European stock markets opened higher on Monday, 12 May 2025, following the announcement of a 90-day tariff reduction agreement between the United States and China. The pan-European STOXX 600 index rose by 0.9%, with Germany’s DAX gaining 1.1%, France’s CAC 40 up 1.3%, Spain’s IBEX increasing by 0.7%, and the UK’s FTSE 100 climbing 0.5%.
Investor sentiment was bolstered by the easing of trade tensions, leading to notable gains in sectors such as sportswear and logistics. German companies Adidas and Puma saw their shares rise, while shipping firms Maersk and Hapag-Lloyd also experienced upticks. Conversely, pharmaceutical stocks declined by 2.6% after U.S. President Trump announced plans to reduce prescription drug prices, impacting companies like Novo Nordisk, GSK, Roche, Sanofi, and AstraZeneca.
Defence stocks, including Hensoldt, Rheinmetall, Dassault Aviation, and Saab, faced losses amid reports of potential negotiations between Ukrainian President Zelenskiy and Russian President Putin. In the banking sector, Italy’s UniCredit rose by 2.7% after reporting stronger-than-expected quarterly profits and an optimistic outlook for 2025.
Overall, the positive market response reflects optimism that the temporary tariff reductions could pave the way for more comprehensive trade agreements between the U.S. and China.
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