Friday saw a surge in European stocks, buoyed by a newly ratified trade agreement between the U.K. and U.S. and anticipations around the imminent U.S.-China trade talks. The Stoxx Europe 600, a pan-European index, concluded 0.44% higher. Concurrently, the FTSE 100 from the U.K. and Germany’s DAX marked an increase by 0.27% and 0.63% respectively, with the DAX ending at a milestone high of 23,499.3 points.
Public statements from President Trump proposed an 80% tariff on Chinese imports ‘seems right’, further stoking the trading climate. German shares hit a milestone high, while Commerzbank wore a smile with profits cresting at the highest since 2011. Additionally, despite U.S. tariffs, China’s exports in April registered an 8.1% leap, exceeding estimates.
Most major European indices closed with a positive sign on Thursday, the exception being the U.K.’s FTSE 100 which took a dip of 0.32% after breaking its record streak the day before. An important event unfolding over the following weekend was the meeting between U.S. Treasury Secretary Scott Bessent, Trade Representative Jamieson Greer, and senior Chinese authorities in Switzerland. The discussion was focused on trade and economic challenges facing both nations.
Scott Bessent, ahead of the meeting, remarked it was more about ‘de-escalation’ rather than one major trade agreement. This comes into light as both the U.S. and China are grappling with a trade war, with imposed tariffs well-over 100% on each other. President Trump, ahead of the weekend discussions, backed a reduction in tariff rates on Chinese goods but maintained it at a stringent level.
Asian markets on Friday presented a mixed picture as investors read into China’s trade numbers for April. Despite being impacted by the high-level U.S. tariffs triggered last month, Chinese exports managed to record considerable growth. Concurrently, import declines lessened as Beijing ramped up stimuli.
Meanwhile, on Wall Street, stocks climbed higher in the initial trades after President Trump hinted at multiple trade agreements in the pipeline. Regional index Stoxx 600 picked up 0.44%, with FTSE 100 and France’s CAC 40 registering increases of 0.27% and 0.64%, respectively. The DAX index from Germany also ascended 0.63%, capping off at an all-new high.
Warnings around the far-reaching impact of Trump’s import tariffs came from Fed Governor Michael Barr. He asserted that these tariffs might translate into inflated prices and reduced growth prospects later the same year. He divulged on Friday that the magnitude and extent of the recently imposed tariffs was unprecedented, clouding any precise forecasts around their economic impact.
Barr emphasized that the economic disruption created by the tariffs could hike global supply chain pressures, leading to long-lasting inflationary tendencies. He expressed a dual concern about increased unemployment numbers due to economic deceleration caused by tariff imposition.
On the eve of a face-to-face dialogue slated between Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and their Chinese counterparts in Switzerland, Trump tweeted again. He divulged an aggressive tariff policy with China, with tariff levels soaring to 145%, despite comparatively lenient tariffs enforced on other countries following his tariff announcements in early April. With China retaliating with stiff tariffs on U.S. goods, the global trade milieu remains intense.
The trading day on Friday saw Germany’s DAX index scale record highs, going past its previous pinnacle before settling slightly lower at 0.45% above its opening value. Home to leading German companies, the index has seen an impressive rise of over 17% since the year commenced. Among the top gainers, Siemens Energy experienced a 3% jump, Merck saw a 1.8% surge, and BMW recorded a 1.6% rise.
European investors were seen as ‘belatedly celebrating’ the newly minted trade agreement between the U.K. and U.S., as Russ Mould, investment director at AJ Bell, put it eloquently in a client note on Friday morning. He remarked that as the trade deal arrived close to market closure in the U.K., many investors likely hadn’t had sufficient time to evaluate and realign their investment strategies.
Commerzbank, the German banking giant, had a profitable start to the year as they reported a 12% Year-on-Year increase in net profit (834 million euros), beating an expected net result of 738.5 million euros, according to data from LSEG. The January to March period saw the bank’s highest quarterly profit since 2011. Additionally, revenues increased by 12% YoY to hit 3.1 billion euros, surpassing market expectations of 2.96 billion euros.
The bank reconfirmed their outlook for the full year, indicating a projected net profit of 2.8 billion euros by 2025, which they anticipate will drop to 2.4 billion euros after accounting for restructuring costs.
Even under the weight of intensifying U.S. tariffs that took effect last month, China saw a remarkable surge in exports in April. Boosted by accelerated stimuli from Beijing, their imports also experienced a tapering off of declines during the period. These export numbers showcased an 8.1% increase in U.S. dollar terms compared to the same time last year according to data from the customs authority, a figure significantly higher than the anticipated 1.9% rise posed by Reuters’ poll estimates.
In contrast, April imports slumped by a modest 0.2% YoY, which is significantly less than economists’ projected 5.9% fall. The robust performance of China’s trading scenario, amidst escalating tariffs imposed by the U.S., embraces the reality of a complex global economic landscape.