The progress in the de -escalation of the commercial war injects optimism among investors, both from Wall Street and Europe. China and the United States have agreed for an initial period of 90 days. It is not the definitive end of tensions, but puts on the table the intention of the two greatest economies of the world to lower the tone to search for meeting points. And the market reaction has been immediate: the Dow Jones and the S&P 500 rise more than 2% and the Nasdaq adds more than 3%. European markets are left under euphoria, with increases of more than 1% in the case of the Euro Stoxx 50. The IBEX, weighed by energy, earns 0.75% after a day of high volatility.
Since and has generated enormous uncertainty in financial markets. The announced truce is better than what the worst economic omens would have been thought and moved away, which only a few weeks ago considered a recession inevitable. In this possible new scenario, investors again see the view towards US assets and increase their appetite for risk: they bet on the bag and oil, while leaving debt and gold, which falls 3% to $ 3,200 an ounce.
After the meetings held in Switzerland during the weekend, Washington and Beijing agreed a 90 -day pause in the encumbrances and that the tariffs would be reduced by more than 100 points: the Asian giant will drop from 125% to 10% the rates on US products and the US will cut those that apply to Chinese goods from 145% to 30%. “Trump has reduced his tariffs faster than anyone would have imagined. It seems that the rates on China will fall to manageable levels, even temporarily,” says Reuters Arne Petimezas, research director of the AFS Group firm in Amsterdam.
Relief moves to the most penalized sectors during the commercial crisis. In the United States, technological such as NVIDIA, Tesla and Apple advance 5%, and In Europe stand out (+6%) and ASML holdings (+4.5%). Automobile and steel also rebound, although 25% tariffs are still in force to cars and steel. Stellantis rises more than 7% and Mercedes-Benz, 5.5%. The Maersk shipping company shoots 12% thanks to the improvement in global trade forecasts. However, not all sectors benefit equally. Pharmaceuticals fit notable falls after the announcement of a Trump executive order to reduce the price of medicines. In the US, Eli Lilly loses 5% and in Europe, Novo Nordisk falls 5% and Sanofi, 6%.
“While the de -escalation of the commercial war benefits both economies, the agreement is likely to be considered a particular victory for China,” says Lynn Song, an Ing. “The reduction of tariffs on China is sufficient to allow a practically normal recovery of trade.”
Some analysts warn, however, the lack of details in the principle of agreement between the White House and Beijing, and consider that although it is an advance, it is not a definitive pact. In addition, any relief could soon be seen eclipsed not only by turns in negotiations, but for the data that show a slowdown in the US economy. Sheldon Macdonald, investment director of Marlborough, considers that it is “too soon” to expect an easy problem resolution. He adds that, even if the US maintained the 30% tariffs on China, this would remain “negative” for growth and “the fear of a recession would not yet be clarified.”
The IBEX moderates the increases
In European stock exchanges, the Dax erases the initial increases and falls 0.3% while the Paris CAC adds 0.8% and the Italian MIB 0.9%. “The news has been much better than expected,” said Geoffrey Yu, macro strategist and currency in the Bny Mellon entity. “We doubt that the market forgets April, but the worst scenarios are already a thing of the past and people will invest accordingly,” he adds.
Something behind, the IBEX advances 0.75%, weighed by energy companies, such as Endesa and Iberdrola, which fall around 2%. On the positive side, the ArcelorMittal Acerera adds 5.59%, and also the IAG Air Group (owner of Iberia and British Airwys), which earns another 4.88%. The Spanish index closed last week at 2008. On the side of the losses, Cellnex has been the red lantern of the index (-2.96%). Iberdrola has lost 1.78% and indra 1.72%.
The reaction to the tariff pause is felt in the fixed income, in the currencies and in other assets such as raw materials. Investors seek some more risk in their portfolios (with more actions) to the detriment of safer assets, such as debt. Bond prices fall and increase profitability (that is, the gain obtained by title holders, which moves the price inverse). The 10 -year German bond performance increases seven basic points, to 2.6%, maximum in a month. Also the interest paid by the US bonus at 10 years ups seven points. “Many institutional investors with liquidity seek to increase their exposure to the variable income” which penalizes the fixed income, explains to Reuters Karen Georges, manager of Ecofi Variable Income Funds.
The prospects for a cooling in tensions, very punished since Donald Trump began his commercial barrage, often measures adopted in a chaotic way. Today, the dollar recovers land not only in front of the euro (each European currency is changed to $ 1.11, minimum of a month), but also against other currencies considered refuge, such as Japanese Yen and the Swiss Franco. “The general scenario is not as bad as it could have been, but we still have enough uncertainty about where these tariffs will be located, their impact on world growth and the policy of the central banks,” said Jane Foley, head of exchange strategy of Rabobank, to Reuters.
In the, the general increase in appetite due to the risk harms gold, which has been upwards in recent weeks, since investors have sought safety in physical metal. The price of gold drops more than 3%, to $ 3,231 an ounce, below the historical maximum of April $ 3,500. On the other hand, oil prices advance, since negotiations reduce the risk of an important economic recession. The rises more than 2%, and each barrel exceeds $ 65.
Analysts, however, keep caution. The Macroyield investment firm indicates “the doubts” about the possibilities that a tariff situation close to what was beginning of this year can be consolidated (when the US effective rate was around 3%), but for the moment “the hopeful signals, which include the possibility of new commercial agreements with other countries this week, can continue to serve the support of the risk assets and the dollar”.
As for monetary policy perspectives, operators reduce their bets on the scope of the sales rates by the central banks this year. For the Federal Reserve, the expectations of a cut is delayed from July to September. Anz analysts expect that “it will not be until the publication of May IPC data in the US when we see wide evidence of tariffs reflected in inflation data.” Experts add that “June is too early for the Fed to cut the types and maintain our opinion that it will be in the third quarter, and most likely in September.”
Uploads in Asia
The main Chinese bags have also recorded profits against parenthesis in tensions. The Shanghai index is 0.8% and the Hang Seng of the Hong Kong Stock Exchange has risen about 3%.
In addition to commercial tensions, the campaign for presenting business results continues its course, although this Monday with less references. Today, it has touched Almirall’s turn, which has tripled the benefits and rises more than 8%. In Italy, the Unicredit Bank has announced an increase in the result in the first quarter and its action gains 2.5%. Juan José Fernández Figares, Director of Analysis of Link Management, explains that the business results season is coming to its end in Wall Street, and these have been “in general, more positive than initially expected.”
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