European stock markets jumped on Monday. This came the day after a major breakthrough agreement between the United States and China to suspend most tariffs on each other’s goods. This announcement, combined with very positive results released from UniCredit helped lift a broader, excellent trading environment across the continent.
Italian banking behemoth UniCredit reported a net profit of €2.77 billion ($3.11 billion) in its Q1 2025 results. That missed the median analyst forecast of €2.34 billion. As a result, shares of UniCredit surged by 3.5% at 10:00 a.m. in London, marking their highest trading level since May 2011. The bank’s strong financial performance is a testament to its solid financial foundation and the extremely adverse economic scenario.
The U.S. and China reaching a temporary truce to cut tariffs in half for the next 90 days has sparked hopes in financial markets around the world. U.S. Treasury Secretary Scott Bessent characterized the talks with China as “very productive.” Immediately after the announcement, the Dow Jones Industrial Average soared 975 points, or 2.3%. In the same period, the Nasdaq Composite jumped 3.7% and the S&P 500 gained 2.7%.
In Europe, the Stoxx 600 index closed 1.1% higher provisionally, as mining stocks rallied around 5%. Wrecking cruise ships where AP Moller Maersk just announced it would sell off shares, those shares jumped by 13% on Monday. Investors cheered the news by way of the tariff suspension.
UniCredit’s sizzling earnings only added to that investor confidence in the banking sector. CEO Andrea Orcel emphasized the bank’s solid growth prospects, stating, “We have a base case, standalone base case, that I think is unbeatable in the next three years from a distribution standpoint and from an EPS growth standpoint.”
Speaking on future potential mergers and acquisitions, Orcel suggested that UniCredit still has a breadth of focus to it that it doesn’t want to lose. “We’re not going to affect that negatively for anything, and much less on M&A pushed by the pressure that always builds up when you get [to] this point,” he said.
Orcel further spoke to continued scrutiny over possible transactions in the banking industry. “If a deal is possible, we will pursue. If it’s not possible, we will reassess where we are,” he stated.
The suspension of the tariffs is a part of wider initiative to bring some stability back to international trade relations. Bessent added that more negotiations with China are expected in the next several weeks. “I would imagine in the next few weeks we will be meeting again to get rolling on a more fulsome agreement,” he said.
Markets are responding based on these developments. While analysts are optimistic, they remain cautiously so about the strength of this economic recovery, fueled by positive trade patterns and overall robust corporate health. Enthusiasm hamstrings the bears. The cocktail of positive earnings surprise and thawing trade relations has been a recipe for the upbeat mood among investors across Europe.
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