European Equities Rally Amid Trade Deal Uncertainities
European equities saw a modest increase, driven by gains in EssilorLuxottica despite concerns over a new trade deal between the US and EU. The STOXX 600 index climbed 0.5%, buoyed by France's CAC and Germany's DAX, as investors remain cautious about the 15% levy on EU goods.
On Tuesday, European equities experienced a slight uptick, propelled by rising stocks in EssilorLuxottica amid a host of corporate earnings reports. This comes as investors gauge the implications of a newly established trade deal between Washington and Brussels. The pan-European STOXX 600 index rose by 0.5% at 0815 GMT, with most regional indices, including Germany's DAX and France's CAC, increasing nearly 1% each.
The STOXX 600 initially climbed 0.9% on Monday to reach a four-month high but reversed to close 0.2% lower. This shift is attributed to market concerns over a new 15% tariff on most European Union goods, marking a significant hike from pre-2025 levels. Andrea Cicione of TS Lombard expressed that while tariffs are generally unfavorable, the reaction indicates relief. He suggested markets may view the new deal as a reasonable compromise in due time.
The focus also shifted to US-China trade talks, following a meeting aimed at resolving economic disputes and potentially extending a tariff truce. Aerospace and defense stocks recovered by 1.9%, benefitting from the new trade framework offering zero tariffs on aircraft. Meanwhile, EssilorLuxottica shares surged 6% owing to increased first-half profits, while Philips rose 10.3% after reducing its anticipated tariff impacts post-deal with the US.
(With inputs from agencies.)
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