Europe open: Stocks jump on China tariff reprieve

(Sharecast News) - European stocks pushed firmly higher on Monday after the Trump administration said certain products from China would be exempt from tariffs for now - though uncertainty was still high regarding how the trade war will play out in the coming weeks.

By 0930 CEST, the Stoxx 600 was trading 2.0% higher at 495, with gains of 1.8% or more seen on all major indices across the continent.

"The market whipsaw continues, with investors buffeted by conflicting signals which has made any thoughts of equilibrium a distant dream for the time being," said Richard Hunter, head of markets at Interactive Investor.

European markets had slumped to 14-month lows last week as America's seesawing trade policy continued to cause volatile swings across asset classes. The initial launch of reciprocal tariffs on all US trading partners was then followed by a 90-day pause, with the exception of China, which saw import duties hiked to 145%.

However, an announcement over the weekend from the White House of a tariff exemption on Chinese-made smartphones and other consumer electronic products has lifted sentiment somewhat as the new trading week began. According to Nomura analysts, some 16.3% of all Chinese exports into the US are now exempt from the reciprocal tariffs announced earlier this month.

"There was also some optimism towards the possibility of a broader deal between the economic powerhouses [China and US], although some of this was tempered by comments that other tariffs are on the way," Hunter said.

Tech stocks were the main beneficiaries from the latest tariff newsflow, with Soitec, Logitech and BE Semiconductor Industries among the best performers on the Stoxx 600.

Banking stocks were also on the rise across the region, including HSBC and Barclays in London, Commerzbank and Deutsche Bank in Frankfurt, and Credit Agricole and Societe Generale in Paris.

Busy week ahead

Market participants were starting to look ahead to Thursday when the European Central Bank is expected to cut interest rates again amid ongoing tariff-related uncertainty. "We expect another cut to the ECB policy rate this week as the downside risks to growth and inflation grow," said analysts at Citi in a note.

Aside from the ECB, investors will have a wave of key economic data and corporate earnings to contend with during a shortened trading week, with most markets closed on Friday for Easter. These include the latest quarterly figures from US banks, inflation data from the eurozone and UK, US retail sales and business inventories figures, and earnings from heavyweight tech groups TSMC and Netflix.

"All [of these announcements are] unfolding under the shadow of escalating trade tensions", said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "Every data point will be dissected through the lens of the growing trade war. While earnings will move stocks, it's the forecasts that truly matter now. A potential jump in US retail sales may not signal confidence, but rather reflect consumers front-loading purchases before tariffs bite," Ozkardeskaya said.