European shares moved higher on Friday, driven by gains in the auto sector, as a newly struck deal between the U.S. and China lifted investor sentiment.
A White House official said the two countries had reached an agreement to speed up rare earths shipments to the U.S., offering a sign of progress in trade relations.
With geopolitical concerns in the Middle East momentarily subdued, market attention turned to whether new trade agreements can be finalized before U.S. President Donald Trump’s tariff reprieve expires in early July.
Automakers led sectoral gains, with the Stoxx 600 Automobiles & Parts RP rising around 2% as of 08:26 GMT, while media stocks added 1.6%.
Among the auto gainers was BMW (ETR:BMWG), whose 2.7% gain was also likely supported by positive commentary from Bernstein analysts following their discussions with the company’s representatives.
The broker hosted BMW Group Treasurer Ritu Chandy and Head of Investor Relations Adam Sykes in Paris on June 25–26.
During a series of one-on-one discussions and a well-attended group session, Chandy delivered what Bernstein described as a "measured and confident message," recognizing the challenges facing both BMW and the broader industry, while outlining what the analysts view as "very credible responses."
Analysts highlighted that BMW has already “substantially de-risked” potential fallout from Chinese retaliation by localizing X5 production in China and pre-emptively stockpiling other U.S.-built models, which account for only around 2% of BMW’s registrations in the country.
Despite significant tariff headwinds, including new U.S. measures announced on Liberation Day, BMW has maintained its 2025 Automotive EBIT margin guidance of 5–7%.
According to Bernstein, this reflects the company’s ability to absorb a €800–1300m headwind while also benefiting from factors like the retention of free trade zone status for its Spartanburg plant.
Bernstein also flagged BMW’s expectation of “some progress on the tariffs issue in July,” which supports the view that the current margin guidance remains intact.
Sportswear companies also performed strongly on Friday, after Nike (NYSE:NKE)’s upbeat revenue outlook. JD Sports Fashion PLC (LON:JD) jumped 7.6% in London, while Germany’s Puma (OTC:PMMAF) and Adidas (OTC:ADDYY) rose 4.1% and 3.9%, respectively.
The broader pan-European STOXX 600 climbed 0.9% to 542.27 points, putting it on course for its first weekly gain in three weeks. Other major regional indexes also traded in positive territory.