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(Bloomberg) — European equities rose on Tuesday on relief that US President Donald Trump had refrained from immediately targeting the region with trade tariffs.
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The Stoxx Europe 600 Index ended the session up 0.4%, with luxury goods makers LVMH, Hermes International SCA and weight-loss drug manufacturer Novo Nordisk A/S contributing to gains.
European stocks have outperformed US peers so far this month, but investors are keenly watching Trump’s first few days in power for more details on his trade policies.
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“Trump doesn’t seem to be targeting Europe specifically, and if that’s broadly the case, we see some upside potential for European stocks,” said Benoit Peloille, chief investment officer at Natixis Wealth Management. “Our message is there are other trades out there at the moment, at least tactically, than big US tech.”
Market participants are looking to make the most of current market swings. A survey by Bank of America Corp registered a sharp move toward European equities this month as some investors expect softer Trump tariffs.
Elsewhere, shares in miners and automakers, sectors that are most exposed to trade policy, dipped, as Trump pledged to impose 25% levies on Mexico and Canada. Spanish stocks also underperformed, dragged down by names exposed to Mexico. Wind-related shares trailed after the American president ordered a freeze on permitting US offshore wind power development.
Orsted A/S slumped as much as 18% after the company recorded a $1.7 billion hit on its earnings from rising offshore wind farm costs, magnifying concerns over the industry’s outlook in the US. Meanwhile, Sweden’s Avanza Bank Holding AB was the biggest gainer, rising 13%, after the stockbroker’s results beat expectations.
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At the same time, the market will have to get used to volatility as the US president is pushing through his executive orders, according to Oliver Collin, co-head of UK and European equities at Invesco Asset Management Ltd.
“You’re getting those initial gyrations but gradually the aftershocks will get less and less,” Collin said. “The stock market will become more and more sanguine about the noise and more discerning about the impact.”
For more on equity markets:
- Mining Rally Requires Trust in China’s Turnaround: Taking Stock
- M&A Watch Europe: Generali, BPCE, Anima, Antofagasta, Aedifica
- Franklin Sees Hot Gulf Market Boosted by Peace Push: ECM Watch
- US Stock Futures Erase Gains After Trump’s Comments on Tariffs
- House Prices Rebound: The London Rush
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—With assistance from Julien Ponthus.
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