Automakers propel European shares to two-week highs on US-EU trade deal optimism
Futures tracking the pan-European STOXX 600 index got a further boost and were last up 2.1% as EU diplomats said the bloc and Washington were headed for a potential trade deal including a 15% U.S. baseline tariff on European imports - half the level U.S. President Donald Trump had threatened.
Negotiations between the two economies have lagged in recent weeks, and investors are keen for an agreement before the August 1 deadline. The European Commission is planning to unveil counter-tariffs if the talks fail.
The benchmark STOXX index <.STOXX> closed 1% higher and logged its biggest one-day gain in nearly a month, after Japan struck a trade deal with the U.S., sparking a rally in automobile stocks earlier in the day.
"One of the premises underlying global markets is that once tariffs are implemented, they will not be as negative as feared," said Steve Sosnick, chief market analyst at Interactive Brokers.
"From the European point of view, it's understandable why that would be perceived as good news, because it's reasonable to think that there will be some sort of negotiation between the U.S. and the EU to arrive at a deal".
Most of the major bourses in the region, including Germany's DAX , France's CAC 40 (.FCHI), opens new tab along with main stock indexes in Italy (.FTMIB), opens new tab, rallied more than 1.3%.
European automobile stocks (.SXAP), opens new tab surged 3.7% and logged its biggest daily rise in close to a month, tracking a steep rally by some Asian rivals.
European carmakers such as Stellantis, Mercedes-Benz (MBGn.DE), opens new tab, Volkswagen (VOWG.DE), opens new tab and Porsche (P911_p.DE), opens new tab gained between 6.1% and 7.3%.
Earnings were also on the radar, with technology stocks (.SX8P), opens new tab bogged down by a 4.1% slide in SAP (SAPG.DE), opens new tab as investors were disappointed the software company held off on increasing full-year targets after reporting higher quarterly sales and earnings.
ASM International (ASMI.AS), opens new tab dropped the most on the benchmark index, down 10.4%, after the computer chip equipment maker reported second-quarter bookings below market expectations.
UniCredit (CRDI.MI), opens new tab rose 3.6% after the Italian lender posted higher-than-expected quarterly profit and raised its fiscal-year outlook, a day after a clash with the government prompted Italy's second biggest bank to ditch its takeover bid for rival Banco BPM.
Nokia (NOKIA.HE), opens new tab, meanwhile, slumped 7.6% after the Finnish group lowered its guidance for 2025 comparable operating profit, while SSAB's (SSABa.ST), opens new tab slid 9% after earnings fell more than expected in the second quarter.
Spanish stocks (.IBEX), opens new tab were limited by a 4.7% drop in Iberdrola (IBE.MC), opens new tab after the utilities company raised 5 billion euros ($5.87 billion) to help pay for a big rise in investments in power grids in Britain and the United States.
($1 = 0.8515 euros)
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