European share markets steady as healthcare, financial stocks offset Trump’s tariff fears

Investors expressed cautious optimism as Donald Trump refrained from announcing immediate tariffs on Europe, instead focusing on Canada and Mexico.

European stock markets traded flat on Tuesday, with modest gains in healthcare and financial shares offsetting declines in other sectors, as investors weighed U.S. President Donald Trump’s early tariff threats against a lack of immediate sweeping measures. The pan-European STOXX 600 index edged up 0.1 percent, hovering near a three-month high.

Gainers: Healthcare, Financials; Losers: Automobiles, Renewable Energy

Healthcare stocks led the gains, rising 0.7 percent, driven by a 2.9 percent jump in Novo Nordisk shares. Financial services added 0.5 percent, with British asset manager ‘abrdn’ surging 4.5 percent after reporting net inflows in the fourth quarter.

Other notable gainers included personal and household goods stocks, which advanced 0.6 percent. Avanza Bank rose 7.4 percent to a three-year high on better-than-expected quarterly results.

However, basic resources dipped 0.8 percent, tracking lower metal prices. European automaker stocks fell amid lingering uncertainty over Trump’s trade policies. Volkswagen, BMW, and Stellantis shares all slipped about 1 percent.

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Renewable energy stocks suffered a sharp decline after Donald Trump suspended new federal offshore wind leases pending environmental and economic reviews. Orsted shares plunged 15.2 percent after posting a $1.7 billion impairment on its U.S. offshore wind portfolio. Vestas Wind Systems and Nordex SE shares fell by 2.6 percent each.

Relief over delayed tariffs tempered by caution

Investors expressed cautious optimism as Donald Trump refrained from announcing immediate tariffs on Europe, instead focusing on Canada and Mexico with threats of 25 percent levies by February 1. Trump also hinted at reversing the U.S. trade deficit with the European Union, potentially through tariffs or increased energy exports.

“This is clearly not the worst-case scenario in terms of trade,” said Christopher Dembik, senior investment adviser at Pictet Asset Management, to Bloomberg. “Trump’s focus is on Canada and Mexico but not on Europe at the moment. The market knows, however, that sooner or later Trump is coming for it,” said Dembik.

Gilles Guibout, head of European equities at AXA IM, told Bloomberg that the muted reaction in European markets was likely as “We had far less worse announcements than what was expected.”

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European market investors brace for a volatile ride

While the near-term outlook for European markets remains stable, strategists warned of potential volatility ahead. “Market is clearly on edge at this point about what comes next,” said Chris Beauchamp, chief market analyst at IG Group, to Reuters.

Kevin Thozet, a member of the investment committee at Carmignac, told Bloomberg, “We Europeans are not currently an immediate target of Trump’s trade policy, but of course, we could enter a phase of rollercoaster announcements moving forward.”

As Trump’s “America First” agenda unfolds, European markets remain susceptible to global trade tensions. “Trump doesn’t seem to be targeting Europe specifically, and if that’s broadly the case, we see some upside potential for European stocks,” said Benoit Peloille, chief investment officer at Natixis Wealth Management, to Bloomberg.

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