DE40: Automakers rebound on trade optimism; Chinese industrial policy fuels commodity prices (02.07.2025)

European stock markets are rebounding today after two declining sessions (EU50: +0.5%), driven mainly by optimism surrounding trade negotiations between the EU and the US. Among the gainers are Germany’s DAX (+0.5%), France’s CAC40 (+1%), the UK’s FTSE 100 (+0.3%), Italy’s FTSE MIB (+0.7%), and Spain’s IBEX35 (+0.5%).

The prospect of 50% tariffs on all EU goods now appears to be a thing of the past, and investors are showing greater enthusiasm toward European companies as Trump's trade offensive shifts focus to Japan. Sources say the EU’s current negotiation strategy involves adopting a flat 10% tariff, with exemptions for key sectors (automotive, pharmaceuticals, steel, and aluminum).

Shares of major car manufacturers are driving gains on the German stock exchange. Source: Bloomberg Finance LP

Among sectors, the biggest gains are seen in materials companies, mainly due to new plans for China’s industrial policy focused on shutting down low-efficiency industrial plants to combat “disorderly price competition.” The announcement has driven up prices of key commodities, benefiting companies such as Glencore, ArcelorMittal, SSAB, and KGHM. There is also renewed enthusiasm for renewable energy firms, following the removal of a tax on renewables from Trump’s Big Beautiful Deal passed in the U.S. Senate.

Sector volatility within the Euro Stoxx 600 index. Source: Bloomberg Finance LP

DE40 (H4)

The DAX futures pulled back from part of its opening gains, trading slightly below the 30-day exponential moving average (EMA30, light purple). The price currently appears to be consolidating between the EMA30 and EMA100. A path toward recent highs may open once the 23.6% Fibonacci retracement level is broken. Developments in China and the dynamics of trade talks are generally supporting optimism in Frankfurt, especially through the lens of the automotive sector. However, a drop below the EMA100 could signal a continuation of the correction later in the week.

Source: xStation5

Company news:

• Airbus (AIR.FR): The European Space Agency has placed the Sentinel-4 air quality monitoring instrument, developed by Airbus, aboard the third-generation Meteosat satellite. Operating in geostationary orbit at 36,000 km, the device will deliver hourly atmospheric data for Europe and North Africa.

• AstraZeneca (AZN.UK): CEO Pascal Soriot is reportedly considering moving the company’s stock listing—and possibly its headquarters—to the U.S., frustrated by the UK’s regulatory climate and declining competitiveness in life sciences. The shift would deal a major blow to the London Stock Exchange and the UK economy. AstraZeneca, the UK’s largest listed firm, generates 43% of its sales in the U.S.

• Zalando (ZAL.DE): The company has received European Commission approval for its planned takeover of e-commerce firm About You. The clearance allows the transaction to close, which is scheduled for July 11. The German retailer will carry out a squeeze-out of the remaining About You shares not included in the €6.50-per-share offer.