European stock markets decline: Optimism regarding US-China trade relations diminishes, policy easing does not boost investor confidence

Taiwan • Business • 05/14 18:27
European stock markets decline: Optimism regarding US-China trade relations diminishes, policy easing does not boost investor confidence

On May 14, 2025, major European stock markets ended lower as optimism among investors about easing US-China trade tensions waned. The London FTSE 100 index dropped 0.21%, the Frankfurt DAX index dropped 0.47%, and the Paris CAC 40 index fell 0.47% as well. Even though the Chinese Ministry of Commerce announced a temporary lift on export controls for 45 US entities, market reactions showed that this short-term policy relief did not boost investor confidence.

Key Updates

05/15 22:55

US stocks are mixed: Employment data is steady, IMF cuts global growth forecast; US-South Korea forex talks lead to Korean won fluctuations

On May 16, 2025, the major indices of the U.S. stock market had mixed performances, with the Dow Jones Industrial Average rising by 0.65% and the S&P 500 Index by 0.41%, while the Nasdaq Index fell by 0.18%. The U.S. non-farm employment report for April showed an increase of 177,000 jobs, with the unemployment rate remaining at 4.2%. The IMF downgraded the 2025 global economic growth forecast to 2.8%, citing U.S. tariff policies as the reason. The U.S.-South Korea foreign exchange policy talks led to fluctuations in the Korean won, and the appreciation of the New Taiwan dollar attracted attention, though the Taiwan-U.S. tariff negotiations did not address exchange rate issues.

05/15 21:23

U.S. stock market closed with mixed results: Cisco's stock rose as its financial forecast was revised upward, while UnitedHealth's stock plunged due to a judicial investigation.

On May 15, 2025, the U.S. stock market closed with mixed performance. The Dow Jones Industrial Average rose over 270 points due to Cisco's upward revision of its full-year forecast, while the S&P 500 Index increased for the fourth consecutive day. The Nasdaq Index edged down due to declines in tech stocks such as Amazon and Meta. Cisco's stock price jumped more than 5% on strong AI demand, while UnitedHealth tumbled 11% after reports of a criminal investigation by the U.S. Department of Justice, hitting a five-year low, making it the market's focal point.

05/15 08:26

Trump Announces "Tariff Freedom Day": S&P 500 Strongly Rebounds, Retail Investors Cause Significant Market Fluctuations

On April 9, 2025, President Trump of the United States announced "Tariff Liberation Day," significantly lowering tariffs on Chinese goods and reached an agreement with China to suspend the trade war for 90 days. This policy shift caused market fluctuations, with the S&P 500 index initially dropping and then rising, resulting in an "artificial bull market." The CNN Fear and Greed Index surged to 70, indicating that market sentiment had shifted into the greed zone. This article examines the impact of the policy shift on the stock market and how retail investors dominated the market rebound.

05/15 02:25

US stocks experience slight fluctuations: AI deal boosts tech stocks, the S&P 500 rises for six consecutive days, Treasury yields break through 4.5%

On May 14, 2025, the major U.S. stock indices were mixed. The S&P 500 index rose for the sixth consecutive day, boosted by the AI cooperation agreement between the U.S. and Saudi Arabia, as technology stocks performed strongly. The Nasdaq index also rose, while the Dow Jones index slightly declined. The yield on the 10-year U.S. Treasury note rose to 4.53%, indicating increased pressure in the bond market. Investors are focusing on the forthcoming economic data and remarks from Federal Reserve Chairman Powell to evaluate future policy directions.

05/14 18:56

U.S. stocks opened higher due to trade optimism: the pause in U.S.-China tariffs and easing inflation are boosting the three major indexes.

On May 14, 2025, the U.S. stock market continued its upward trend from earlier this week due to positive news such as the U.S.-China tariff suspension, cooling inflation data, and Trump's visit to the Middle East. The Dow Jones Industrial Average rose by 9.7 points, the S&P 500 rose by 10.2 points, and the Nasdaq rose by 64.6 points. Technology stocks performed strongly, particularly AI-related companies, leading to a positive shift in market sentiment.

05/14 18:27

European stock markets decline: Optimism regarding US-China trade relations diminishes, policy easing does not boost investor confidence

On May 14, 2025, major European stock markets ended lower as optimism among investors about easing US-China trade tensions waned. The London FTSE 100 index dropped 0.21%, the Frankfurt DAX index dropped 0.47%, and the Paris CAC 40 index fell 0.47% as well. Even though the Chinese Ministry of Commerce announced a temporary lift on export controls for 45 US entities, market reactions showed that this short-term policy relief did not boost investor confidence.

05/14 07:27

U.S. stock futures slightly rise: Dow Jones Industrial Average surpasses 42,200 points, indicating stable sentiment in Asian markets

On May 14, 2025, at 12:33 PM Taipei time, futures for the three major U.S. stock indices slightly increased. Dow Jones Industrial Average futures rose 21 points to 42,249, S&P 500 futures increased by 2.75 points to 5,907.25, and Nasdaq 100 futures went up by 20.5 points to 21,298.5. This indicates stable market sentiment during the Asian trading session, as investors focus on global economic and corporate earnings developments.

05/13 18:31

U.S. inflation data falls to a four-year low, European stocks react differently: London edges down, Frankfurt and Paris edge up.

On May 13, 2025, European stock markets had mixed performances after the U.S. April CPI annual growth rate fell to 2.3%. The London FTSE 100 index dipped slightly by 0.02% due to a slowdown in the UK labor market affecting market confidence. Meanwhile, the Frankfurt DAX and Paris CAC 40 indices rose by 0.31% and 0.30%, respectively, boosted by a temporary reduction in tariffs between the U.S. and China and expectations for a rate cut by the European Central Bank. Markets remain cautious about the global economic outlook, reflecting a cautious, wait-and-see attitude amid the interplay of multiple factors.

05/13 17:25

Soft U.S. inflation data and easing U.S.-China trade tensions boost the S&P 500 and Nasdaq.

On May 13, 2025, the U.S. stock market rose due to the annual growth rate of the April CPI dropping to 2.3% and the easing of trade tensions between the U.S. and China. The S&P 500 and Nasdaq indices increased by 0.9% and 1.49%, respectively. The U.S. and China announced a suspension of some tariffs and significantly reduced tariff rates, which boosted market confidence. Technology stocks led the gains, with the Nasdaq entering a technical bull market. The yield on the U.S. 10-year Treasury bond declined, and the dollar index fell, indicating increased expectations of a shift in Federal Reserve policy.

05/13 10:59

Futures for the three major U.S. stock indices simultaneously declined: Dow futures fell more than 90 points as investors pay attention to inflation data.

On the afternoon of May 13, 2025, futures for the three major U.S. stock indices declined. Dow Jones Industrial Average futures dropped 93 points to 42,400, S&P 500 futures fell 19.25 points to 5,845.75, and Nasdaq 100 futures decreased 85.75 points to 20,863. The market was cautious ahead of the U.S. stock market opening, as investors focused on upcoming U.S. inflation data and economic indicators, which could impact the Federal Reserve's interest rate policy.

European Stock Markets Retreat as Investor Sentiment Turns Cautious

After four consecutive trading days of gains, European stock markets experienced a pullback on Wednesday. The London FTSE 100 index fell by 17.91 points to close at 8,585.01, a decline of 0.21%. The Frankfurt DAX index dropped 111.55 points to 23,527.01, a decrease of 0.47%, while the Paris CAC 40 index fell 37.04 points to 7,836.79, also down by 0.47%.

The pan-European Stoxx 600 index also ended its streak of gains, closing down 0.2%. Consumer goods and healthcare stocks underperformed, while banking and construction stocks were relatively resilient. Despite some corporate earnings exceeding expectations, such as British luxury brand Burberry, which saw its stock price surge by 17% due to retail growth and planned layoffs, the overall market sentiment remained affected by macroeconomic uncertainties.

Market observers noted that the boost from previous US-China trade easing news, which had driven stock market gains, is gradually diminishing. Investors are beginning to reassess the substantive content and sustainability of the agreement and remain vigilant about potential policy variables in the future.

China's Ministry of Commerce Announces Temporary Lifting of Restrictions on 45 US Entities

Amid market fluctuations, China's Ministry of Commerce announced at 10 PM on May 14 that it would temporarily lift export restrictions on 45 US entities for 90 days, effective from the announcement. Specifically, 28 US companies will be temporarily removed from the export control list, and 17 US entities will not be subject to the unreliable entity list regulations.

This move is to implement the consensus reached during recent high-level economic and trade talks between China and the US in Geneva, Switzerland. According to the Ministry of Commerce, these measures were originally announced on April 4 and 9, 2025, in response to US tariff increases and other trade restrictions, leading China to place relevant US entities on export and transaction restriction lists.

According to the announcement, exporters wishing to export dual-use items (products that can be used for both civilian and military purposes) to these entities must apply to the Ministry of Commerce under the "Regulations of the People's Republic of China on the Administration of the Export of Dual-Use Items" and can only proceed with transactions if approved.

Additionally, regarding the suspension of the unreliable entity list measures, Chinese companies can also apply to conduct transactions with relevant US entities, subject to review by the unreliable entity list working mechanism in accordance with the law.

Background of the US-China Trade Agreement and Market Reaction

China's decision to temporarily lift restrictions on US entities is part of a 90-day "trade ceasefire" agreement reached between China and the US following talks in Geneva. Under the agreement, the US will reduce tariffs on Chinese goods from 145% to 30%, while China will lower retaliatory tariffs on US goods from 125% to 10%. Both sides also agreed to suspend some non-tariff countermeasures to create space for further negotiations.

US President Trump stated in a media interview that the "most exciting" part of the agreement is that the Chinese market will further open to US companies. He emphasized that the basic framework of the agreement was nearly established from the outset and looks forward to further discussing details with Chinese President Xi Jinping.

However, despite signs of policy easing, the market reaction has been cautious. Analysts pointed out that investors still have doubts about the sustainability and implementation details of the agreement, especially given the repeated policy reversals and negotiation breakdowns between the US and China in recent months.

Additionally, some European markets were affected by other factors. For example, French train manufacturer Alstom, despite reporting a profit rebound, saw its stock price plummet by 17% due to a weak future outlook, dragging down overall market sentiment.

Forex and Other Market Dynamics

As stock markets declined, the US dollar index also weakened. Market observers noted that this reflects weakened investor confidence in the US-China trade agreement, leading investors to shift to other safe-haven assets. Meanwhile, Asian markets showed mixed performance, with Chinese and Hong Kong stock markets closing higher due to gains in tech stocks, indicating regional capital flows and policy expectations still vary.

References

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