The STOXX 50 and STOXX 600 both edged up 0.2% on Tuesday, marking a modest continuation of Monday’s stronger performance when the indices climbed around 1%.
European shares edge up
The gains reflected lingering optimism following former President Trump’s decision to delay the implementation of a proposed 50% tariff on EU imports until July 9, which temporarily alleviated fears of an imminent transatlantic trade clash. However, that initial enthusiasm began to fade as investors turned cautious, awaiting fresh catalysts to drive the next leg of the market’s direction. With earnings season winding down and summer liquidity conditions approaching, market participants are increasingly focused on macroeconomic indicators and central bank guidance for signs of momentum.
On the economic front, data releases painted a mixed picture of the Eurozone’s health. Germany’s GfK consumer confidence index improved for the third consecutive month, suggesting a gradual recovery in household sentiment. However, the gain was smaller than forecast, highlighting continued consumer wariness amid high living costs and geopolitical uncertainty. Meanwhile, in France, headline inflation unexpectedly eased to 0.7% year-over-year, offering some relief to policymakers and consumers alike. The decline was driven largely by a moderation in food and energy prices, though underlying inflation pressures remain a concern across much of the bloc.
Sector-wise, defense stocks led the way, buoyed by renewed geopolitical tensions after Trump signaled potential new sanctions against Russia. The prospect of increased defense spending across NATO-aligned countries boosted investor interest in military and aerospace contractors. Rolls-Royce advanced 2.9%, Rheinmetall gained 1.8%, BAE Systems rose 1.7%, and France’s Safran added 0.5%, continuing a strong year-to-date performance for the sector.
Other notable gainers included tech and energy names
Semiconductor giant ASML Holding rose 1%, benefiting from a rebound in global chip demand and upbeat sentiment toward the sector. Energy giant Shell climbed 1.2%, supported by stable oil prices and solid cash flow expectations, while Airbus also added 1.2% on optimism surrounding new aircraft orders and easing supply chain pressures.
Despite Tuesday’s moderate rise, analysts warn that volatility may return as markets navigate an increasingly complex backdrop that includes sticky inflation, diverging central bank paths, and heightened geopolitical risk. With the European Central Bank expected to begin cutting interest rates soon, investors will be watching closely for any forward guidance that might affect the outlook for growth and equity valuations in the second half of the year.
