Stock Markets Rise After Trump’s Delay of Tariffs on EU Goods

Following last week’s losses, European stock markets are showing recovery on Monday morning thanks to U.S. President Donald Trump’s decision to postpone the introduction of a 50 percent tariff on goods from the European Union until July 9. This has eased market tensions that he himself caused on Friday when he threatened to impose tariffs starting June 1 due to what he described as slow progress in trade negotiations with the EU.

The pan-European STOXX 600 index was up one percent at 9:30, while the Frankfurt DAX rose 1.42 percent to 23,964 points, and the Paris CAC increased by one percent to 7,812 points. Trump agreed to extend the deadline for negotiations after the President of the European Commission requested more time to reach a quality agreement.

Sectors sensitive to tariff threats particularly benefited – the automotive and parts manufacturers index rose by 1.4 percent, while shares of Mercedes, BMW, and Volkswagen increased between 1.9 and 2.1 percent. Shares of luxury goods manufacturers, heavily exposed to the U.S. market, jumped between 1.5 and 2.4 percent. Bank stocks strengthened by 1.5 percent, while technology stocks rose by an average of 1.9 percent.

Trading was, however, weaker due to holidays in the U.S. and the United Kingdom, and investors are closely monitoring upcoming macroeconomic indicators, including inflation and employment data in Germany and economic sentiment in the eurozone.

In Asian markets, the situation was mixed. The Japanese Nikkei index rose by one percent to 37,531 points, while the MSCI Asia-Pacific index (excluding Japan) was up 0.12 percent. Chinese markets were in the red – the Shanghai index fell by 0.3 percent, and the Hong Kong index dropped by one percent.

In the foreign exchange markets, the euro strengthened by 0.3 percent against the dollar to 1.1397 dollars – the highest level since the end of April – while the dollar slightly strengthened against the yen to 143.085 yen. The dollar index fell by 0.83 percent to 99.08 points.

Investor focus remains on the surge in U.S. public debt. After the House of Representatives passed Trump’s proposal to extend tax cuts, an additional $3.8 trillion in debt is projected over the next decade, bringing the total debt to $40 trillion.

Analysts warn that this fiscal uncertainty, along with trade tensions, is prompting investors to shift capital from the U.S. to Europe and Asia, fearing a possible recession in the U.S. and global slowdown.

– “Tariffs of 50 percent far exceed previous reciprocities. The U.S., EU, and China together account for 60 percent of global GDP, making this escalation a serious threat to the world economy,” analysts at Brown Brothers Harriman noted in a client memo.