European equities rebounded sharply on Thursday after US President Donald Trump announced a temporary pause in full reciprocal tariffs on most trade partners, offering a brief reprieve amid ongoing trade tensions.
However, US markets failed to sustain their momentum from the previous session and fell back into negative territory.
Best day in years for European stocks
The Stoxx 600 index jumped 3.7%, marking its strongest session in three years.
Gains were broad-based, with all sectors finishing in the green.
Banking, industrial, and technology stocks led the charge, rising 5.15%, 4.9%, and 4.5%, respectively.
Germany’s DAX index rose 4.67%, leading gains among major European markets.
France’s CAC 40 advanced 3.8%, while the UK’s FTSE 100 gained 3.04%.
Germany is expected to be among the most affected by new US tariffs due to the scale of its exports to the country.
The rally came after a volatile week that saw the index close at its lowest level since January 2024 just a day earlier.
Trump’s announcement late Wednesday — a 90-day pause in new tariff rates for most US trade partners — was a shift from his earlier stance that tariffs would remain in place.
The European Union, in response, will also pause its counter-tariffs against the US for 90 days to allow room for negotiations, European Commission President Ursula von der Leyen said in a post on X Thursday.
She noted that while the EU has finalized its countermeasures with strong backing from member states, their implementation will be delayed.
The tariffs will take effect if discussions do not yield a satisfactory outcome.
US markets slip on Thursday
US stocks had surged on Wednesday following Trump’s move, with the S&P 500 gaining more than 9%, its third-largest one-day rise since World War II.
But the enthusiasm faded quickly. On Thursday, all three major indexes reversed sharply.
The Nasdaq Composite fell 654 points, or 3.8%, to 16,407.91. The S&P 500 declined 174.60 points, or 3.2%, to 5,282.30, while the Dow Jones Industrial Average lost 1,068 points, or 2.6%, to 39,540.41.
Investors appeared to be locking in profits from the prior day’s rally, as concerns about economic growth resurfaced.
Traders mostly ignored the inflation data that was released earlier on Thursday.
US inflation eased more than expected in March, according to data released Thursday by the Bureau of Labor Statistics.
The consumer price index (CPI) declined by 0.1% on a seasonally adjusted basis, bringing the annual inflation rate down to 2.4% from 2.8% in February.
Core inflation, which excludes food and energy, rose 0.1% in March and slowed to 2.8% year-over-year — the lowest since March 2021.
Both headline and core inflation came in below Wall Street expectations.
As per Dow Jones estimates, annual headline inflation was seen at 2.6% and core at 3%.
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