Automobile stocks surged 3.6%, with companies like Mercedes-Benz, Volkswagen, and Porsche seeing increases of 5.1% to 7.4%, boosted by strong performance in Asia.
Trump’s trade deal with Japan reduced U.S. auto import tariffs from 25% to 15% and included $550 billion in US-bound investments and loans. This also improved the chances of an EU-US trade deal, as EU representatives were set to begin negotiations on Wednesday.
In the STOXX 600, Temenos saw the biggest gain, jumping 18.1% after raising its full-year earnings forecast.
UniCredit rose 3.4% as the Italian bank reported better-than-expected profits and improved its yearly outlook. Swiss company Lonza also gained 6.3% after beating profit expectations.
On the downside, Nokia dropped 7.7% after lowering its 2025 profit forecast, putting pressure on media stocks. ASM International fell 9.3%, the biggest drop in the index, due to disappointing second-quarter bookings.
SAP slipped 2.5% despite reporting higher profits, helped by cost cuts and strong demand.
Overall, European corporate earnings forecasts showed slight improvement on Tuesday.
On the FX front, the yen initially strengthened to 146.20 per dollar, its highest since July 11, after trade news. However, it later fell following reports that Ishiba plans to step down next month after losing an upper house election, something Ishiba has since denied.
The US dollar has been weak since Trump announced tariffs in April but has stabilized somewhat this month as those tariffs were paused for negotiations.
The euro dipped 0.1% to 1.1744 but stayed close to its four-year high from earlier this month. The British pound rose slightly to 1.1354.
The Australian dollar gained 0.4% to $0.6581, helped by optimism from the trade deal and higher metal prices, though caution remains.
Currency Power Balance