FRANKFURT: European stocks ended slightly higher on Tuesday, as positive momentum fueled by a soft US inflation reading and a truce in the Sino-US trade spat showed signs of fizzling out, while investors assessed a mixed bag of corporate results.
The continent-wide STOXX 600 index closed 0.1% higher, around its highest level since late March, in its fourth consecutive session of gains.
The index had touched a session high after a softer-than-expected
inflation reading
in the US, but some caution lingered as the report did not capture the impact of US President Donald Trump’s tariffs yet.
“We’ve got a situation where everyone is assuming that what we’re seeing at the moment is not what we’re going to see in a couple of months,” said Danni Hewson, head of financial analysis at AJ Bell.
“Investors are going to take the report with a pinch of salt.”
Global stocks had surged on Monday after Beijing and Washington agreed to a 90-day pause on most of the tariffs imposed on each other in April, offering relief to investors worried about the trade war causing a global recession.
European stocks have recovered much of the losses induced by Trump’s massive tariffs last month, but concerns of higher levies weighing on global growth still remained.
“Once that initial euphoria passed, investors are now looking at the small print and understanding that although the tariffs are paused over this 90-day period, they’re still way above where they were at the start of the year,” said Hewson. Volatility in the markets, however, was low, with the Euro STOXX Volatility index touching its lowest point in 11 weeks.
Earnings also remained in the spotlight. Bayer gained 2.8% after it posted a slower decline in first-quarter adjusted earnings than the market had feared.
Germany’s largest reinsurers, Munich Re and Hannover Re, dropped 4.6% and 4.4%, respectively, after they reported sharp declines in first-quarter profit after a combined 1.7 billion euros ($1.9 billion) in claims relating to the Los Angeles wildfires this year.
The companies weighed heavily on the insurance sector index, which fell 1.2%.
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