European equity markets advanced Tuesday following news that the United States and China agreed to prolong their tariff truce, easing trade tensions and lifting investor confidence ahead of crucial U.S. inflation figures.
By 07:10 GMT, Germany’s DAX rose 0.3%, France’s CAC 40 gained 0.5%, and the UK’s FTSE 100 added 0.4%.
Tariff pause fuels positive market mood
Investors worldwide welcomed the extension of the tariff ceasefire between the two largest economies, announced late Monday. This deal delays the imposition of additional tariffs for another 90 days, helping maintain more moderate duties and preventing potential disruptions to global trade.
Under the agreement, existing U.S. tariffs on Chinese imports will remain between 30% and 50%, while China’s tariffs on American goods will stay in the 10% to 20% range. This follows their May accord to reduce tariffs from levels exceeding 100%. The truce also sustains recent U.S. chip export relaxations and China’s rare earth trade resumption.
Focus shifts to U.S. inflation report
European investors are also awaiting Germany’s ZEW economic sentiment index for August, expected later Tuesday, as a barometer of confidence in Europe’s largest economy.
Earlier, UK data revealed unemployment steady at 4.7% for the quarter ending June—the highest since mid-2021—while average wage growth excluding bonuses held at 5.0% year-on-year.
However, the market’s main focus remains on the upcoming U.S. consumer price index (CPI) for July. This report is seen as critical in gauging the inflationary impact of ongoing tariff policies and how the Federal Reserve might adjust interest rates in response.
Economists forecast the annual CPI inflation rate to tick up slightly to 2.8% from 2.7% in June, continuing to outpace the Fed’s 2% target.
Corporate earnings highlights
Although earnings season is winding down, some companies posted notable results. Hannover Re (TG:A30VQR) reported a strong 38% year-over-year rise in second-quarter net income, buoyed by better underwriting results in property and casualty reinsurance as well as improved reinsurance service income.
UK homebuilder Bellway (LSE:BWY) shifted from a net debt position of £10.5 million last year to a net cash balance of £42 million by the end of fiscal 2025, thanks to higher-than-expected housing completions and revenues.
Meanwhile, gambling firm Entain (LSE:ENT) raised its full-year profit outlook after reporting solid first-half gains driven by robust online growth and a 35% revenue increase from its U.S. joint venture, BetMGM.
Oil edges up amid tariff ceasefire and geopolitical talks
Crude oil prices edged higher Tuesday as the tariff truce eased worries about a slowdown in the world’s two biggest oil-consuming nations. At 03:10 ET, Brent crude futures were up 0.3% at $66.81 per barrel, and West Texas Intermediate crude climbed 0.4% to $64.20 per barrel.
Adding to market uncertainty, U.S. President Donald Trump and Russian President Vladimir Putin are scheduled to meet in Alaska on Friday to discuss prospects for ending the conflict in Ukraine.
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