European Markets Close Higher Despite Trump's Tariff Threats

(RTTNews) - European markets closed mostly higher on Monday as investors shrugged off U.S. President Donald Trump's tariff threats, and chose to pick up stocks amid optimism about more monetary easing by the European Central Bank.

Investors looked ahead to key inflation data from the U.S., and the Fed Chair Jerome Powell's congressional testimony, for clues about the outlook for interest rates.

Trump said over the weekend that he would announce new 25% tariffs on all steel and aluminium imports, raising fears of a brewing global trade war and its potential impact on the global economy.

German Chancellor Olaf Scholz reportedly emphasized that the EU is prepared to respond "within an hour" if the US imposes tariffs on European goods.

China's retaliatory tariffs on U.S. goods are set to take effect today. Trump has stated that he would announce reciprocal tariffs on Tuesday or Wednesday that mirror the tariffs those countries charge on American exports.

Amid a lack of fresh data due from the region, investors largerly refrain from making significant moves.

Expectations of more monetary easing by the European Central Bank aided sentiment. ECB Governing Council member Boris Vujcic said that expectations for three more rate reductions this year are reasonable.

The pan European Stoxx 600 gained 0.58%. The U.K.'s FTSE 100 climbed 0.77%, Germany's DAX closed higher by 0.57% and France's CAC 40 ended 0.42% up, while Switzerland's SMI settled with a gain of 0.27%.

Among other markets in Europe, Austria, Belgium, Finland, Netherlands, Norway, Poland, Portugal, Spain and Sweden closed higher.

Denmark, Greece, Iceland, Ireland and Turkiye ended weak.

In the UK market, shares of BP Plc climbed nearly 7.5% after activist investor Elliott Investment Management built a stake in the company. Elliott's involvement at BP will reportedly result in an overhaul of the struggling firm's strategy and a shake-up of its board.

In mid- January, there were reports that BP was planning to cut around 4,700 jobs, representing over 5% of its workforce, as part of a major cost-reduction initiative.

BP CEO Murray Auchincloss had stated earlier that the company intends to deliver at least $2 billion of cash savings by the end of 2026.

Fresnillo and Endeavour Mining gained 4.8% and 3.25%, respectively. Pershing Square Holdings, Barratt Redrow, Prudential, Taylor Wimpey, Persimmon, Howden Joinery, Centrica, Airtel Africa, Haleon and Legal & General moved up 2 to 3%.

Segro, Ashtead Group, Schrodders, Rolls-Royce Holdings, JD Sports Fashion, Next, Associated British Foods, Antofagasta, HSBC Holdings and M&G also posted strong gains.

IAG closed lower by about 3.5%. Coca-Cola HBC, BAE Systems, EasyJet, Diageo, SSE, Aviva, Melrose Industries and Natwest Group also ended notably lower.

In the German market, Puma, Siemens, Siemens Healthineers, Porsche, RWE, Mercedes-Benz, Adidas, Deutsche Post, Deutsche Telekom, Rheinmetall, Volkswagen, MTU Aero Engines and BMW gained 1 to 3%.

Merck tumbled about 3.3%. Qiagen lost nearly 2% following a rating downgrade. Infineon, Sartorius and Commerzbank ended moderately lower.

In the French market, Edenred, Vivendi and Schneider Electric gained 2.5 to 3.4%. Hermes International, Teleperformance, Capgemini, Accor, Eurofins Scientific, Kering and Essilor closed higher by 1 to 2%.

Societe Generale, Pernod Ricard, Vinci, Publicis Groupe, Carrefour and ArcelorMittal ended with sharp to moderate losses.

On the economic front, euro area investor sentiment strengthened to a seven-month high in February as economic expectations increased dynamically despite tariff threats, results of the monthly survey by the behavioral research institute Sentix showed.

The Sentix investor confidence index climbed to -12.7 in February from -17.7 in January. The reading was the highest since July 2024. The score was forecast to improve moderately to -16.4.

Although the current assessment improved in February, it remained in the deep red. The corresponding index rose to -25.5 from -29.5 in January. On the other hand, the expectations index advanced to +1.0 from -5.0, exceeding the magic zero line for the first time since July 2024.

A report compiled by S&P Global said UK job vacancies decreased the most since August 2020 as higher cost of employing staff due to the changes in government policies weighed on hiring activity.

Vacancy numbers fell especially sharply for permanent worker, with the rate of contraction accelerating for the fifth successive month, the KPMG/REC Report on Jobs survey revealed. That said, temp workers dropped the most since June 2020.

There was a steep drop in permanent placements in January as falling demand for workers and a general air of business uncertainty damped the labor market.