European stocks surge.
European stocks rose strongly Monday after the U.S. reached a trade agreement with the European Union, ending fears of a tariffs war between the two massive trading blocs and providing more clarity for corporations.
EU-U.S. trade agreement
U.S. President Donald Trump announced a framework trade agreement with the European Union over the weekend, resulting in the imposition of a 15% import tariff on most EU goods, while committing the EU to invest some $600 billion in the United States.
The baseline 15% tariff, reached after discussions with European Commission President Ursula von der Leyen in Scotland, is above Europe’s initial hopes of securing a zero-for-zero tariff deal, but has still been welcomed as better than the threatened 30% rate.
The agreement now allows companies to plan for the future and averts a major bust-up between the two groups that account for almost a third of global trade.
The 15% rate matches an agreement with Japan made last week, as countries raced to reach trade agreements with the U.S. to avert the imposition of the hefty tariffs that were first announced on April 2.
Oil rises as US-EU deal boosts trade optimism.
The single currency later regained some ground and last traded 0.13% lower at $1.1676. Oil prices rose on Monday after the United States clinched a trade deal with the European Union and may extend a tariff pause with China, relieving concerns that higher levies could have hurt economic activity and limited fuel demand.
Brent crude futures inched up 61 cents, or 0.89%, to $69.05 a barrel by 0647 GMT, while U.S. West Texas Intermediate crude stood at $65.75 a barrel, up 59 cents, or 0.91%.
The U.S.-European Union trade deal and a possible extension in the U.S.-China tariff pause are supporting global financial markets and oil prices, IG markets analyst Tony Sycamore said.
“With the risk of a prolonged trade war and the importance of the August tariff deadlines being steadily defused, markets have responded positively,” he added in a note. Sunday’s U.S.-EU framework trade pact sets an import tariff of 15% on most EU goods, half the threatened rate. The deal averted a bigger trade war between two allies that account for almost one-third of global trade and could crimp fuel demand.
European shares rise to 4-month high.
European shares advanced to a four-month high on Monday, led by gains in auto and pharmaceutical stocks, after the EU cinched a trade deal with the U.S., avoiding a wider trade war ahead of the August 1 deadline.
The pan-European STOXX 600 index rose 0.8% by 0715 GMT. Most regional bourses were also in the green, with UK’s FTSE 100 adding 0.3%, Germany’s blue-chip DAX rising 0.7% and France’s CAC 40 gaining 1.1%.
The trade agreement imposes a 15% tariff on most EU goods and requires the EU to invest around $600 billion in the U.S., with tariff rates on spirits still under negotiation.
Automobile stocks were boosted on the day with Porsche and Volkswagen (ETR:VOWG_p) gaining 1.6% and 1.9%, respectively.
Mercedes-Benz (OTC:MBGAF), Stellantis (NYSE:STLA) and Volvo (OTC:VLVLY) Cars, which have pulled their 2025 financial guidance due to U.S. trade uncertainty, rose between 1.6% and 3%.
Pharmaceutical stocks also gained with the base tariff rate extending to cover healthcare. Novo Nordisk (NYSE:NVO) and Roche both rose more than 1.5%.
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