EUROPEAN shares jumped on Thursday, with most indexes recording their biggest one-day gains since 2022, after US President Donald Trump’s pause on reciprocal tariffs for most trading partners prompted a huge relief rally following a brutal selloff.
The suspension of punishing tariffs on dozens of countries came less than 24 hours after they kicked in. In response, the European Union on Thursday paused its own countermeasures against around 21 billion euros worth of US imports.
The pan-European Stoxx 600 leapt 3.7 per cent to 487.28 points, and major regional bourses jumped between 3 per cent and 4.7 per cent.
The benchmark index, as well as those in Germany Spain, and the UK recorded their best day since March 2022. France’s CAC 40 jumped 3.8 per cent, its best day since October 2022.
“Today we’ve see markets sort of mechanically rebound across the continent, we’ve had participants reassessing and reducing some of the downside growth risks that we did have in terms of the outlook in Europe,” said Michael Brown, senior research strategist at Pepperstone.
The shock reprieve came as a welcome relief to investors after a steep cross-asset selloff, as uncertainty and fears of the broad hit to economic growth from US tariffs have seen markets at their most volatile in years.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The Stoxx 600 has slumped about 9 per cent since US reciprocal tariffs were announced on April 2. It is down over 13 per cent from its March record close.
Uncertainty still remains, however, as Trump further hiked tariffs on Chinese imports. Broader 10 per cent levies, and tariffs on automobile imports also remain in effect.
“A 10 per cent levy on European imports is still very, very high and there’s absolutely no guarantee that a deal will be done, we’ve, built in 90 days worth of humongous uncertainty now,” Brown said.
A gauge of euro zone stock market volatility was still at elevated levels of 37 points, indicating traders still expect big swings in markets.
Money markets dialled back bets for a European Central Bank rate cut at its meeting this month, seeing around a 97 per cent chance of rate cut in April from fully pricing it the day before. They are pricing in around three 25 basis point cuts by year-end.
All sectors were higher, with the most battered ones this month – banks, miners and energy – advancing 5.2 per cent, 3.8 per cent and 2.5 per cent, respectively. The rate-sensitive banks index also notched its best day in over three years.
In company news, Barry Callebaut slumped 21.5 per cent to the bottom of the Stoxx index, after the Swiss chocolate maker lowered its annual volume guidance due to what it called “unprecedented volatility” in cocoa bean prices.
Tesco fell 6.2 per cent after Britain’s biggest food retailer warned its profit would likely fall this year. REUTERS
