Europe midday: Shares up on US-China truce; Pharma hit by Trump price cut threat

(Sharecast News) - European equities surged on Monday as the US and China agreed to slash tariffs on each other for 90 days after weekend talks in Switzerland to avert a major trade war.

US Treasury Secretary Scott Bessent said "both sides will move their tariffs down by 115%" as a truce was agreed. The pan-regional Stoxx 600 was up more than 1% in morning trade, but had slipped back to a gain of 0.87% at 542 points with all major continental bourses following suit.

In Germany, the DAX hit a record 23,924 before settling to a 0.67% gain to 23,655.

China's Vice-Premier He Lifeng earlier said said Beijing and Washington had agreed to a new "trade consultation mechanism" to minimise future disputes.

Markets went into freefall last month after US President Donald Trump slapped tariffs of 145% on China, which retaliated with 125% tariffs of its own.

With the latest deduction, Chinese duties on US goods will be cut to 10%, while the US levy on imports from the world's second largest economy will be reduced to 30% including a 20% rate imposed by before the tit-for-tat measures which Trump said was related to Beijing's role in the US's fentanyl crisis.

Brent crude soared by 3% to just below $66 a barrel on the news, while other commodity-related shares were also up.

''The pause button has once again been pressed on the most onerous tariffs threatening the world economy. The move by the US and China to sharply reduce tariffs has been welcomed with open arms by investors," said Hargreaves Lansdown analyst Susannah Streeter.

"US futures indicate a big incoming wave of optimism as the big powers demonstrate a desire for compromise. The S&P 500 looks set to open 2.8% higher as the worst-case scenario of feared tariff effects recedes."

"The European Union is still in the queue when it comes to striking a trade deal. Although there are hopes that just like the UK and China, a sharp de-escalation will be achieved, it is far from conclusive."

In equity news, shares in shipping giants AP Moeller Maersk and Hapag-Lloyd jumped more than 10% on hopes that global trade would pick up as a result of the US-China agreement.

Cranswick shares fell sharply after the food producer was forced to suspend staff at one of its pig farms in response to an undercover investigation by animal rights acts activists and reported by the Guardian newspaper revealing allegedly brutality towards pigs being reared for consumption via major UK supermarkets.

Shares in pharmaceutical companies fell after US President Donald Trump threatened to sign an executive order to slash the price of prescription drugs for Americans.

"European markets are riding with joy...except for the FTSE 100...that is under pressure due to its exposure to pharmaceutical companies," said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

"These companies have been quite optimistic that they do have their protections in the US, so they won't be hit by tariffs as bad as the other sectors. But now... there's going to be a certain pressure on their revenues from the US sales," Swissquote Bank's Ozkardeskaya said.

AstraZeneca, GSK, Novo Nordisk, Roche, Sanofi, Sandoz and Haleon were all lower.

Weapons makers were down after after Ukrainian President Volodymyr Zelenskyy said he was ready to meet his Russian President Vladimir Putin in Turkey on Thursday. Hensoldt, Rheinmetall, Dassault Aviation and Saab all fell on the news.

Reporting by Frank Prenesti for Sharecast.com