Europe: Shares gain on defence boost, tariff delay aids sentiment

EUROPEAN shares closed higher on Tuesday with defence stocks boosting the market after US President Donald Trump threatened additional sanctions on Russia, while optimism lingered from the delay of US tariffs on the European Union.

The Stoxx 600 index closed 0.33 per cent higher at 552.32, building on Monday’s 1 per cent rise after Trump gave the EU a reprieve on his threatened 50 per cent tariffs.

EU policymakers have asked the bloc’s leading companies and CEOs for US investment plans to prepare for trade talks with Washington, according to two sources.

The bloc set up trade meetings with the United States, a step Trump said was positive.

The latest flip-flop on EU tariffs highlights the unpredictability of Trump’s trade policies, that have been shaking investor confidence and raising concerns over the fiscal health of the US economy.

The uncertainty has been pushing investors away from US assets to find other safe havens internationally.

Europe’s defence index jumped 1.7 per cent to a record high, after Trump said he would recommend additional sanctions on Moscow, amid escalating tensions between Russia and Ukraine.

“There is recognition of the fact that Trump is less close to Putin than he had been and that there is more likely to be a prolonged conflict in Ukraine rather than the quick end” said Nick Saunders, CEO of Webull UK.

“Defence is definitely a sector that is in fashion at the moment.”

Technology shares rose 1.1 per cent, while industrials added 0.9 per cent.

“People are actually looking for value at the moment and trying to pick the most profitable stocks rather than assuming that the rising tide is going to float all boats,” said Saunders.

In Germany, the DAX 40 ended 0.8 per cent higher, closing at an all-time high, after a survey indicated consumer sentiment is set to improve slightly heading into June.

However, the German Chamber of Commerce and Industry (DIHK) forecast a contraction in the economy this year.

Euro zone government bond yields dipped on the day.

Britain’s FTSE 100 share index ended 0.7 per cent higher as investors returned following a holiday on Monday.

French benchmark index CAC 40 was flat after preliminary data showed inflation fell to its lowest level since December 2020 in May, with the government hinting at proposals to get public finances under control in early July.

FLSmidth rose 3.4 per cent after Goldman Sachs raised the mining and cement technology supplier’s rating to “buy” from “neutral” on expectations of higher margins. REUTERS