April 25 – European equities posted modest gains on Friday, buoyed by emerging signs of reduced tensions between the United States and China over their long-standing trade dispute. Optimism around potential tariff rollbacks and strong corporate earnings across the region helped push markets higher, keeping investors cautiously hopeful.
Trade War Truce Hopes Fuel Gains
Investor focus remained largely fixed on global trade developments, particularly the evolving relationship between Washington and Beijing. Speculation that China may ease tariffs on certain American products sparked renewed hope and lifted sentiment across global financial markets. Chinese authorities have reportedly asked domestic companies to submit lists of American products that may qualify for exemption from the existing 125% import tariffs. This move is being interpreted as a possible step toward easing the pressure in what has been a tense economic standoff between the world’s two largest economies.
This indication of a potential shift in trade policy added a layer of stability to global markets that have seen several years of turbulence driven by tit-for-tat tariffs. With the U.S. administration showing signs of softening its tone—particularly with a temporary suspension of some tariffs for a 90-day period—investors are hoping for sustained dialogue and eventual resolution.
However, despite the pause, many of the U.S tariffs remain intact, especially those affecting the European Union. Products such as steel, aluminum, and automobiles are still subject to levies as high as 10%, leaving room for concern among European policymakers and exporters.
STOXX 600 and Key Indices Record Weekly Gains
In response to the recent developments, the pan-European STOXX 600 (.STOXX) index saw a 0.3% rise by mid-morning trading and appeared set to notch up a solid 2.8% weekly gain—marking its second consecutive week in the green. Across major regional exchanges, momentum remained positive.
Germany’s DAX (.GDAXI), France’s CAC 40 (.FCHI), Spain’s IBEX (.IBEX), and the UK’s FTSE 100 (.FTSE) posted gains between 0.1% and 0.9%. The broader rally suggests that investors are not only reacting to the thawing trade climate but are also finding confidence in a series of upbeat earnings reports across sectors.
Richard Flax, Chief Investment Officer at investment platform Moneyfarm, noted that while progress is visible, the current tariff levels are “unsustainable in the long run.” He added that negotiations could still take time to finalize, and the key question remains what the final settled terms will look like.
Sector Watch: Defense and Construction Lead
On a sectoral basis, European defense stocks led the charge with a notable 2.4% gain. Closely following were construction and materials companies, which advanced by 1.5%, benefitting from both macroeconomic optimism and company-specific performance.
French aerospace manufacturer Safran was among the top performers, surging 4.8% after announcing better-than-expected first-quarter revenue figures. The company reiterated its confidence in meeting full-year targets, despite the global uncertainty surrounding tariffs. Notably, Safran’s management confirmed that certain aircraft components, such as jet engines, were being granted tariff exemptions by Chinese authorities—an encouraging sign for the sector.
Another standout was Mapfre (MAP.MC), a major Spanish insurance firm, whose stock jumped 6.7% following a strong quarterly report. The company posted a 28% rise in net profit for the first quarter, signaling resilience despite external headwinds.
Accor (ACCP.PA), the largest hotel group in Europe by property count, experienced a 4.6% boost in its share price following stronger than anticipated revenue results for the first quarter. The hospitality group cited strong recovery in travel demand and effective cost controls as key drivers behind the growth.
Not All Sunshine: Kemira Slumps on Weak Earnings
While the broader sentiment was positive, not all stocks joined the rally. Shares of Finnish chemical company Kemira (KEMIRA.HE) plummeted 9.1% after delivering earnings that fell short of analyst expectations. The company also flagged weaker demand in its core markets, raising concerns about the outlook for the chemicals sector amid shifting industrial trends.
Kemira’s disappointing performance served as a reminder that despite encouraging signs on the macro front, company-specific issues and sectoral challenges remain relevant for investors.
Looking Ahead
As markets digest the evolving dynamics of international trade and corporate performance, the next few weeks will be crucial. Investors are watching closely for any concrete progress in U.S-China trade talks, particularly whether the tariff pause leads to more permanent policy shifts.
For now, the signs point toward cautious optimism. The combination of strong earnings and potential de-escalation in global trade tensions has provided European equities with a much-needed boost. However, sustained recovery will depend on continued diplomatic efforts and clarity on the long-term tariff landscape.