European stocks rise after Trump delays 50% tariffs on EU 

Deadline extended to July 9 after call with European Commission president Ursula von der Leyen

European stock index futures gained after US president Donald Trump said he would extend the deadline for the European Union to face higher tariffs, as investors weigh the prospects for a longer-term trade deal. Picture: AP Photo/Manuel Balce Ceneta

European stocks gained after President Donald Trump said he would extend the deadline for the region to face higher tariffs, as investors weigh the prospects for a longer-term trade deal.

The Stoxx Europe 600 Index gained 1.0% at 1.24pm (12.24pm Irish time) in Madrid, with all sectors in the green and technology and industrial goods and services stocks leading the gains. Trading volumes were 57% lower than the 30-day average as the UK stock market was closed for a holiday. US markets also are closed.

Stocks fell in Europe on Friday after Trump threatened a 50% levy on the European Union starting June 1. He had complained that the EU was slow-walking negotiations and unfairly targeting American companies with lawsuits and regulations. A reprieve came Sunday with Trump pushing the deadline for the 50% rate to July 9 after a phone call with European Commission President Ursula von der Leyen.

“This is nothing more than the usual ‘threat and retreat’ that has been the modus operandi of this tariff tennis we have witnessed since the start of the year,” said Florian Ielpo, head of macro research at Lombard Odier Investment Managers. 

“European valuations outperforming in this context and the EUR progressing vis à vis the dollar are yet more signs that European stocks continue to look attractive in this high-uncertainty environment.” 

The EU had been slated for a 20% tariff under the reciprocal rates announced in April, and a temporary pause took the rate down to 10% through July 9. Ensuing expectations for a trade deal lifted sentiment, with the Stoxx 600 bouncing 18% from an April low through its recent high last week. Cyclical stocks had a sharp rally.

“‘Less bad news’ has been lifting valuations, but now we need ‘more good news’ to fuel this rally - good news on both the fiscal front and the growth front,” said Mr Ielpo.

Among individual movers, Thyssenkrupp advanced 6.4% after German’s Bild newspaper reported the firm’s chief executive Miguel Lopez plans to turn it into a holding company. The move would allow Thyssenkrupp to cut overhead costs as it divests further units, according to Bild.