European stocks rebound as Trump’s tariff deadline extension boosts market sentiment
European shares rose sharply on Monday, poised to recoup the previous session’s losses on relief after U.S. President Donald Trump delayed his threat to impose a 50% tariff on the region.
The pan-European STOXX 600 index .STOXX rose 0.9%, as of 0822 GMT. The benchmark lost 0.9% 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.
“We had a very nice call, and I agreed to move it,” Trump said before returning to Washington after a weekend in New Jersey. “She said we will rapidly get together and see if we can work something out.”
Von der Leyen said in a post on X that she had a “good call” with Trump and that the EU was ready to move quickly.
“Europe is ready to advance talks swiftly and decisively,” she said. “To reach a good deal, we would need the time until July 9.”
The automobiles and parts index .SXAP, sensitive to tariff-related pressures, rebounded by 1.1%. Stellantis STLAM.MI gained 2.5%, Mercedes MBGn.DE rose 1.9% and Valeo VLF.PA jumped 4.9%.
Luxury stocks, highly exposed to the U.S. market, gained. Shares of Kering PRTP.PA, LVMH LVMH.PA and Richemont CFR.S rose between 0.9% and 1.4%.
Economically-sensitive banks .SX7E surged 1.2%, while technology stocks .SX8P rose 1.7%. The European aerospace and defence index .SXPARO led the sector gains, advancing 1.8%.
“One thing is for sure, whatever is said has to be taken with a pinch of salt because the narrative changes so fast. So, whatever is true right now may not be true in about 10 minutes,” said Ipek Ozkardeskaya, a senior market analyst at Swissquote Bank.
The euro jumped along with other risk-sensitive currencies, as Trump backtracked from his tariff threats, while the dollar extended its fall against a basket of currencies.
Rising concerns about the U.S. economic slowdown and fiscal woes, underscored by Moody’s credit rating downgrade on May 16, are increasingly persuading investors to limit their exposure to U.S. assets.
“There was this very deep and very historically anchored sentiment among investors that if you want to have a low-risk portfolio, a low-risk investment, the U.S. is where you would go first,” Ozkardeskaya added.
“But with the trade tensions and geopolitical tensions, this favorable sentiment towards the U.S. assets has shifted.”
