General view of the City of London skyline, the capital’s financial district.
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Stock markets soared on Thursday, after U.S. President Donald Trump’s jarring about-turn on most tariffs, with sectors paring multi-day losses.
Trump dramatically reversed course on the White House’s trade policies on Wednesday, dropping his country-specific tariffs down to a universal 10% rate for all trade partners, except China.
Tensions between Washington and Beijing remain high, with Trump ratcheting up duties on goods from China to 125%. He cited a “lack of respect” shortly after Beijing responded with retaliatory measures to the White House’s initial tariffs.
CNBC takes a look at some of the market’s biggest gainers.
Autos
Auto giants posted sharp gains, reacting positively after Trump’s 90-day pause announcement.
Germany’s Volkswagen, BMW and Mercedes-Benz Group all jumped more than 9% shortly after the opening bell. Milan-listed Stellantis, which owns household names including Jeep, Dodge, Fiat, Chrysler and Peugeot, rose 14%.
In Asia, Japan’s Nissan rose 9.5%, Honda jumped 8.4%, while Toyota traded 7.7% higher.
The automotive industry has been hit hard by Trump’s back-and-forth trade policies in recent months, particularly given the sector’s high globalization of supply chains.
Banks
The banking sector notched some of the sharpest gains at the Thursday market open, higher by 8.61% as it recovered from deep declines in the previous sessions.
Some of the largest European lenders, Banco Santander, Deutsche Bank and Intesa Sanpaolo were up by 9-11% by 9 a.m. London time, with Swiss giant UBS rising by 9.5%.
Bank shares have been on a rollercoaster ride this spring, first gaining steep momentum following the announcement of the European Union’s defense-geared ReArm initiative in March, before taking a bruising after Washington’s tariff announcements of April 2.
Deutsche Bank offices in the City of London on 2nd July 2024 in London, United Kingdom.
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European banks have been particularly susceptible to the depreciation of the U.S. dollar, which they hold in substantial reserves, and to a darkening outlook for global growth prospects that could tighten investment and loan demand.
Analysts have also been raising the possibility of a recession emerging in the world’s largest economy, which could translate into declining interest rates and reverberate into net interest margin contraction, hitting banking revenues.
Pharma
Pharmaceutical stocks also jumped on signs of a reprieve on Thursday, after sitting among the worst performing sectors on Wednesday amid Trump’s signal that tariffs on the industry would come “very soon.”
Novo Nordisk was the biggest gainer among European health care stocks Thursday morning, gaining 10%. Novartis, Bayer, Roche, Bavarian Nordic and AstraZeneca were also all more than 5% higher.
It follows gains in Asia for firms including Daiichi Sankyo and Takeda Pharmaceuticals.
Pharma companies have so far been exempt from trade levies, given their role as producers of critical goods. But hopes of an industry-wide carve out have faded lately, with the Trump administration last week saying it may launch a so-called 232 investigation into the sector, which could ultimately lead to targeted tariffs.
Luxury
Luxury stocks climbed in early European trade, led by gains of more than for prestigious names like LVMH, Kering, Burberry and Richemont.
High-end fashion houses — for whom the made-in-Europe label is part of the allure — were thought to be largely sheltered from the initial effects of tariffs, given their stronger pricing power and ability to pass on added costs to consumers.
A photograph taken on April 23, 2024 shows a view of the new Louis Vuitton luxury shop belonging to French luxury group LVMH Moet Hennessy Louis Vuitton SA, on the Champs Elysee avenue in Paris.
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However, analysts have warned that a wider economic downturn wrought by tariffs could make those hikes tougher to bear, even for the wealthiest shoppers.
That could be especially hard felt in the world’s two largest economies, the U.S. and China — both key growth drivers for the sector.
Mining
Europe’s mining stocks were among the top performers on Thursday morning.
Shares of London-listed Anglo American jumped 11% shortly after the open. Antofagasta, Glencore and Boliden were all last seen trading up more 8%, while Rio Tinto posted gains of 4.6%.
Analysts have previously warned that Trump’s back-and-forth trade policy, combined with an escalating trade war, could harm demand for metals and raw materials.