European Equities: The Smart Play in a World of Trade Turbulence
2min read The U.S.-China trade war has been a rollercoaster for global markets, but here’s the thing: Europe isn’t just surviving—it’s thriving. The 90-day tariff truce announced last month isn’t just a pause button; it’s a green light for investors to pile into European stocks before the window slams shut. Let me break it down.
The Tariff Truce Isn’t Just a Truce—It’s a Tipping Point
When the U.S. and China agreed to slash tariffs—from 145% to 30% for American goods and 125% to 10% for Chinese exports—the world breathed a sigh of relief. But Europe? It’s already cashing in. The pan-European STOXX 600 index jumped 1% in days, with Germany’s DAX hitting an all-time high of 23,500 points by mid-May. This isn’t luck—it’s strategy.
The truce isn’t permanent, but it’s buying time. For investors, that’s everything. With U.S.-China talks now focused on “substantial progress” instead of tit-for-tat tariffs, European markets are becoming the “safe haven” everyone’s been seeking.
CYCLICALS: Fire Up Those Undervalued Engines
Start with autos and industrials—Europe’s undervalued darlings. These sectors are still trading at discounts because the trade war had investors fleeing. But with tariffs easing, supply chains are stabilizing.
Take BMW (): Its shares are up 12% since the truce, but they’re still 20% below their 2024 peak. Why? Investors are waiting for confirmation that trade flows will stay open. They’re wrong to wait. With Chinese tariffs on German cars now slashed, BMW’s factories in Shenyang will be humming—not hobbled.
Or look at Siemens (). Its industrial division, which relies on global manufacturing demand, is 30% cheaper than its five-year average. This is a steal. When trade fears fade, industrials lead the charge.
DEFENSIVES: Healthcare and Tech—the Steady Hands
Don’t think Europe’s gains are all about risk-on bets. Healthcare and tech are quietly outperforming.
Healthcare stocks like Roche () are cash cows. With its $70 billion in annual revenue and a dividend yield of 3%, Roche is a fortress. The tariff truce? It’s irrelevant to its drug sales—except that a stable economy means more patients can afford care.
Tech? Yes, even in Europe. SAP () is proving that European tech can innovate. Its cloud division grew 18% last quarter, and with U.S.-China tech tariffs on hold, SAP’s software is suddenly a bridge between the two superpowers.
Act Now—Before the Clock Runs Out
The 90-day truce expires in July. That’s your deadline. Here’s how to play it:
ETFs for the Masses: Load up on MSCI Europe ETF (FEUR) or iShares MSCI EMU ETF (EZU). These track the region’s blue chips and are dirt-cheap.
Blue Chips for the Bold: Go direct with LVMH (luxury’s unkillable giant), ASML (semiconductors that need global trade), or Sanofi (healthcare’s next pharma titan).
Avoid the Duds: Skip energy stocks—Russia-Ukraine tensions are still a wild card. And steer clear of banks like Deutsche Bank—their profits are still too tied to ECB rate hikes.
The Bottom Line: Europe Isn’t a Bunker—It’s a Launchpad
The U.S.-China truce isn’t a cure for all economic ills, but it’s a lifeline for European equities. Cyclicals are cheap, defensives are safe, and the region’s exporters are finally breathing easy. This isn’t a trade—it’s a strategic reallocation.
Don’t wait for July. The next 60 days are your chance to get in before the next round of talks (and tariffs) starts. Europe isn’t just a safe haven—it’s the next boom.
Invest now, or watch the train leave without you.
