European shares ticked higher on Friday as investors assessed a potential de-escalation in the US-China trade war, while some upbeat quarterly earnings also offered support.
China is considering exempting some US imports from its 125% tariffs, stoking hopes for a de-escalation in a spiralling trade war between the world’s two largest economies.
The pan-European STOXX 600 index rose 0.4% by 0850 GMT, and was on track to climb about 2.8% this week, its second straight week of gains.
Other regional indexes including Germany’s DAX, France’s CAC 40, Spain’s IBEX, and the UK’s FTSE 100 gained between 0.2% and 1.1%.
US President Donald Trump’s softened rhetoric on the trade war with China also helped stabilise sentiment this week. With the bulk of Trump’s sweeping tariffs suspended for 90 days, expectations of trade deals between the US and its major trading partners have mounted, but none have yet emerged.
Even with the 90-day reprieve, the European Union is still being hit by a broad 10% tariff along with higher rates on steel, aluminium and cars.
“There is acknowledgment that the level of tariffs we see is likely not sustainable but it’ll probably take some time before these tariffs settle, and the question is still open as to where they settle, said Richard Flax, chief investment officer at Moneyfarm.
European shares dip as investors weigh mixed corporate earnings
European defense stocks led sector gains with a 2.2% rise, followed by travel stocks that rose 1.6%.
French jet engine maker Safran jumped 4.8% after it reported a stronger-than-expected rise in first-quarter revenues and said it was confident of hitting full-year targets, excluding any tariff impact.
The head of Safran said China has decided to grant exemptions from import tariffs for some aircraft parts, including jet engines.
Mapfre rose 7.5% after the Spanish insurer said its net profit in the first quarter rose 28%. Accor rose 5.4% after Europe’s biggest hotel group by portfolio reported a larger-than-expected rise in first-quarter revenue.
On the flip side, Kemira’s shares fell 9.4% after the Finnish chemical solutions maker delivered first-quarter earnings below expectations and signalled a weakening demand in its end-markets.
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