European Stock Markets End with Losses Except for Britain Amid New US-China Trade Deal

Strategic Insights -

European stock markets suffered losses except for Britain on Thursday, despite the newly announced trade deal between the US and China. The pan-European Stoxx 600 dropped 0.33%, with Germany's DAX 40 index down 0.74% and France's CAC 40 falling 0.14%. The trade deal, subject to final approval, aims to reduce tariffs between the two nations, with US President Donald Trump announcing that the US would receive 55% tariffs and China 10%. The deal includes provisions for the supply of rare earths and Chinese students using US colleges.

Key Takeaways:

  • The pan-European Stoxx 600 dropped 0.33%, with a 1.8-point decrease to close at 549.84.
  • Germany's DAX 40 index fell 0.74% to end at 23,771.45 points, while France's CAC 40 dropped 0.14% to close at 7,765.11 points.
  • Britain's FTSE 100 index bucked the trend, rising 0.23% to 8,884.92 points.
  • US President Donald Trump announced that the newly signed trade deal would include a 55% tariff rate for the US, with China receiving 10% tariffs.
  • The deal includes provisions for the supply of rare earths and Chinese students using US colleges and universities.
  • US Commerce Secretary Howard Lutnick stated that tariffs on China won't change again, including a 20% tariff on fentanyl, a 10% reciprocal tariff, and a 25% tariff rate from the president's first term.
  • US Treasury Secretary Scott Bessent emphasized the need for China to be a reliable partner in the trade negotiations, citing the possibility of a "big, beautiful" rebalancing of the economy.

Statistics:

  • The euro/US dollar exchange rate rose to around 1.16 on Thursday, hitting its highest level since April 22.
  • The UK economy contracted by 0.3% in April, with a record decline in exports to the US being a major driver of the contraction.
  • The UK's Office for National Statistics reported a decline in exports to the US, prompting economists to revise their expectations for interest rate cuts.
  • Interest rate cuts are now seen as more likely in August or November rather than at next week's Bank of England (BoE) meeting.
  • The US and China agreed to a broad rollback of punitive tariffs for an initial 90 days in May.

Sources:

  • [CNN Business]
  • [CNBC]
  • [Office for National Statistics]
  • [House Ways and Means Committee]
  • [Bank of England]