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Europe Markets: Airbus and Boeing shares lift off as EU and U.S. are set to resolve 17-year trade spat over aid to manufacturers

Shares in aircraft manufacturers Airbus and Boeing lifted off on Tuesday, ahead of the expected settlement of a long-running trade dispute between the European Union and U.S. over state aid to the two groups.

Airbus
AIR,
+0.94%

stock climbed near 1.5% in European trading, while shares in Boeing
BA,
-0.87%

rose near 1% in the U.S. premarket.

The 17-year trade spat centres on state subsidies from the U.S. to Boeing and the EU to Airbus. Both companies, rivals, are jewels in the manufacturing crowns of the U.S. and Europe, respectively, with Airbus manufacturing taking place in the U.K., Germany, France, and Spain. The U.S. suspended tariffs on U.K. goods related to the dispute in March.

A formal announcement on the agreement is expected on Tuesday, after an accord was sought among EU member states on Monday, according to Bloomberg. A settlement also paves the way for lifting a cumulative $11.5 billion in tariffs between the U.S. and EU on each other’s exports.

Read: U.S. and European Union agree truce over Boeing and Airbus subsidies, reports say

The news met an upbeat day for markets in Europe as stocks traded at all-time highs.

The pan-European Stoxx 600
SXXP,
+0.18%

rose 0.3%, hitting a new record, while the FTSE 100
UKX,
+0.23%

in London ticked up 0.3% after opening at the highest level since February 2020. In Paris, the CAC 40
PX1,
+0.38%

lifted 0.5% while Frankfurt’s DAX
DAX,
+0.50%

climbed 0.6%. Dow industrials futures
YM00,
-0.05%

were up around 40 points, set for a soft but positive open after the index fell 85 points on Monday to close at 34,393. 

Analysts noted that stocks were looking for direction ahead of a key announcement on rates and stimulus from the Federal Open Market Committee of the U.S. Federal Reserve on Wednesday.

“Markets appear to be taking the line of least resistance, which is a slow incremental move higher with a ‘two steps forward and one step back’ approach, over the past week or so,” said Michael Hewson, an analyst at CMC Markets.

“Today’s European open looks set to play out in a similar fashion with a modestly positive open, with the main focus, apart from the FOMC conclusion tomorrow, on today’s U.K. unemployment numbers and U.S. retail sales and PPI [producer price index] for May.”

H&M
HM.B,
-2.03%

stock fell near 2%, after blowout second-quarter sales at the fashion retail giant fell short of expectations. Sales in local currency jumped 75% from March to the end of May compared with the same period in the year prior, to 46.51 billion Swedish kroner, which fell short of analysts’ expectations of SEK 48.09 billion. The company said that by June 13, 180 of its stores remained closed due to COVID-19 restrictions. 

After rising as much as 1.5% higher, shares in Lufthansa
LHA,
-1.05%

fell 0.5%, after the German airline announced its targets for 2024 late on Monday, including plans for a possible capital increase. Lufthansa said it would target an adjusted earnings before interest and taxes margin of 8% by 2024, up from 5.6% in 2019 and minus 40% in 2020.

Shares in EDF
EDF,
-1.75%
,
the French multinational energy group, fell as much as 2% before settling 1% lower, after reports that one of its nuclear power plants in China could be experiencing a leak. EDF, which jointly owns the plant with the China General Nuclear Power Group, said on Monday that it was dealing with “performance” issue at the facility but that operations remained within safety guidelines.

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