Stocks rise on bank earnings, auto tariff hopes

AFP | London

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Stock markets rose yesterday as investors digested strong bank earnings and shares in several auto giants surged over hopes of tariffs relief from US President Donald Trump.

Some stability has returned to markets after last week’s roller-coaster ride over Trump’s stop-start tariff announcements, but uncertainty remains over speculation of new levies on high-end technology and pharmaceuticals.

“While financial markets have steadied, with many looking as if they are consolidating at current levels, this feels as if it is the calm before the storm,” said David Morrison, senior analyst at financial services firm Trade Nation.

“Markets remain skittish, and investors feel safer sitting on their hands for now, hoping that last week’s worrying dislocations revert back to normal,” he said. Wall Street’s main indexes were in the green in late morning deals as investors also kept an eye on corporate earnings.

Shares in Bank of America and Citigroup climbed after the financial giants posted solid earnings reports.

Boeing slumped as Trump said China “reneged” on a major deal with the US aviation giant, after Bloomberg reported that Beijing ordered airlines not to take further deliveries from the company amid an escalating trade war. Shares in European rival Airbus rose.

European indices closed higher, with London and Frankfurt gaining 1.4% each.

Paris made more modest gains, weighed down by shares in Louis Vuitton owner LVMH falling almost 8% over weak sales. The group was overtaken by rival Hermes as France’s most valuable company by market capitalisation.

Shares in European and Asian automakers rallied following Trump’s comments on Monday that he was “very flexible” and “looking at something to help some of the car companies” hit by his 25% tariff on all imports.

US-European automaker Stellantis, whose brands include Jeep, Fiat and Peugeot, gained over 6% in Paris, while German brands Volkswagen and Mercedes-Benz advanced more than 2%. In Asia, Toyota jumped 3.7% and Hyundai more than 4%.

But in the United States, General Motors and Ford slumped.

Markets made a positive start to the week, rising Monday after the announcement of tariff exemptions for consumer electronic products, though Trump’s suggestion that the reprieve would be temporary tempered the optimism.

“Sentiment got a further boost thanks to positive noises about trade negotiations, which added to the sense that the administration is focused on making deals that could see the tariffs come down,” said Jim Reid, an analyst at Deutsche Bank.