Europe close: Stocks rise on removal of some US tariffs

20th May 2026 15:29

(Sharecast News) - European stock markets rallied on Wednesday after EU lawmakers reached a provisional agreement to remove some tariffs on US goods, easing concerns about a potential rise in auto tariffs ahead of a July deadline.

The pan-European Stoxx 600 rose 1.51%.

Germany's DAX gained 1.36% to 24,732.28, France's CAC 40 advanced 1.7% to 8,117.42, and London's FTSE 100 added 0.99% to 10,432.34.

Oil prices fell sharply, with Brent crude futures last down 5.26% on ICE at $105.43 a barrel, and the NYMEX quote for West Texas Intermediate 4.96% lower at $98.98.

Axel Rudolph, chief technical analyst at IG, said: "Yields and crude prices retreating drive a recovery in stocks ahead of all-important Nvidia earnings."

"After several days of slipping, US stock markets turned their fortunes around ahead of Nvidia earnings as yields retreated and the price of crude dropped by over 3% on hopes of progress being made in the Middle East," he said.

"WTI slid back to the $100 per barrel mark, nearly 5% lower than this week's high."

Danni Hewson, head of financial analysis at AJ Bell, noted that stock markets pushed into the green on Wednesday afternoon as investors awaited results from the world's largest company.

"Such is Nvidia's scale that even in an environment where geopolitical headlines are dominating, it can still have a meaningful say in market sentiment," she said.

"This reflects the central place AI holds in hopes for continuing corporate growth - with Nvidia's results a key test of whether the theme still has legs."

European Commission officials had paused ratification of the trade deal after the Supreme Court ruled that US president Donald Trump's reciprocal tariffs, introduced last April, were illegal.

Trump responded by imposing a temporary 10% global levy in February, but a federal trade court also ruled earlier this month that he did not have authority to impose that tariff.

He later threatened new 25% tariffs on EU car imports if Brussels failed to implement the agreement by 4 July.

Geopolitical tensions remained in focus after Iran threatened to attack countries outside the Gulf if the US and Israel resumed military action.

In a statement carried by state media, the Islamic Revolutionary Guard Corps said: "If aggression against Iran is repeated, the promised regional war will extend beyond the region this time, and our crushing blows will bring you ruin in places you cannot imagine."

The warning followed Trump's claims that he had been an hour away from ordering a new bombing campaign against Tehran before being persuaded to hold back by other Middle Eastern countries.

Trump also told reporters that Iran was eager to reach an agreement and that the conflict would end "very quickly", while vice president JD Vance said negotiations were in a "pretty good" place.

"Oil prices eased somewhat after the latest comments from president Trump regarding an end to the conflict in the Middle East being close," Hewson said.

"It feels like we have been here before multiple times in recent weeks.

"That's reflected in the relatively modest pullbacks in crude. Government bond yields, while still elevated, have also come back slightly on renewed optimism over peace talks."

Euro area inflation reaches two-and-a-half-year high

On the economic front, eurozone inflation was confirmed at a two-and-a-half-year high in April.

Eurostat said annual inflation rose to 3.0%, in line with the preliminary estimate, up from 2.6% in March and the highest rate since September 2023.

Energy prices surged 10.8% year-on-year as Middle East supply disruptions and production stoppages drove oil prices to a four-year high during the month.

Excluding energy, inflation would have eased to 2.2% from 2.3%.

In the UK, inflation eased despite the Middle East war.

The Office for National Statistics said consumer price inflation fell to 2.8% in April from 3.3% in March, below expectations for 3.0%, helped by lower electricity and gas prices after a reduction in the Ofgem price cap.

Food inflation slowed to 3.0% from 3.7%, although petrol and diesel prices rose.

However, pipeline inflation pressures increased.

Raw material costs rose 7.7% in the year to April, up from 5.3% in March and ahead of forecasts for 5.9%, while factory gate prices rose 4%, above expectations for 2.8%.

Alpesh Paleja, deputy chief economist at the Confederation of British Industry, said the figures did not yet fully capture the inflationary impact of the Middle East conflict and that inflation was likely to rise again in the months ahead.

Anna Macdonald, investment strategy director at Hargreaves Lansdown, said technical factors including the Ofgem price cap and timing of Easter helped bring the headline number down, but that the data, alongside a softer labour market, gave the Bank of England "a bit more breathing space".

ING's James Smith said the figures questioned the need for aggressive rate hikes, despite inflation being set to rise again later this year.

Euronext, M&S in the green

In equity markets, Euronext rose 4.92% after reporting better-than-expected first-quarter earnings.

Marks & Spencer gained 3.89% after the retailer forecast profit growth for the current financial year, following 2025-2026 earnings that were hit by a cyber attack that caused supply disruption.

RS Group surged 14.03% after the industrial and electrical products distributor launched a £100m share buyback programme following a "resilient" full-year performance.

Experian fell 1.25% despite lining up a $1bn share buyback programme and forecasting organic revenue growth of 6% to 8% for 2027.

Reporting by Josh White for Sharecast.com.