European stock markets kicked off the new trading week with a powerful surge on Monday, as investors enthusiastically welcomed news that the United States and China had reached an agreement to significantly reduce trade tariffs.
This apparent breakthrough in the protracted trade dispute between the world’s two largest economies immediately lifted global market sentiment.
The positive momentum was evident across major European bourses from the opening bell.
The pan-European Stoxx Europe 600 index jumped 1.1% in early trading.
Leading national indices followed suit: Germany’s DAX surged 1.6%, France’s CAC 40 climbed 1.3%, and the UK’s FTSE 100 opened around 0.6% higher.
Earlier IG data had indicated pre-open expectations for the FTSE 100 to be up 35 points, DAX +192, CAC +70, and Italy’s FTSE MIB +366 points.
The primary catalyst for this strong risk-on sentiment was the White House’s announcement over the weekend of a “trade deal” with China, which included an agreement to suspend most tariffs for a 90-day period.
US Treasury Secretary Scott Bessent further bolstered optimism on Monday, stating that talks with China had been “very productive.”
This signaled a significant thawing in trade tensions that have weighed heavily on global economic prospects.
The positive news reverberated across global markets even before European trading commenced.
US stock futures had jumped sharply on Sunday night following the White House comments, with Nasdaq futures pointing to gains around 3.6%, S&P 500 futures up by 2.8%, and Dow futures indicating a rise of nearly 1,000 points (or 2.3%).
Asia-Pacific markets also broadly rallied on Monday in response to the perceived progress.
Safe havens retreat as risk appetite returns
The improved outlook for global trade prompted a noticeable shift away from traditional safe-haven assets.
Spot gold, which often gains during periods of economic and political instability, plunged on Monday as investors unwound protective positions. By 9:20 a.m. Singapore time, bullion was trading 1.85% lower at $3,262.29 per ounce.
This marked a sharp reversal from the previous week when gold had notched a 2.6% gain as investors sought refuge from trade uncertainties.
Bitcoin, another asset sometimes viewed as a hedge, also saw a slight pullback on Monday after strong recent gains.
The leading cryptocurrency was down 0.42% to $103,859.94 as of 11:39 a.m. Singapore time, though it continued to hold comfortably above the significant $100,000 threshold.
Its recent surge had prompted forecasts of it soon retesting its all-time high reached at the end of January.
Focus on earnings amid quieter data day
While the trade news dominated headlines, investors also turned their attention to corporate earnings.
Monday’s European earnings calendar was relatively light, though Italian banking giant UniCredit was among those releasing its latest quarterly results.
The broader earnings season continues to unfold, providing crucial insights into how companies are navigating the evolving economic landscape.
Data releases for the day were also sparse, allowing market participants to fully digest the implications of the US-China trade developments.
As the trading week begins, the significant step towards de-escalating the US-China trade war has provided a powerful boost to investor confidence, setting a positive tone across global financial markets.
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