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European Markets Edge Higher on Renewable Energy Rally and Luxury Rebound

Policy clarity in Washington and sector rotation in Europe help lift the STOXX 600 as traders lean into renewables and consumer names.

London, July 2 EST: European stocks inched higher Tuesday, as a strong move in renewables and a rebound in luxury goods helped the STOXX 600 close up about 0.2%.

The key driver: a U.S. Senate revision that quietly rewrote the math for clean energy developers. Lawmakers extended eligibility for wind and solar tax credits to projects that break ground before mid-2026, easing fears that a 2027 policy cliff would shut off the spigot for new builds.

That one change gave listed European suppliers—many with U.S. exposure—room to breathe. Vestas shares jumped 10%, with Ørsted, Nordex, and RWE also in the green. The gains weren’t speculative—this was backlog repricing in real time.

“These companies live and die by project timing. Pushing the deadline out means two more years of deal flow and predictable returns,” one portfolio manager in Amsterdam told Reuters.

For analysts, the extension puts a floor under U.S. demand just as financing rates begin to stabilize. SMA Solar and EDP Renováveis, two names that have struggled with cost inflation, posted solid gains as the market recalibrated its growth runway.

Luxury Sector Rebounds on Revised Outlook

Luxury stocks, battered earlier this year by cautious consumer data and uneven demand from China, found their footing again. LVMH, Moncler, and Burberry all rose around 4%, helped along by UBS, which upgraded the sector to “benchmark” from “underweight.”

It’s not that consumers suddenly opened their wallets wider—it’s that the bottom didn’t fall out. That alone was enough to trigger some tactical rotation back into high-end retail.

“We’ve reached a point where bad news is already priced in,” said a Paris-based fund manager covering discretionary names. “Now, even stable guidance looks like an upside surprise.”

Luxury’s bounce also came as inflation expectations in Europe cooled slightly, giving more breathing room to discretionary spending forecasts heading into Q3.

Banks and Industrials Ride the Broader Lift

Beyond the headline sectors, European stocks showed quiet strength in banking and industrial names.

Banco Sabadell rose 5% on renewed speculation around its stalled deal with Santander for UK lender TSB. In Sweden, Avanza Bank surged 7% on word that a privatization plan could be on the table. Meanwhile, Spectris gained nearly 4.5% amid reports of a KKR takeover offer.

One outlier: UK bakery chain Greggs, which fell 14% after warning on profits. The company flagged rising input costs and a weaker-than-expected Q2. It was the worst performer on the STOXX 600.

Markets Watching July 9 Trade Deadline

Investors are keeping a close watch on U.S.–EU trade talks, with a July 9 deadline approaching to resolve disputes over auto and tech tariffs. Both sides are signaling a preference for a negotiated outcome, but the margin for error is tight.

Donald Trump, speaking on the campaign trail, said a deal with India was nearly done, voiced doubts about Japan, and claimed agreement with Vietnam had been finalized. Those remarks, while off-the-cuff, are being watched closely by trade desks and export-heavy corporates.

The EU trade delegation is expected in Washington this week for direct negotiations. For exporters and manufacturers in both regions, the outcome could reshape H2 earnings guidance.

Real Momentum, With a Short Leash

Tuesday’s market move wasn’t dramatic, but it was deliberate. Renewable energy and luxury goods have been under pressure most of the year. Now, with fresh catalysts in both camps, traders saw reason to rotate back in.

Still, the backdrop remains fragile. The earnings calendar picks up later this month, and trade tensions are just one bad headline away from knocking sentiment off track.

For now, though, the message is clear: if policy clears a path, capital will follow.


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Source
LSE.co.ukReutersFinimize ReutersMarketScreener

Neha B.

Neha Bhardwaj is a Reporting Fellow at New Jersey Times, focusing daily on insightful stories from the business and finance sectors. Currently pursuing her studies at Symbiosis, Pune, Neha brings a keen understanding of economic landscapes and corporate strategies to her reporting. Her articles aim to demystify complex financial topics and keep our audience informed on the forces shaping the economy.

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