European Autos Surge to Six-Month High on Trade Optimism
European Autos Surge to Six-Month High on Trade Deal Optimism
(Bloomberg) -- European automotive stocks soared to the highest level in six months after U.S. Commerce Secretary Wilbur Ross said the White House may not need to put tariffs on imported cars later this month.
The Stoxx 600 Automobiles & Parts Index jumped as much as 3.1% Monday and was the best-performing sector in Europe after Ross told Bloomberg Television on Sunday that the U.S. has had “good conversations” with automakers in the European Union, Japan and elsewhere. Progress on a U.S.-China trade deal also emerged from a meeting between Ross and Chinese Premier Li Keqiang, further boosting investors’ sentiment on the tariff-sensitive car industry.
Ross met with Li Monday during a regional summit in Bangkok, according to a person familiar with the discussion, hours after the U.S. cabinet member said a first phase of a trade deal between the countries is “very far along.”
The threat of U.S. tariffs on cars from the EU has been holding back stocks for awhile, so, “these comments are a welcome boost at a time when the sector appears to be stabilizing,” Michael Hewson, chief market analyst at CMC Markets UK, said by email. Other trade-sensitive sectors including mining and steel also rallied on Monday.
The White House agreed in May to delay new tariffs on imported vehicles and components for six months as it engaged in negotiations with the EU and Japan. While the U.S. struck a deal with Japan last month that averted the fees, the EU has yet to reach an agreement. The bloc’s authorities have said that, in the event of American import tariffs on European cars, the EU would impose charges on $39 billion of U.S. goods.
Settlements on both the Chinese and EU fronts are likely for 2020 “in order to create no problems for the U.S. economy, as re-election will be of highest priority” for President Trump, Bankhaus Metzler analyst Juergen Pieper said in an emailed response to questions.
To contact the reporter on this story: Chiara Remondini in Milan at cremondini@bloomberg.net
To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Tom Lavell, Beth Mellor
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