Europe ETFs jumped, extending their year-to-date gains over U.S. funds, after President Donald Trump extended a deadline to impose 50% tariffs on imports from the region.
Trump this weekend climbed down from Friday’s threat to hit Europe with 50% taxes starting Sunday, June 1, pushing the deadline to July 9. Stocks tumbled last week.
Europe-focused exchange-traded funds, like their U.S.-centric counterparts, surged today after Trump spoke with European Commission President Ursula Von der Leyen on the phone this weekend and the two parties agreed to fast-track trade talks.
The largest, the $25.1 billion Vanguard FTSE Europe ETF (VGK), moved 1.3% higher before midday, extending its 21% year-to-date gain. VGK’s top holdings are German software maker SAP SE (SAP), Swiss food behemoth Nestlé SA (NSRGY) and Dutch semiconductor machine maker ASML Holding N.V. (ASML).
The No. 2 European ETF traded in the U.S., the $7.9 billion iShares MSCI Eurozone ETF (EZU), gained 1.7%, while the third-largest, the $6.7 billion iShares Core MSCI Europe ETF (IEUR), rose 1.2%.
U.S.-focused ETFs, hit hard in Friday trading by the tariff threats, also rose, with the world’s largest, the $659.2 billion Vanguard S&P 500 ETF (VOO), adding 1.6%. Tech-heavy ETFs got even more of a jolt, with the Invesco QQQ Trust (QQQ) gaining 1.9% and the VanEck Semiconductor ETF (SMH) soaring 2.8%.
Trump had also singled out Apple Inc. (AAPL) with a 25% tariff threat if it didn’t move some production to the U.S. That stock dipped Friday, but today the Direxion Daily AAPL Bull 1.5X Shares (AAPU) jumped 3.2%.
While European ETFs are handily beating their U.S. counterparts this year—VOO is at about the same place it was when the year began—money has continued to flow into U.S. ETFs on bets that domestic markets will resume climbing.
Performance of Top 5 European-focused ETFs—Source: FactSet
VOO has pulled in $65 billion so far this year, a sum that exceeds the total assets of all but the 30 biggest ETFs out of more than 4,300 funds. VGK has raised $2.9 billion, EZU has experienced net outflows of $1 billion, and IEUR has raised $1.1 billion. The Wall Street Journal reported that $437 billion has poured into U.S. ETFs so far this year, pacing for a second straight year of record inflows.