EUROPEAN EQUITIES UPDATE: Stocks surge on US-Sino joint announcement, but pharmaceuticals hit by Trump

STOXX 600: +0.5%

• European bourses are broadly in positive territory with sentiment in Europe boosted after the US and China agreed to lower tariff levels by 115ppts each for a period of 90-days.


• To recap the main points; 1) US to cut tariffs on Chinese goods to 30% (prev. 145%) for 90 days, 2) China to cut tariffs on US goods to 10% (prev. 125%) for 90 days, 3) Bessent said both sides came to an agreement, 4) there was no discussion on currency with China, while fentanyl remains an issue.


• The announcement sparked immediate upside across the equities complex, and now currently resides just off highs


• It is worth noting that the DAX 40 has entirely pared the upside seen following the announcement. As the dust settles, traders may now be focused on commentary from Treasury Secretary Bessent, who suggested that on trade, the “EU is much slower”.

Sectors: Positive

• European sectors are mostly firmer, with the risk-tone boosted after the aforementioned US-China talks. The typical cyclical sectors outperform today, with the likes of Basic Resources and Autos leading whilst Utilities is towards the foot of the pile.


• Healthcare underperforms in Europe today, with pharma names broadly in the red after US President Trump said he will sign an executive order on reducing the price of prescription drugs, by 30-80%. Roche (-3.2%), AstraZeneca (-3.5%).


• There is some underperformance in Novo Nordisk (-5.9%) after Eli Lilly’s study suggests Zepbound outperforms Novo’s Wegovy for weight loss.


• Elsewhere, the Banking sector is firmer but sits around the midpoint of the pile. UniCredit (+2.7%) is boosted after reporting strong Q1 results and lifting its profit outlook.

Others: FTSE 100 +0.4%, DAX 40 +0.9%

• DAX 40 is on a stronger footing but has pared some of the initial upside seen on the US-China announcement. In terms of stock specifics; Evonik (-0.1%) is pressured after reporting a mixed set of results and highlighting the risk of economic slowdown in H2. Elsewhere, Hypoport (-6%) slips after its Q1 results.

US Equity Futures: ES +2.5%, NQ +3.5%, RTY +3.3%

• Future are entirely in the green, with the complex boosted by the positive US-China trade updates (see above).


• The Magnificent 7 after broadly higher in pre-market trade; Tesla (+6%), Amazon (+6%) – Chinese stocks are also set to open higher; Alibaba (+6.8%), PDD (+7%).


• Docket ahead is fairly quiet; focus will be on US President Trump who is set to sign executive orders on pharma prices as well as commentary from Fed's Kugler.

12 May 2025 - 10:00- ForexEU Research- Source: Newsquawk