European stocks closed higher on Tuesday despite lingering concerns over US trade tariffs, which continued to weigh on investor sentiment. The markets experienced fluctuations throughout the session, as traders evaluated the impact of new tariffs on China and the temporary exemption granted to Canada and Mexico.
The Stoxx Europe 600 Index edged up by 0.2%, reflecting a day of careful market movements. While trade tensions remained a central concern, strong European corporate earnings helped offset some of the worries. The technology sector emerged as a leader, with Infineon Technologies AG surging after the semiconductor manufacturer lifted its revenue forecast beyond analyst expectations. The banking sector also gained momentum, driven by BNP Paribas SA and UBS Group AG, both of which launched share buybacks and delivered robust earnings reports.
The US imposed a 10% tariff on China, triggering retaliatory measures from Beijing that affected industries such as oil and agricultural equipment. Meanwhile, President Donald Trump granted Canada and Mexico a last-minute reprieve from 25% tariffs, though the decision on potential levies against European Union goods remains pending.
“The tariff issue is not going away as fast as one could have hoped for,” stated Andrea Tueni, head of sales trading at Saxo Banque France. “I think there’s a long-term risk that markets have not priced in yet, and volatility is likely to settle in—that’s what we’re seeing across markets today.”
Despite the uncertainty surrounding tariffs, European equities have maintained a strong start to the year. The regional Stoxx 600 index posted an impressive January, reaching record highs on the back of solid earnings reports.
“While economic growth in Europe is mediocre at best, we’ve been seeing, by contrast, earnings that show signs of resilience,” commented Eric Bleines, head of equities at Swiss Life Gestion Privee.
The ongoing trade negotiations and corporate earnings season will continue to shape market movements, with investors closely watching developments on both sides of the Atlantic.
JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
