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European stocks experienced modest gains on Tuesday as investors assessed the latest news on U.S. trade tariffs and awaited further developments on potential trade agreements.
At 03:05 ET (07:05 GMT), the DAX index in Germany was up by 0.3%, the CAC 40 in France climbed by 0.1%, and the FTSE 100 in the U.K. rose by 0.1%, reflecting cautious optimism in the market.
Trump Extends Trade Agreements Deadline
European markets received a slight boost as U.S. President Donald Trump announced an extension of the July 9 deadline for trade agreements to August 1. Trump indicated that the new deadline for imposing reciprocal tariffs is “not 100% firm” and expressed openness to further negotiations with trade partners, suggesting that there may still be room for adjustments.
The extension came after Trump signed an executive order on Monday, in which he outlined new tariff rates for 14 countries, including key U.S. allies such as Japan, South Korea, and Indonesia. The new tariff rates could reach up to 25% on these countries if no trade agreements are reached by the new deadline. However, Trump clarified that the higher tariffs would not overlap with previously announced sector-specific tariffs on automobiles, steel, and aluminum.
Importantly, the European Union (EU) was not included in the list of nations receiving new tariff rates. EU officials are still aiming to reach a trade deal by Wednesday, after European Commission President Ursula von der Leyen and Trump reportedly had a “good exchange” on the issue.
German Exports Fall in May
On the economic front, Germany’s exports declined more than expected in May. According to official data released on Tuesday, exports fell by 1.4% compared to the previous month, worse than the forecasted 0.2% decrease. The drop in exports was partly driven by a significant 7.7% decrease in exports to the United States, following several months of strong purchases in anticipation of U.S. tariffs. This decline raises concerns over the impact of trade tensions on global supply chains, especially within the European economy.
Corporate News: Novartis and OMV Updates
In the corporate sector, Novartis (SIX:NOVN) received approval in Switzerland for Coartem Baby, which is now the first drug approved to treat malaria in babies and young children. This approval represents a significant breakthrough in malaria treatment and strengthens Novartis’ position in the pharmaceutical market.
Meanwhile, Austrian energy company OMV (VIE:OMVV) released a provisional trading update for the second quarter of 2025, reporting a decline in energy prices and production volumes. However, OMV also noted an increase in chemical margins, which somewhat mitigated the impact of weaker energy prices on its performance.
Outlook
As the deadline for U.S. trade negotiations looms, market sentiment will likely remain volatile, with investors keeping a close eye on Trump’s next moves and the possibility of further trade deals or escalating tariff rates. The extension of the deadline and Trump’s willingness to engage in more talks offers a glimmer of hope for an agreement, but the uncertainty around the tariffs continues to weigh on global markets. Additionally, economic data from major European countries, such as Germany, will be scrutinized for signs of resilience or slowdown amid the ongoing trade tensions.
