European stocks subdued as corporate news outweighs US credit downgrade
FRANKFURT: European stocks closed flat on Monday, following a five-week winning streak, as declines from a surprise US credit rating downgrade were offset by upbeat corporate updates.
The pan-European STOXX 600 index pared earlier declines to close 0.1% higher, hovering around the seven-week intraday high it touched on Friday.
Credit rating agency Moody's cut its ratings on US debt on Friday, citing concerns about the nation's growing $36 trillion debt pile, which sent jitters across global markets earlier in the day.
'The downgrade reflects what markets already know: we're in a new fiscal regime defined by austerity via tariffs and caps... Don't overreact to the downgrade itself as history shows these calls often lag the fundamentals,' said Lale Akoner, global market analyst at eToro.
Wall Street's main indexes were lower, and longer-dated US Treasury yields rose, though were off their session peaks.
Meanwhile, US President Donald Trump's sweeping tax-cut bill, which had been stalled for days, won approval from a key congressional committee on Sunday, while Treasury Secretary Scott Bessent said in television interviews that President Donald Trump will carry out tariff threats if trading partners do not negotiate in 'good faith' on deals.
'There's some issues around the tariffs coming back and reminding everyone that while we've seen some de-escalation, it's not kind of all over and done with,' said Richard Flax, chief investment officer at Moneyfarm.
De-escalation in US-China tariff war and hopes of interest rate cuts from the European Central Bank have helped regional markets recover from the early April slump when Trump announced 'reciprocal' tariffs, with Germany's DAX touching a record high on Monday.
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