European stock markets opened with modest gains in early trade on Friday, as a turbulent week for shares neared its end.
While positive momentum was present, underlying concerns about an escalating trade war between the US and China persisted, capping overall enthusiasm.
The pan-European Stoxx 600 index opened up 0.4%, with the UK’s FTSE 100 inching up by 0.5%, while Germany’s Dax and France’s CAC 40 were higher by 0.4% at 8:10 a.m.
London time, reflecting a generally cautious approach from investors.
Almost all sectors of the stock market were trading in positive territory, with energy the lone exception, highlighting a broad but not overwhelming sense of optimism.
A choppy week driven by trade policy developments
European, and global, markets have experienced a choppy week as investors have reacted to the frequent and often unpredictable developments in global trade policy, triggered by US President Donald Trump’s latest tariff plans.
Trump’s so-called reciprocal tariffs came into effect earlier this week before being temporarily dropped to a blanket 10% for 90 days to allow for trade negotiations with most of the close to 90 countries and territories targeted, providing a brief period of respite.
However, tariffs on imports from China were raised, underscoring the primary focus of the trade dispute.
The European Union on Thursday responded in a similar vein, pausing the adoption of countermeasures for 90 days.
“We want to give negotiations a chance,” European Commission President Ursula von der Leyen said on social media, signaling a commitment to de-escalation.
Despite these efforts, trade policy uncertainty persisted, as it remained unclear how negotiations between the US and its trading partners would play out.
Lingering fears about a full-blown trade war between the US and China were firmly front of mind for investors.
Cumulative tariff rate on China reaches 145%
The two countries have been engaging in a tit-for-tat cycle, with the White House confirming to CNBC on Thursday that the cumulative tariff rate on China would now effectively total 145%.
This encompasses the 125% duty on goods, as well as a 20% fentanyl-related duty, creating a significant economic challenge for Chinese exporters.
Asia-Pacific markets were last mixed, reflecting the lack of a clear direction in global trade relations.
Stateside, US stock futures slipped after a losing session for stocks on Thursday, further adding to the cautious atmosphere.
UK GDP data looms: a key economic indicator
In Europe, investors are eagerly awaiting the release of monthly UK gross domestic product (GDP) data on Friday, which will provide valuable insights into the health of the British economy and the potential impact of global trade headwinds.
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