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European Stocks Surge on China-U.S. Trade Deal Optimism

European Stocks Surge on China-U.S. Trade Deal Optimism. Source: Image by Gerd Altmann from Pixabay

European equity markets rallied on Monday, driven by renewed optimism over U.S.-China trade negotiations. At 07:02 GMT, Germany’s DAX surged 1.8%, France’s CAC 40 gained 1.3%, and the U.K.’s FTSE 100 rose 1%, reflecting investor confidence in a potential de-escalation of the trade war between the world’s two largest economies.

Sentiment improved after the White House announced progress in trade talks with China over the weekend. Although no concrete tariff reductions were detailed, both sides are expected to make a joint statement soon, signaling a softer tone and possible resolution to months of escalating tensions that had seen tariffs exceed 100%.

Investor mood was further lifted by geopolitical developments, including a fragile ceasefire between India and Pakistan and Ukrainian President Volodymyr Zelenskiy’s willingness to meet Russia’s Vladimir Putin in Turkey for talks.

Markets also responded positively to expectations that the European Central Bank will cut interest rates in June, with analysts pricing in a 90% chance of a reduction. The ECB has already slashed rates seven times in the past year amid easing inflation, and additional cuts are anticipated later in 2025.

In corporate news, Italian bank UniCredit reported a record Q1 net profit of €2.8 billion, up 8.3% year-on-year, driven by higher fees and trading income despite a dip in net interest income. Meanwhile, German steelmaker Salzgitter posted weaker-than-expected results due to persistent economic weakness in Europe.

Oil prices also climbed on trade deal optimism. Brent crude rose 2.1% to $65.27 a barrel, while U.S. WTI crude futures increased 2.1% to $62.29, building on last week’s 4% gains fueled by hopes of a thaw in U.S.-China relations.

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