European stock markets saw a strong close on Tuesday, building on the previous session’s significant gains. This rally came on the heels of potential U.S. action to pause tariffs on automobiles and parts, a development poised to benefit pivotal segments of the European economy. The Eurozone's STOXX 50 advanced by 1.2%, while the broader STOXX 600 of pan-European stocks rose by 1.6%. Market confidence was bolstered by President Trump’s comments on Monday about the possibility of introducing temporary exemptions on tariffs for imported vehicles and parts. Such a move aims to provide car manufacturers additional time to increase production within the United States.
These comments not only offered relief to companies with substantial stakes in the automotive sector but also raised hopes that the U.S. President may be cautious about implementing tariffs without considering market repercussions. In response, Stellantis saw its shares jump by 6.5%, with Volkswagen and BMW each enjoying a 3% rise. Significant gains were also recorded in the banking sector, with Santander and UniCredit both climbing over 3%. Conversely, LVMH dropped over 7% after posting disappointing first-quarter revenue figures.
