European stocks rebound after sharp selloff; trade tensions remain

Investing.com - European equity indices traded higher Tuesday, rebounding from a four-day losing streak as investors wade through escalating global tariff tensions.

At 03:05 ET (07:05 GMT), the DAX index in Germany climbed 1.4%, the CAC 40 in France gained 1.8% and the FTSE 100 in the U.K. rose 0.9%. 

The pan-European STOXX 600 slumped 4.5% on Monday, down for the fourth straight session and at its lowest closing level since January 2024.

Trade tensions remain

Global equity markets have been rocked by the imposition of sweeping trade tariffs by the Trump administration, with U.S. President Donald Trump stating that this policy was the only means to “cure” massive financial deficits with the likes of China and the European Union.

Despite the bounce Tuesday, these tensions do not appear to be easing, with the White House denying speculation on Monday about a potential tariff pause.

Additionally, China has vowed to "fight to the end" after Trump’s recent threat to increase tariffs on Chinese imports by 50%, unless Beijing retracts its earlier 34% tariff hike on U.S. goods.

The European Union members are set to vote on their countermeasures against the U.S. tariffs on Wednesday, and the European Commission, which coordinates EU trade policy, has drawn up a list of U.S. imports valued at €21 billion and plans to narrow them down to €18 billion worth on which to impose tariffs.

Italian banking sector in focus

The European banking sector has been hit hard of late, with losses triggered by escalating concerns over a trade war and a potential global recession, which could reduce spending, weaken loan demand and pressure fees from advising on deals.

Yet, despite this turbulence, Banca Monte dei Paschi di Siena (BIT:BMPS) is still planning to acquire Mediobanca (OTC:MDIBY) for €13 billion, looking to complete the deal in July.

The world’s oldest bank still in operation, surprised investors in January by making an all-share offer for Mediobanca - an offer that has been rejected by the Italian lender.

Crude rebounds after sharp selloff

Oil prices rose Tuesday, rebounding after a prolonged selloff on fears the Trump administration’s tariffs would result in a global recession, hitting demand for crude.

At 03:05 ET, Brent futures climbed 1% to $64.82 a barrel. U.S. West Texas Intermediate crude futures rose 0.9% to $61.27 a barrel.

Both contracts have slumped over 14% since Trump’s April 2 announcement of "reciprocal tariffs" on all imports, but have recouped some of those losses in a relief rally.