European equities surged Wednesday as investors responded positively to signs of easing trade tensions between the U.S. and China. Germany’s DAX led gains with a 2.5% jump, followed by France’s CAC 40 at 1.5%, and the U.K.’s FTSE 100 rising 1.3% by 07:05 GMT.
Driving the rally were comments from President Donald Trump suggesting that current 145% tariffs on Chinese imports were too steep and might be reduced. Treasury Secretary Scott Bessent reinforced this narrative, calling the ongoing trade war “unsustainable” and hinting at potential de-escalation.
This shift in tone reduced fears of a global economic slowdown, encouraging investors to re-enter equities. Trump also softened his stance on Federal Reserve Chair Jerome Powell, stating he had no plans to dismiss him—a move that further boosted market confidence in monetary stability.
Volvo Profit Miss Dampens Auto Sector
Despite broad market strength, Swedish truck maker Volvo underperformed after reporting a larger-than-expected decline in Q1 earnings. The company also revised down its outlook for North American demand, citing uncertainty from ongoing tariff-related pressures.
In contrast, Dutch firm Akzo Nobel exceeded expectations, reporting a modest drop in core profit thanks to cost control and pricing strategies. Semiconductor firm BE Semiconductor Industries (BESI) reported an 8.2% rise in Q1 bookings, fueled by demand from Asian AI-focused data centers.
Corporate Highlights:
- Volvo: Q1 profit below forecasts; U.S. truck market outlook downgraded
- Akzo Nobel: Beat estimates despite minor profit drop
- BESI: Orders jump 8.2% on Asian tech demand
Across the Atlantic, Tesla shares climbed in premarket trading after its auto division posted profitability above expectations, although revenue and net income missed targets. CEO Elon Musk announced plans to reduce his involvement in U.S. political affairs to focus more on his businesses.
Economic and Energy Updates Awaited
Investors are awaiting fresh economic signals, including the Eurozone PMI data due later today, which will provide insight into activity across services and manufacturing sectors.
The U.K. government also reported it borrowed £151.9 billion during the 2024/25 fiscal year, well above the Office for Budget Responsibility’s £137.3 billion forecast, signaling continued fiscal pressure.
Meanwhile, oil markets extended gains following new U.S. sanctions on Iran. Brent crude rose 1.5% to $68.47 per barrel, while WTI climbed 1.6% to $64.66.
Key Developments:
- U.S. Sanctions: Target Iranian oil magnate and exports
- Oil Inventory: API reports 4.6M-barrel drop
- Nuclear Talks: U.S. and Iran to resume in Oman
As geopolitical and economic narratives evolve, European investors are cautiously optimistic heading into the second quarter.
