European Stocks Steady Amid Trade Concerns on Trump's Inauguration Day

European stocks closed flat after reaching a three-month high on hopes that Donald Trump would delay tariff increases. The automobile sector led gains, while the euro strengthened against the dollar. Investors remained cautious about Trump's protectionist policies affecting inflation in the U.S. and Europe.

On Monday, European stocks closed flat after initially reaching a three-month high. This movement followed expectations that President Donald Trump would avoid imposing new tariffs on U.S. trading partners immediately after taking office. The pan-European STOXX 600 concluded the day unchanged at 523.87 points, having surged by over 2% last week.

The automobile sector, notably sensitive to tariff news, saw a 1.1% increase. An official from the incoming Trump administration indicated that Trump would release a wide-ranging trade memo on Monday. This directive orders federal agencies to assess U.S. trade relationships with China, Canada, and Mexico, rather than enacting immediate tariffs.

As a reaction, the U.S. dollar fell by 1%, whereas the euro appreciated by 1.2%. Analyst Fiona Cincotta of City Index remarked, "There's a sense that Trump will take a more measured approach, which is comforting to markets that have speculated on aggressive trade tariffs." Gains were brief, with European equities remaining on edge due to concerns about Trump's potential protectionist policies raising inflation in the U.S. and Europe.

(With inputs from agencies.)