Which European Stocks Have Risen as Global Trade War Retreats?

Michael Field, Morningstar’s chief European markets strategist, says this rally is still in its early stages: “The US-China deal has 30% import taxes on Chinese goods which could stem trade flow still. The EU hasn’t even begun negotiations with the US, and if we get anything like the UK deal, then it’s bad news.”

Here are some of the initial winners of the European rally, with figures covering the last five trading days, to May 14.

ASML and Infineon Stocks Rise as Tech Recovers

Technology shares have rallied globally, lifting bellwether European stocks. The technology sector is the leader returning 6.43% over a one-week period in euros.

Dutch semiconductor giant ASML ASML was hit hard in the April selloff, but its shares have continued to track upward ever since Trump’s administration announced tariff exemptions for smartphones, computers and other electronics.

ASML shares are up 10% over the past five days, but in 2025 so far, the shares are down 18%.

The stock considered undervalued by Morningstar. Despite the lower-than-expected Q1 figures, equity analyst Javier Correonero says that investors should not make long-term decisions based on quarterly orders.

“In a highly uncertain environment, investors are trying to figure out if global tariffs will generate a global recession and how deep it could be. ASML reconfirmed its EUR 30 billion to EUR 35 billion revenue guidance for 2025, but investors are already starting to look at 2026.”

ASML is currently trading at EUR 685 below Morningstar’s fair value estimate of EUR 850.

German semiconductor solutions business Infineon Technologies IFX has also been lifted over the past five days with its shares up 12%. In 2025 so far, the company’s shares are up over 10%. The stock is currently trading at around EUR 34, below Morningstar’s fair value estimate of EUR 43.

Luxury Stocks Rebound

After technology, the consumer cyclicals saw an uptick of 6.17%, and within that grouping, luxury stocks were the main beneficiaries. Investors weighed up the implications for a possible detente between the US and China on the luxury sector, which has heavy Asia-Pacific exposure.

Under-pressure British luxury brand, Burberry BRBY has seen its share price boom in recent days, rising more than 16% on May 14 after it released earnings outlining cost-cutting plans. Over five days the share price is up 30%.

The share price rally comes despite disappointing annual results: Burberry said its pretax loss was £66 million, down from a profit of £383m in the previous 12 months.

For Morningstar equity analyst Jelena Sokolova, the fruits of Burberry’s turnaround strategy initiated by recently appointed CEO Joshua Schulman are still yet to be seen. But she believes Burberry is moving in the right direction.

“While the turnaround may be delayed by tough market conditions, we believe Burberry is pursuing the right strategy focusing on the core offering, where the brand is differentiated and strong with more consistent price positioning. Successful turnarounds (Pandora in 2018 is an example) often start with refocusing on the core strength of the brand.”

Burberry is a 5-star stock, trading at 947.70p below its fair value estimate of £13.30.

LVMH MC has also seen its share price rise by 7.60% over the last five days. LVMH recently lost its crown as Europe’s largest luxury company by market capitalization to Hermès RMS, and shares are off more than 17% in the year to date as some parts of the luxury sector remain in the doldrums. However, in the long-term, Morningstar equity analyst Jelena Sokolova is bullish on LVMH because of its strong brand proposition.

“In fashion and leather goods LVMH’s brand intangible assets are backed by the 100-plus-year-old globally recognized Louis Vuitton brand. In wines and spirits LVMH benefits from strong market share and brand recognition in a conspicuous market niche. In the rest of the business, LVMH Group has a smaller presence, but still has several strong brands, such as Dior and Guerlain in perfumes and Bulgari and Tiffany in branded jewelry,” she says.

4-star LVMH is considered undervalued by Sokolova trading at EUR 522, below Morningstar’s fair value estimate of EUR 620.

European Energy Stocks Rise as Oil Prices Gain

European energy was the third best performing sector over a one-week period. Energy stocks have been reeling from the drop in oil prices because of fears that Trump’s tariffs would lead to a global recession. Brent Crude Oil is currently trading at $66.25 per barrel up from $60 last week.

British oil giant BP BP. saw its share price leap 7.48% over the past five days. However, the stock is making news for takeover rumors by rivals interested in buying the company at a discount due to its weak share price.

After quarterly earnings on April 29, Allen Good, director of equity research at Morningstar, said the stock is in a vulnerable position.

“BP’s strategic reset may have come too late. In contrast to Shell, which did so two years ago and then had a period of strong prices, BP now faces falling prices. Its 2025 plan was built on a $71.5/barrel price assumption, well above current levels.

“Shares look cheap but have for some time. Peers with stronger balance sheets who can maintain payouts in a downcycle are more attractive, even with less of a discount. BP keeping repurchases at the bottom end of the range, after cutting payouts in February, demonstrates its vulnerability.”

BP is considered undervalued according to Morningstar as it trades as a 4-star stock. It is currently around 380p, below Morningstar’s fair value estimate of 511p.

Spanish oil company Repsol REP is also up around 7% over the last five days, although year to date it is down around 1%.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.