The pan-European STOXX 600 index rose 0.7% by 8.15am. Most regional bourses were also in the green, with Germany’s blue-chip is rising 0.6% and France’s CAC gaining 0.8%. The UK’s FTSE 100 added 0.1%.
The trade agreement imposes a 15% tariff on most EU goods and requires the bloc to invest around US$600 billion in the US. Tariff rates on spirits are still under negotiation.
The deal “is positive for markets because it removes a lot of the uncertainty”, said Anthi Tsouvali, multi-asset strategist at UBS Wealth.
European companies are now “getting that clarity and I didn’t see anything in the fine print that is outward and more negative,” Tsouvali said.
Expectations of similar trade agreements before the Aug 1 tariff deadline have helped lift the benchmark STOXX 600 to within 1.8% of its all-time high hit on March 4, marking a 19.5% rebound from its April trough.
Pharmaceutical and automobile stocks – sectors with the largest exports to the US – hit their highest in one month and two months, respectively.
The baseline tariff brings tariffs for the auto industry down from the 27.5% faced before.
Pharma heavyweights Novo Nordisk and Roche rose 0.4% and 1.4%, respectively.
Shares of Stellantis and Volvo Cars, which have pulled their 2025 financial guidance due to US trade uncertainty, rose marginally.
Spirits stocks Pernod Ricard, Anheuser-Busch inBev slipped 1.4% and 1.3%, respectively, as the trade deal did not contain any decision regarding the spirits sector.
Heineken fell 4.3% after the Dutch brewer said it was weighing all options to deal with growing tariff challenges long-term, including shifting manufacturing.
LVMH rose marginally after media reports said French luxury goods group is in discussions with multiple buyers to offload its fashion label Marc Jacobs.
ASML, the world’s biggest supplier of computer chip-making equipment, jumped 4.2%, while chipmakers Besi and ASM International were among the top gainers on the index adding 5.5% and 3.8%, respectively.
In a week full of key events, investors will closely monitor policy decisions from the Federal Reserve and the Bank of Japan, earnings from several “Magnificent Seven” companies and the looming Aug 1 tariff deadline.