European Market Surge: Pharma and Semiconductor Stocks Soar on EU-US Trade Deal

European stocks hit a four-month high led by the pharmaceutical and semiconductor sectors after a new trade agreement between the EU and US mitigated impending tariffs. The deal includes a 15% tariff on EU goods and a $600 billion EU investment in the US, boosting investor confidence.

On Monday, European shares reached a four-month peak, driven by significant gains in pharmaceutical and semiconductor stocks. This rise comes after the European Union signed a pivotal trade agreement with the United States, deftly circumventing harsher tariffs just before the August 1 deadline. The pan-European STOXX 600 index ascended by 0.7% as of 0815 GMT.

Regional stock markets followed suit, with Germany's DAX rising by 0.6% and France's CAC 40 advancing by 0.8%. Meanwhile, the UK's FTSE 100 experienced a modest increase of 0.1%. The EU-US trade pact enforces a 15% tariff on most EU goods and mandates a $600 billion investment from the bloc into the U.S., although tariff discussions on spirits are ongoing.

This agreement has provided the market with much-needed clarity, driving the benchmark STOXX 600 to nearly match its historical high from March 4 and achieve a 19.5% recovery from its April low. Major sectors like pharmaceuticals and automobiles, which have substantial exports to the U.S., saw shares climb to new monthly highs. Notably, semiconductor companies like ASML and chipmakers Besi and ASM International posted significant gains.

(With inputs from agencies.)