European Stocks Rebound After Trump Eases Greenland Tariffs
European markets finally lifted their heads after four consecutive sessions of decline. This recovery occurred after US President Donald Trump eased the threat of tariffs previously linked to the Greenland issue, while earnings reports from several major companies also provided a breath of fresh air to the market.
The Stoxx Europe 600 Index closed up around 1%, its strongest daily surge since November. Stocks sensitive to global trade flows also rose—from luxury goods to automotive—reflected by Barclays' select basket, which rose 1.3%. In the UK, the FTSE 100 moved lower after news emerged of potential political turmoil that could drag into Keir Starmer's leadership.
Sector-wise, construction emerged as a standout, while mining and energy lagged. The market appeared to have returned to a more selective "risk-on" approach: sectors benefiting from a stable economic outlook received buying, while commodity-based sectors tended to be more cautious.
The drivers remained geopolitical. Trump stated that he would not proceed with tariff plans on European countries that oppose the US push regarding Greenland, citing a "framework" for future discussions. The threat of 10% tariffs had previously sparked a surge in uncertainty, pushing the Stoxx 600 down nearly 2% in just the first three days of the week as investors worried the trade war would hurt growth prospects.
The earnings season then clarified the market's direction. Volkswagen jumped 6.5% after its automotive division's cash flow beat estimates, while Michelin rose 3.5% on better-than-expected free cash flow performance. However, issuer-based volatility remained high: Ubisoft plunged 40% after cutting its forecast and canceling several game projects, while Carl Zeiss Meditec plunged 17% after withdrawing its earnings guidance, falling to its lowest level since 2016.
Looking ahead, market participants are starting to reassess fundamentals. Compiled data shows MSCI Europe companies are expected to post profit growth of around 1.3% in the fourth quarter—the best forecast in three years. With geopolitical headlines somewhat calmer, the focus on European markets has shifted: will earnings season be strong enough to keep the rally alive?
Source: Newsmaker.id
