“The Mother of All Deals”

European stock markets are showing cautious growth amid a historic trade agreement between the European Union and India. Indian Prime Minister Narendra Modi called it “the mother of all deals,” emphasizing the scale and strategic significance of the agreement.

The Stoxx 600 index gained around 0.3%, but sector dynamics remain uneven. Shares of chemical companies fell 0.8%, the automotive sector lost 0.7%, while the industrial segment showed moderate growth of 0.1%.

The EU-India agreement covers economies representing about 25% of global GDP and roughly a third of global trade. It has the potential to significantly reshape trade flows, particularly in key export sectors for Europe: machinery, transport equipment, and the chemical industry.

Tariff risks from the US

Amid positive expectations, uncertainty is also rising. Donald Trump announced an increase in import tariffs on South Korean cars, pharmaceuticals, and lumber from 15% to 25%. The market reaction was immediate: shares of South Korean automakers dropped sharply, heightening concerns about the resilience of global supply chains.

The situation reminds investors that the risk of escalating trade conflicts remains relevant, especially in the context of the US political cycle. For European markets, this creates a contradictory picture: opening new sales markets exists alongside the threat of closing existing ones.

Corporate moves: contrasts of the day

Among individual companies, Puma stands out, with shares rising 8.6% after confirming a deal with China’s Anta Sports to sell a 29% stake for €1.5 billion. This example clearly shows how transnational partnerships can quickly change market sentiment.

In the opposite situation is UK footwear maker Dr. Martens. The company’s shares fell 12% following weak quarterly results and a forecast of almost zero revenue growth in 2026. Management called it “a year of transformation,” betting on reducing discounts and entering new markets, but in a slowing consumer demand environment, this strategy appears risky.

In focus — earnings and Fed policy

Investors are also preparing for a new round of corporate earnings reports. This week, results are expected from ASML, Volvo, LVMH, and Deutsche Bank, and soon from Atlas Copco, Sandvik, and Logitech International. These reports will be an important indicator of the state of the European economy.

An additional uncertainty factor remains the US Fed meeting. While the market expects interest rates to remain in the 3.5-3.75% range, any signals of potential future cuts could impact currency markets and the positions of European exporters.

Summary

The simultaneous influence of two opposing trends — trade expansion through the EU-India deal and rising protectionist risks from the US — creates high selectivity in European markets. Companies oriented toward the Indian market and industrial exports may gain additional momentum, while automakers and businesses with vulnerable supply chains remain under pressure.

The key factor in the coming months remains political uncertainty in the US, capable of changing the balance of power in global markets at any moment.