sensitive currencies, while euro zone government bond yields were little changed, as Trump backtracked from his tariff threats.
Rising concerns about the US economic slowdown and fiscal woes, underscored by Moody’s credit rating downgrade on May 16, are pushing investors to limit their exposure to US assets.
“If you want to have a low-risk portfolio, the US is where you would go first, but with the trade tensions and geopolitical tensions, this favourable sentiment has shifted,” said Ipek Ozkardeskaya, a senior market analyst at Swissquote Bank.
Trading volumes were lighter than usual due to public holidays in the US and the UK markets. However, US stock futures were up more than 1 per cent each.
Thyssenkrupp jumped 8.8 per cent after a weekend report said the submarine and car parts maker plans to hold a shareholder meeting on August 8 to approve an expected spin-off of its warship division. Thyssenkrupp was not immediately available for comment.
Zealand Pharma topped the Stoxx 600 with a 10 per cent advance. REUTERS
