Europe: Shares notch best session since November 2022 after tariff-sparked pullback

European Shares Bounce Back from 14-Month Lows

European shares rose from 14-month lows on Tuesday, after four straight sessions of heavy selling, although investors continued to closely watch developments as countries responded to sweeping US tariffs.

The pan-European Stoxx 600 closed 2.72 per cent higher at 486.91 points after slumping over 12 per cent in the past four sessions.

World stocks broadly recovered some ground lost in the past few days even as investors worried about a possible global recession triggered by an escalating trade war.

European Commission Proposes Counter-Tariffs

The European Commission proposed counter-tariffs of 25 per cent on a range of US goods on Monday as the 27-member bloc grapples with tariffs on autos and metals already in place and faces a 20 per cent tariff on other products from Wednesday. However, it watered down some initial proposals, removing for example US bourbon from its list. It has also offered a “zero-for-zero” tariff deal to Washington.

Market Reaction

“We’ve moved from uncertainty to a little bit more certainty, and the market is trying to price that in,” said Stephen Dover, chief market strategist at Franklin Templeton, though he added that volatility is likely to remain high.

Sector Performance

Germany’s benchmark rose 2.5 per cent after the index stopped short of confirming a bear market in the previous session. Defence shares lifted an index of those stocks 5.1 per cent, while lenders rose 2.3 per cent and stocks of insurers gained 4.1 per cent.

Notable Stocks

Dutch chip equipment maker ASML and the UK’s AstraZeneca were the biggest boosts to the Stoxx 600, up 4.3 per cent and 3.2 per cent, respectively, and were among the biggest supports for the Stoxx.

Company News

German chipmaker Infineon Technologies edged up 0.8 per cent after saying it would buy Marvell Technology’s automotive ethernet business for about US$2.5 billion in cash, to expand its microcontroller segment. Germany’s Continental rose 4.6 per cent after saying it plans to turn its ContiTech rubber and plastics division into an independent entity.

Conclusion

European shares bounced back from 14-month lows, but investors continued to closely watch developments as countries responded to sweeping US tariffs. The pan-European Stoxx 600 closed 2.72 per cent higher, and defence shares lifted an index of those stocks 5.1 per cent.

FAQs

Q: What triggered the recent sell-off in European shares?
A: The sell-off was triggered by a series of US tariffs imposed on European goods, which led to concerns about a potential global recession.

Q: What is the European Commission proposing in response to US tariffs?
A: The European Commission has proposed counter-tariffs of 25 per cent on a range of US goods, as well as a “zero-for-zero” tariff deal to Washington.

Q: How did the Stoxx 600 perform on Tuesday?
A: The Stoxx 600 closed 2.72 per cent higher at 486.91 points, after slumping over 12 per cent in the past four sessions.

Q: What is the outlook for European pharma companies?
A: European pharma companies warned the European Commission president that US tariffs would expedite the industry’s shift away from Europe and toward the United States.