European Markets Cautious as Geopolitical Tensions Rise

European stock markets opened on a cautious note, with both the STOXX 50 and STOXX 600 trading near the flatline on Monday. Investor sentiment was dampened by rising tensions between the US and Europe over Ukraine and trade tariffs. European leaders are set to hold an emergency meeting in Paris, while US-Russia negotiations regarding the Ukraine war are scheduled to take place on Tuesday in Saudi Arabia. However, Ukraine’s participation in the talks remains uncertain, and European nations have not been invited, raising concerns about the region’s geopolitical stability.

US Tariffs on Foreign Cars Add Market Uncertainty

Adding to market jitters, President Trump reaffirmed plans to impose tariffs on foreign cars starting April 2nd. The European auto sector saw mixed performance, with:

• Mercedes-Benz and Volkswagen (VW) rising by 0.3%
• BMW trading near the flatline

The potential tariffs could pose significant challenges for European automakers, which rely heavily on exports to the US market.

Defence Stocks Outperform Amid Geopolitical Risks

With increasing geopolitical risks, defence stocks saw strong gains, as investors sought safer investments.

• Rheinmetall surged 17.5%
• Leonardo climbed 4.9%

Defence companies are expected to benefit from higher European military spending as the region prepares for potential escalations in global conflicts.

Market Outlook

European markets are expected to remain volatile in the coming days, with investors closely monitoring:

• US-EU trade tensions and potential retaliatory measures
• The outcome of US-Russia negotiations on Ukraine
• Auto sector developments amid looming tariffs

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