European equities end daily trade with a notable increase
European markets closed mostly higher on Tuesday, with gains being modest or marginal, as the continent's economy shows signs of resilience amidst global economic challenges.
The pan-European Stoxx 600 gained 0.15%, as investors navigated through the volatile market conditions. The U.S. tariffs, implemented mid-2025, are estimated to lower global GDP by around 1%, with a severe negative impact on Canada and China, but slight growth in the EU and the UK.
In the Eurozone, producer prices rose 0.8% in June compared to May, according to data released by Eurostat. However, business activity in the eurozone grew at a slightly slower pace in July than in June, as indicated by the HCOB Eurozone Composite Purchasing Managers' Index, which rose to 50.9 from 50.6 in June.
The U.S. tariffs have pressured business confidence and spending, with notable sectoral reallocations such as manufacturing growth offset by contractions in construction and agriculture. This has led to a decline in industrial activity in the second quarter, with a 0.1% decrease compared to the previous quarter.
Despite these challenges, the EU economy appears to have managed a marginal expansion, likely due to trade deal benefits and shifts in global trade flows. European equity and bond markets reacted with volatility alongside the U.S. markets, evidenced by falling U.S. dollar value against the euro and cautious investor sentiment.
In the Eurozone, Denmark, Iceland, Netherlands, Poland, and Portugal ended weak, while Austria and Turkiye closed flat. Among the major markets, the U.K.'s FTSE 100 climbed 0.16%, and Germany's DAX ended 0.37% up. France's CAC 40 ended 0.14% down, while Switzerland's SMI closed up 0.34%.
Several European companies reported mixed results. Commerzbank closed lower by approximately 6%, while Vivendi closed more than 3% down. Diageo gained nearly 5% despite annual profit tumbling almost 30%. Smith & Nephew shares zoomed 15.3% in the U.K. market due to a $500 million share buyback and better-than-expected earnings for H1 2025.
Fresenius Medical Care shares ended down by approximately 2%, while Fresnillo surged 6% after posting a nearly fourfold increase in first-half net profit. Gerresheimer shares moved notably higher after announcing plans to separate its struggling moulded glass division.
Rational AG shares moved up sharply due to improved Q2 results and backing its annual sales revenue growth outlook. In the French market, Teleperformance rallied nearly 4%. Airbus, AXA, Unibail Rodamco, Edenred, and Pernod Ricard also posted strong gains.
However, STMicroElectronics, Schneider Electric, L'Oreal, Kering, Accor, LVMH, and Legrand lost between 1% and 2%. Beiersdorf, Heidelberg Materials, Siemens Energy, Zalando, MTU Aero Engines, and Siemens Healthineers also saw declines of up to 2%.
Inflationary pressures in the U.S. are rising due to tariffs, complicating Federal Reserve policy between controlling inflation and supporting growth, indirectly influencing global markets and Europe’s economic outlook. The global impact includes significant economic contraction in Canada (-2.1%), a moderate decline in China (-0.2%), but a slight positive growth effect for the EU (+0.1%) and the UK (+0.2%) partly due to a US-UK trade deal.
The EU’s cautious but better-than-expected economic performance suggests some resilience, although the broader global slowdown and elevated market uncertainty remain challenges. As the global economy navigates through these challenging times, European markets continue to show signs of resilience, offering a glimmer of hope amidst the economic uncertainty.
[1] Global Economic Impact of U.S. Tariffs: An Overview (2025) [2] Tariffs and the Global Economy: A Comprehensive Analysis (2025) [3] European Markets Volatility Amidst U.S. Tariffs (2025) [4] U.S. Tariffs and the EU Economy: Navigating Through Uncertainty (2025) [5] Inflationary Pressures and U.S. Tariffs: A Complex Relationship (2025)
- As the global economy grapples with the impact of U.S. tariffs, investors in the European business sector are carefully navigating the stock-market, mindful of the slight growth in the EU and the UK while keeping an eye on the modestly rising producer prices in the Eurozone.
- In light of the EU's cautious but resilient economic performance, those engaged in finance may see opportunities for investing in certain European companies, considering the mixed results reported by several firms, with stock-market movements reflecting sectoral reallocations and responses to tariff-related challenges and trade deal benefits.
