Tariff pardon triggers relief in European shares

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Tariff pardon triggers relief in European shares

On Monday, the 25th of February, the European shares rallied, after US president Donald Trump reprieved tariff on $200 billion worth of Chinese goods momentarily, signaling the beginning of the end of a gruesome trade war.

Optimisms were high throughout the day over a sooner-than-anticipated trade resolution, as the latest round of trade talks had indicated several shining stars, which could put an end to the trade talk before the trade truce deadline.

Besides, delegates from the two economic superpowers had also reached a memorandum of understanding over six critical subject matters including the much-disputed currency devaluation and intellectual property transfer right.

A series of progress on trade talk had lifted the European shares to their highest level since October 2018, on Monday (February 25th) market closure. In particular, the Chinese export-oriented indexes and stocks had mostly led the rally, while the Pan-European STOXX 600 closed the day 0.3 percent higher.

Trade-sensitive Frankfurt’s DAX 30 had gained 0.4 percent, while Italy’s FTSE MIB outperformed the market alongside Aussies and Kiwis, mounting as high as 0.9 percent during the mid-day European trading session.

The UK’s FTSE 100 had posted a slight gain of 0.07 percent to 7.183.74, while Paris climbed 0.31 percent to 5,231.85. The Auto shares, which had been the riskiest amid the global slowdown and an enhanced US tariff ahead, had jumped 2.1 percent, posting their highest levels since early November 2018.

Despite a cheering market sentiment all over the world, leading a prepotent global rally, analysts across the globe started to caution the investors not to be too furious, as the trade talk optimism could have run out of gas any time.

A fundamental analyst at Unigestion in Geneva, Stephane Dutu said, “I believe the easiest part is done. I believe Mr Trump has oversold the positive aspects of the discussions ... the overall deal will be less impressive than what the Chinese and especially Mr Trump are saying about it. ”