Markets sprang back to life on Monday as a wave of cautious optimism swept across Europe. Investors responded positively to signs that upcoming US tariffs may be more focused and less aggressive than feared, reigniting confidence in key sectors and supporting a broad-based rebound.
The STOXX 50 climbed 0.8% while the broader STOXX 600 surged 0.6%, reversing some of Friday’s losses. Fresh reports suggest President Trump’s impending tariffs, expected to roll out on 2 April, may be more targeted in scope than his earlier rhetoric implied. This development calmed investor nerves, fuelling renewed appetite for risk across the continent.
At the same time, purchasing managers’ index data added further texture to the market picture. France delivered stronger-than-expected PMI results, reinforcing its relative economic resilience. Germany’s services and composite PMIs came in below expectations, but a surprise beat in manufacturing provided a silver lining for Europe’s industrial powerhouse.
Sector performance painted a telling picture of investor sentiment. Basic resources, technology and banking stocks led the charge, with defence names also seeing significant upside. Conversely, food and telecom shares were under pressure, suggesting a rotation out of defensive plays and into growth-driven sectors amid a shifting macro outlook.
This rebound underscores the market’s sensitivity to policy nuance and data surprises, with investors seeking clarity as geopolitical risks evolve and economic signals remain mixed.
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