Markets

European stocks close higher as trade war offers reprieve; tech sector rallies

Key Points
  • The U.S. government temporarily eased trade restrictions imposed on Chinese telecommunications giant Huawei.
  • Chipmakers AMS and STMicro both climbed about 4% as a result of the positive trade developments.
  • British Prime Minister on Tuesday offered lawmakers a vote on whether to have a second Brexit referendum.

European stocks closed higher Tuesday as tensions eased slightly in the escalating trade war between the U.S. and China.

The pan-European STOXX 600 closed provisionally 0.5% higher, with most sectors in positive territory. Technology stocks led the gains with a 1.6% rise.

Monday saw markets close lower after a U.S. crackdown on Chinese telecommunications giant Huawei weighed on the technology sector. Major European chipmakers saw a sell-off with reports that Germany's Infineon had suspended shipments to Huawei.

However, markets rebounded Tuesday after the U.S. government temporarily eased some trade restrictions imposed on the company, in a move intended to minimize disruption for Huawei customers around the world. Google confirmed Tuesday that it had reversed a decision to cut ties with Huawei following the move.

Chipmakers AMS and STMicroelectronics both climbed about 4% as a result of the positive trade developments. Many semiconductor stocks had turned south on Monday amid jitters around Huawei.

In economic news, the OECD released its growth outlook, projecting global economic growth of 3.2% in 2019, down 0.1% from its March forecast, and an unchanged 3.4% in 2020. OECD chief economist Laurence Boone told CNBC Tuesday that U.S.-Sino trade tensions have "derailed global growth" and need to be dealt with at a multilateral level.

Meanwhile, investors stateside took their cues from international equity markets, with the Dow Jones Industrial Average trading around 130 points higher and the and Nasdaq indexes also in positive territory.

Brexit

Back in Europe, British Prime Minister on Tuesday offered lawmakers a vote on whether to have a second Brexit referendum if they approved her withdrawal deal. The news sent sterling flying as high as $1.2815, its highest level since Friday, before easing slightly to $1.2755.

Finance Minister Philip Hammond had warned earlier in the day that those on the "populist right" pushing for the U.K. to leave the European Union without a deal would be doing deliberate damage to the British economy.

The country is set to join its European Union neighbors in voting on the makeup of the next European Parliament this Thursday, with Nigel Farage's Brexit Party currently leading the polls.

In terms of individual stocks, Norsk Hydro was among the top performers in the STOXX 600, rising almost 6% after Brazil gave the go-ahead for its Alunorte Alumina plant to reopen. Ireland's UDG Healthcare was the second-highest performing stock, up nearly 7% following a positive annual earnings report.

On the other end, Royal Mail shares were down over 7% by the closing bell with analysts expecting the former U.K. state postal monopoly to report a 40% slump in annual earnings Wednesday.