European Markets Rebound as Trump Delays EU Tariff Threat

European stock markets surged on Monday, recovering sharply from last week’s losses, after U.S. President Donald Trump announced a delay in his proposed 50% tariffs on European Union goods. The move eased investor concerns and injected a wave of optimism across financial markets.

The pan-European STOXX 600 index climbed 0.9% by 08:22 GMT, rebounding from Friday’s 0.9% drop when Trump initially threatened the tariffs, citing slow progress in trade negotiations with the EU.

However, on Sunday, Trump extended the tariff deadline to July 9, giving more time for talks after European Commission President Ursula von der Leyen requested an extension.

Investor relief was evident across several key sectors. The automobiles and parts index rose 1.1%, with major gains from companies such as Stellantis (+2.5%), Mercedes (+1.9%), and Valeo (+4.9%). Luxury goods, which rely heavily on the U.S. market, also performed strongly, with shares of LVMH, Kering, and Richemont advancing between 0.9% and 1.4%.

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Banks, which tend to be sensitive to economic outlooks, saw a 1.2% uptick, while technology stocks increased by 1.7%. The aerospace and defense sector led the gains, rising 1.8%.

Currency markets reacted positively as well. The euro gained momentum, along with other risk-sensitive currencies, while the U.S. dollar continued to weaken. Analysts attribute this to growing investor unease about the U.S. economic outlook, which has been marred by slowing growth and a recent credit rating downgrade by Moody’s on May 16.

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“There’s a lot of uncertainty. What’s true now might not be in ten minutes,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank. “Investors have long viewed the U.S. as the safest bet, but rising trade and geopolitical tensions are shifting that sentiment.”

Trading volumes were thinner due to market holidays in the U.S. and UK, but U.S. futures still pointed to gains of over 1.3%.

Meanwhile, shares in German industrial giant Thyssenkrupp jumped 6.7% after reports emerged that the company would hold a shareholder meeting on August 8 to approve a potential spin-off of its warship division.

Investors are now turning their attention to a speech from European Central Bank President Christine Lagarde and key economic data expected from the eurozone later this week.