European Shares Edge Higher Amid Trade War Optimism and Earnings Reports

European equities experienced gains on Friday, buoyed by considerations of a possible ease in trade tensions between the US and China, alongside encouraging corporate earnings updates.

The potential for China to exempt specific US imports from previously imposed tariffs of 125% has raised expectations for a de-escalation in the ongoing trade dispute between the globe’s two largest economies.

The pan-European STOXX 600 index increased by 0.4% as of 0850 GMT and is poised to rise by approximately 2.8% this week, marking its second consecutive week of positive performance.

Additional regional indexes, including Germany’s DAX, France’s CAC 40, Spain’s IBEX, and the UK’s FTSE 100, all saw increases ranging from 0.2% to 1.1%.

US President Donald Trump’s more conciliatory tone regarding trade relations with China has also contributed to market stability throughout the week. With a significant portion of Trump’s proposed tariffs on hold for 90 days, anticipation is building for potential trade agreements between the US and its major trading partners, although no concrete deals have materialized yet.

Despite the 90-day suspension, the European Union remains subject to a blanket 10% tariff, in addition to higher tariffs on steel, aluminum, and automotive products.

Analyst Commentary

“There is acknowledgment that the current level of tariffs is likely unsustainable. However, it will probably take some time before these tariffs are resolved. The ultimate settlement point remains an open question,” commented Richard Flax, chief investment officer at Moneyfarm.

Sector Performance

European defense stocks spearheaded sector advances with a notable 2.2% surge, followed by travel stocks, which rose by 1.6%.

Individual Stock Movements
  • French jet engine manufacturer Safran saw its shares climb by 4.8% following the release of stronger-than-anticipated first-quarter revenue figures. The company expressed confidence in achieving its full-year objectives, barring any impact from tariffs.
  • The head of Safran indicated that China has decided to grant exemptions from import duties for certain aircraft components, including jet engines.
  • Mapfre’s shares jumped by 7.5% after the Spanish insurer reported a 28% increase in its first-quarter net profit.
  • Accor, Europe’s largest hotel group by portfolio, experienced a 5.4% rise in its share value after reporting first-quarter revenue growth that exceeded expectations.
  • Conversely, Kemira’s shares plummeted by 9.4% after the Finnish chemical solutions provider announced first-quarter earnings below forecasts and indicated softening demand in its key markets.