Europe: Shares recover from near two-week low as Trump softens China tariff stance

[BENGALURU] European shares staged a modest comeback on Monday (Oct 13), shaking off Friday’s bruising sell-off after US President Donald Trump toned down his aggressive trade stance towards China.

The pan-European Stoxx 600 index ticked up 0.4 per cent, clawing back some losses from a 1.3 per cent plunge after Trump threatened a 100 per cent tariff on Chinese goods in a reprisal against China for curbing its critical mineral exports.

Trump, known for his hardline rhetoric, adopted a conciliatory tone over the weekend. European markets and Wall Street recovered on easing fears of another all-out trade war.

“When it comes to tariffs, China is definitely the only country that plays hardball with the US. Even though markets are taking it in their stride. We are going to enter a period of heightened uncertainty around tariffs once again,” said Joachim Klement, an investment strategist at Panmure Liberum.

European stocks are trading just below all-time highs reached last week, with a thriving artificial intelligence trade and optimism over potential US rate cuts outweighing French political chaos. However, the spectre of a renewed trade war remains, injecting fresh volatility. Europe’s so-called “fear gauge” touched its highest level in over two months during the session.

“Investors may have thought the tariff story had run its course as a market catalyst, but last week showed it can still pack a punch,” said Chris Larkin, managing director, trading and investing, E*TRADE at Morgan Stanley. The technology sector gained 1.8 per cent, with a major boost from ASML.

Basic resources jumped 3 per cent as copper prices advanced on hopes of easing US-China trade tensions. France’s CAC 40 edged up 0.2 per cent after Sebastien Lecornu was reappointed as the prime minister on Friday, just four days after he had resigned from the role.

The government must formally present a budget in the coming days that faces a perilous path through a deeply divided parliament. Among big movers, PSI Software surged 35.8 per cent towards its highest since 2021 after private equity firm Warburg Pincus was set to buy the German software firm for more than 700 million euros (S$1 billion), confirming Reuters reports about the deal and the offer price.

Exosens climbed 10.5 per cent after Greek night vision systems maker Theon International said that it plans to buy a 9.8 per cent stake in its French peer. Theon’s shares dipped 1.3 per cent.

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