European stock markets experienced a boost on Friday as optimism regarding reduced US-China trade tensions grew, with investors anticipating discussions scheduled for the weekend. The pan-European STOXX 600 index increased by 0.3% as of 0708 GMT, with all regional markets showing gains. Germany’s DAX index led the charge with a notable rise of 0.7%. Sectors such as energy and basic resources recorded the most significant advancements, gaining 1.8% and 1%, respectively.
U.S. President Donald Trump indicated on Thursday that predicted import tariffs on China, which could reach 145%, may decrease as negotiators from the world’s two largest economies prepare for talks in Switzerland. Although Washington plans to introduce several trade deals in the upcoming month, a 10% tariff imposed on numerous countries is expected to remain in effect, according to U.S. Commerce Secretary Howard Lutnick. Benjamin Ford, a strategist at Macro Hive, commented, “The reason that global equities are kicking on is just the hope that this US-China update on the weekend in Switzerland, is going to be ‘something’.” The STOXX 600 index is on track for its fourth consecutive weekly uptick, having risen about 13.7% since hitting a low in April due to expectations that the U.S. will secure agreements to mitigate the potential fallout of a trade war. In addition, corporate earnings reports released on Friday were largely favorable.
Commerzbank shares rebounded by 2.5% after the German bank unexpectedly reported profit growth for the first quarter. Swiss company Sonova soared 5.8% following a forecast of increased sales and profitability for its fiscal year 2025/26. Meanwhile, shares in Danish biotech firm Bavarian Nordic surged by 12%, achieving their highest level since late February as their first-quarter revenue surpassed market predictions. Out of 149 companies in the STOXX 600 that reported first-quarter results by Tuesday, 58.4% exceeded analyst earnings estimates, significantly higher than the typical 54%.
The backdrop of these developments included central banks, with the U.S. Federal Reserve maintaining rates while the Bank of England enacted a quarter-point rate cut, all amid concerns of a global trade war affecting growth and inflation. BoE Governor Andrew Bailey stated that rebuilding the UK’s trading relationship with the EU is essential. A forthcoming EU summit on May 19 may lead to enhanced defense collaboration and facilitate agreements to improve trade conditions.