European shares increase as Trump lowers China tariffs
After U.S. president Donald Trump exempted smartphones and computers from China's steep tariffs, a rally in technology shares helped lift European stocks on Monday. This provided markets with a breather after weeks of sharp fluctuations.
STOXX 600, the pan-European index, was up 2.1% at 0824 GMT after posting its third consecutive week of losses on Friday.
The global markets have been rattled by weeks of back and forth over tariffs, which has pushed the benchmark index roughly 12% below its previous record-breaking closing high.
All regional indices are trading higher. Trade-exposed Germany gained 2.5% while France, Spain, and the UK rose between 1.8% to 2.1%.
The shares of Infineon and ASML, two chip companies, as well as BE Semiconductor, rose between 3.3% to 4.2%, after Trump granted exemptions from tariffs for smartphones, computers, and other electronics, largely imported from China.
The European technology shares rose by nearly 3% while the economically sensitive banks gained 3.1%.
It's possible that this is a sign that the negotiations are about to begin. Richard Flax said that there is still a lot of uncertainty about how this will play out, but investors may see signs of flexibility.
Investors are unlikely to attach too much importance to any comment made by the U.S. government.
Trump announced on Sunday that tariffs will be announced on semiconductors over the next few weeks and a "soon" decision would be taken on smartphones.
Goldman Sachs has cut its 12-month forecast price for the benchmark STOXX 600 Index to 520, from 570. This is the second time they have lowered their forecast this month because of the uncertainty around Trump's tariff policy.
The European Central Bank will hold its policy meeting Thursday. Markets are widely expecting a rate cut of 25 basis points.
Investors will pay attention to how policymakers assess the impact of tariffs on the economy, as traders have increased their bets for rate cuts. The traders expect that the deposit rate will drop to 1.63% in December from 1.94% last month.
BNP Paribas shares rose 4.1% in company news after the French bank cut its forecast on return on invested capital for its acquisition of AXA Asset Management, valued at 5.8 billion euros (5.9 billion dollars). This was seen by investors as "smaller" than they had feared.
The shares of Vallourec rose by 5.1% following the announcement that it had entered into exclusive negotiations with Aldebaran Investment Company to sell Serimax.
(source: Reuters)
