Unlock the editor’s summary for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
The German Dax index rose to a maximum record on Friday, becoming the first major European reference point to recover the losses caused by Donald Trump’s tariff threats, such as investors’ optimism on the global markets of US trade agreements.
The Dax was 0.6 percent higher in the afternoon trade, after Thursday’s announcement of an American-Tu-UK trade agreement was followed by a call between the president of the United States and the new chancellor of Germany, Friedrich Merz, in which the need to resolve the resignations of commercial disputes.
Merz, who warned after his electoral victory that Europe needed to “achieve independence” from the United States, also reached a conciliatory tone with Trump, saying that Washington remained an “indispensable friend and partner.” Both leaders had agreed to meet in the near future, said the German government.
The United States and China officials are also scheduled to meet this weekend to talk about the commercial war. The Secretary of the Treasury, Scott Besent and the Commerce Representative, Jamieson Greer, will represent the United States, while the Chinese delegation will be directed by Vice President Premier He Lifeng.
Trump wrote in his social network of truth that an 80 percent tariff on China “seems correct”, signing a potentially narrower reduction in punitive taxes than investors had anticipated.
The S&P 500 yielded early profits to trade little changed on Friday.
Dax’s return to the maximums of all time also reflects the wave of enthusiasm for the German actions caused earlier this year by Merz’s plans to introduce loans and inject hundreds of billions of euros in the country’s army and infrastucure.
Emmanuel Cau, head of European Capital Strategy in Barclays, said commercial news had given a broad boost to stock markets.
But he added: “There is an extra degree of emotion in Germany as part of this reactivation narrative and the arrival of the new government. There is more and more interest in Germany.”
The German bonds, which have recovered in the last week, while investors were looking for shelters from the agitation of the market, cooled some of the profits as the most risky assets exceeded.
The 10 -year German government bond yield increased 0.04 percentage points for Friday afternoon, increasing to 2.56 percent. Bond yields move inversely to prices.
European actions have eclipsed their classmates of Wall Street this year because or optism on defense spending combined with the growing fears on the impact of Trump’s commercial war on the US economy.
The Dax increases almost 18 percent this year. Defense stocks have had great performance after spending commitments, with Rheinmetall, rising more than 170 percent.
The German stock market has also benefited from a strong performance of European banks. Deutsche Bank’s shares have increased 43 percent this year.
Although US actions also recovered their losses from Trump’s “day of release day” ads in early April, the S&P 500 reference point remains well below its February maximum of all time and has dropped almost 4 percent until now in 2025.
The higher performance of Wall Street this year has partially reduced a large assessment gap between US and European actions that had been exhausted in recent years due to a relentless demonstration in the technological actions of the United States.
“The fear of maximum trade is behind us,” said Laura Cooper, Nuveen’s global investment strategist. But he added that “” choppy price action episodes “must be expected, since the interruption of tariffs is washed through the global trade system.
But asset administrators have also urged caution, given Trump’s strong rhetoric about tariffs and broader concerns about the formulation of US policies.
“For now, this [rally] He is having, “said Kevin Thozet, a member of the Carmignac Investment Committee.” But it is not evident that continuously in this way for a long time. Trumpism peak can be behind us, but uncertainty is still there. ”
]