European stocks jump most in five years on Trump tariff reprieve

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European stocks gain most in five years on Trump tariff reprieve.

stock :: 2025-04-10 :: source - bloomberg

By Bre Bradham and Macarena Muñoz

(Bloomberg) — European stocks rallied after US President Donald Trump paused plans to implement higher reciprocal tariffs on dozens of trade partners, easing concerns about a global trade war.

The Stoxx Europe 600 Index (^STOXX) was 6% higher by 8:50 a.m. in London, with all sectors in the green and banks and miners leading gains. France’s CAC 40 (^FCHI) jumped 6% and Germany’s DAX soared 7%. If the gains hold to the end of the day, European stocks will have pared back about half of the losses incurred since a record high close in early March.

European stocks have been under pressure, entering a correction, since Trump announced widespread levies last week, including higher tariffs on the European Union. Trump announced a 90-day tariff reprieve Wednesday, while ramping up duties on China.

There’s “some relief but the 125% tariff on imports from China and the uncertainty around negotiations and other side effects of this volatility could keep a risk premium in most assets,” said Rajeev De Mello, chief investment officer at Gama Asset Management. Trump “will be reluctant to allow a worse episode but I would rather fade the risk-on moves from these levels as the market finds a new equilibrium.”

De Mello sees stocks trading within a 10% range over the next few weeks.

Trump’s announcement sent US stocks up by the most since 2008 on Wednesday, though the S&P 500 remains down more than 7% so far this year. The Stoxx Europe 600 has fallen around 2% in 2025, wiping out a strong rally over the first quarter.

“This isn’t the end of the trade war, far from it,” said Susana Cruz, a strategist at Panmure Liberum. “The economic damage is baked in: no one’s rushing to invest in the US, inflation’s ticking higher, and global trade is taking a hit.”

Here is what market participants are saying:

Matthew Ryan, head of market strategy at Ebury

“Risk assets (CNY proxies aside) will probably remain well bid in the next few days, as markets continue to readjust expectations for where the average US tariff rate will land. Again, there are no guarantees here, but the fact that Trump appears open to negotiation suggests that this number is almost certain to come down from current levels, to the relief of market participants.”

Nicolas Domont, an equity fund manager at Optigestion in Paris

“The reversal just shows how nervous the market was. I was telling my clients there was nothing systemic, it’s just that Trump got caught back by the market. I’m going to increase back my exposure to stocks: due to mounting risk I had increased cash in my portfolio to 15% and now plan to buy 3% to 4% today in stocks. I’m back yes, but I’m not all in yet. I’m going to avoid industrials which are exposed to US tariffs on China for instance. I’m going to stay overweight on the US as it’s there that most growth stocks are but I’m probably going to re-expose myself to Europe a bit more. I’m starting to feel that there’s some loss of investor confidence building towards the US. For me the next real tests is the earnings season, I’m hoping to learn a lot from it in the next three coming weeks.”

—With assistance from Levin Stamm and Julien Ponthus.

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