EUROPEAN shares started the week on a positive note on Monday after the United States and China agreed to temporarily slash tariffs, providing some relief to global markets roiled by the trade war.
The US will cut extra tariffs on Chinese imports to 30 per cent from 145 per cent and Chinese duties on US imports will fall to 10 per cent from 125 per cent for the next 90 days, as per the deal.
The pan-European Stoxx 600 index closed 1.21 per cent higher at 544.49, while regional bourses including ones in Germany and the UK were up.
“The deal is a step towards something that’s much better… The worst-case scenarios that investors were pricing in April seem to have been lifted over recent weeks as there’s been a softening of rhetoric,” said Patrick Armstrong, chief investment officer at Plurimi Wealth.
Traders reduced bets on interest rate cuts from the European Central Bank after the deal, with the reduced odds also aided by ECB board member Isabel Schnabel’s remarks.
The easing in tensions has relieved financial markets about worries over global economic growth, and signs of the de-escalation helped the European equities recover their sharp losses from early April.
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Sportswear makers Puma and Adidas closed 6.5 per cent and 3.8 per cent higher, while logistics companies Maersk and Hapag-Lloyd advanced 11.2 per cent and 13 per cent, respectively.
Basic metal miners were the top gainers, up 5 per cent after the deal buoyed prices of industrial metals.
Most healthcare heavyweights such as Roche Holding, Sanofi and AstraZeneca had dipped earlier in the day, after US President Donald Trump planned to sign an executive order to cut prescription drug prices to the level paid by other high-income countries.
However, they reversed losses, with the sector index ending 0.5 per cent higher.
“The market was pricing in very stringent rules, but these are going to be hard to enforce,” said Armstrong, adding that the order was a little vague.
Shares in Novo Nordisk fell marginally after US competitor Eli Lilly said its drug Zepbound was found to be superior to Novo’s Wegovy across five weight-loss targets in a head-to-head trial.
Meanwhile, Ukrainian President Volodymyr Zelenskiy said he was ready to meet Russian President Vladimir Putin in Turkey on Thursday.
Defence stocks Hensoldt slumped 11.6 per cent and Rheinmetall fell 5.9 per cent, with an index tracking European arms makers down 1.4 per cent.
UniCredit rose 4.2 per cent as Italy’s second-biggest bank strengthened its 2025 outlook after posting a surprise increase in first-quarter profit. REUTERS
