European Stocks Rebound After Trump’s Tariff Volatility

European stocks have endured a volatile 24 hours, triggered by another round of tariff drama from Donald Trump over the weekend. In classic fashion, Trump took the 20% tariff and raised it to 50% effective June 1, only to postpone the implementation to July 9 following a weekend call with European Commission President Ursula von der Leyen. In a statement on social media Donald Trump claimed that the European Union had been formed for the primary purpose of taking advantage of the United States, adding that it had been very difficult to deal with.

The initial announcement of 50% tariffs from June 1 sent European stocks tumbling, with the Euro Stoxx 600 shedding 2% in just 30 minutes. However, the bearish momentum didn’t last long as markets seem to be used to dealing with Trump’s back and forth on tariffs. The index had recovered most of the ground by the close on Friday and the full extent of the damage was undone by Monday morning after Sunday’s news of the delay following Trump’s chat with the European Commission’s Ursula von der Leyen.

EURO STOXX 600 5-minute chart

(Past performance is not a reliable indicator of future results)

This whipsaw reaction highlights a growing market sentiment: investors no longer see Trump’s tariff threats as credible policy moves, but rather as bargaining tactics. As a result, the market impact has become more muted—and less durable. Still, the return to aggressive rhetoric may have injected a degree of caution into markets that had grown increasingly optimistic about the stability of international trade negotiations.

On Tuesday, bullish momentum has returned. The Euro Stoxx 600 has broken above last week’s highs, surpassing 550 and suggesting that the monthly peak of 554.90 could be within reach. However, caution is warranted. The RSI (Relative Strength Index) had been edging into overbought territory last week. While the brief pullback helped ease some of that pressure, it wasn’t enough to fully reset momentum, meaning upside potential may be limited if overbought conditions persist.

EU STOXX 600 daily chart

(Past performance is not a reliable indicator of future results)

With a light economic calendar in the Eurozone this week, investor attention will likely stay fixed on trade developments. For now, the path of least resistance for European equities appears to be higher—as long as optimism outweighs uncertainty.