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European stock markets gain as China 'evaluates' offer of US trade talks
Stock markets have gained across Europe, as investors welcomed signs of a possible thaw in the trade war between the US and China.
Germany’s Dax gained 1.2% in the early trades, while France’s Cac 40 was up 1.4% – after both were closed over the May Day bank holiday. The Stoxx 600 index, which tracks big companies across Europe, rose by 0.9%. The FTSE 100 was up 0.9%.
The gains appeared to be a reaction to China’s government saying it is “evaluating” US approaches for trade talks. Reuters reported a statement from the Chinese commerce ministry:
“The US has recently taken the initiative on many occasions to convey information to China through relevant parties, saying it hopes to talk with China,” the statement said, adding that Beijing was “evaluating this”.
“Attempting to use talks as a pretext to engage in coercion and extortion would not work,” it said.
That came after a state-linked social media account said there was “no harm” in China engaging in talks – even if it also sounded a note of caution. Nevertheless, it comes after US administration officials and Donald Trump himself repeatedly signalled they want to cut tariffs.
Jim Reid, a strategist at Deutsche Bank, said:
This optimism has continued overnight after China’s Ministry of Commerce said that it’s evaluating trade talks with the US. The ministry said this comes as “the US has recently sent messages to China through revenant parties” and urged Washington to shows “sincerity” towards China. Against that background Asian equities are higher on the news (more below), with S&P 500 (+0.77%) and NASDAQ 100 (+0.50%) futures also moving higher even after unwhelming results from Apple and Amazon last night.
The FTSE 100 has jumped 1% at the open.
Shell and NatWest are both big contributors, up 4% and 3.7% respectively.
Shell profits drop; NatWest government stake drops below 2%
Shell has reported a 28% drop in profits to $5.6bn (£4.2bn) as big oil companies grapple with lower prices.
Oil prices have dropped from the heights hit after Russia’s invasion of Ukraine caused a global energy crisis. Shell’s adjusted profits were down from $7.4bn in the first quarter of 2024, or the record first-quarter profits of more than $9.6bn in 2023.
However, Shell’s performance this year was still better than analysts’ expectations of $5bn, according to forecasts collected by the company.
Brent crude oil futures were trading at $62 per barrel on Friday, compared with more than $130 at the peak of the energy crisis in early 2022. Oil companies are having to contend with Saudi Arabia’s apparent willingness to tolerate low prices in order to defend its market share, as well as Donald Trump’s desire for low energy prices – not to mention the threat of slower global growth or even recession from Trump’s trade war on the world.
Shell’s profits took a hit of £500m that went to the UK government under the energy profits levy, after chancellor Rachel Reeves raised the tax by three percentage points and closed “loopholes”.
NatWest takes a step closer to full private ownership
NatWest bank has taken a step nearer to full privatisation with a sale of a shares that takes the government’s stake to less than 2%, as the lender reported a 36% jump in profits.
The bank, formerly known as Royal Bank of Scotland, was the biggest recipient of a bailout during the financial crisis of 2008. The government’s stake has dropped from 84% when it was part-nationalised, and 38% in December 2023.
Recent months have not been the worst time to offload a stake in NatWest: in fact the bank’s share price has more than doubled since early 2024. (Of course, the flip side of that is that the government would have benefited from the price increase had it held on to the shares.)
Here is NatWest’s share price over the last decade:
Recent performance has looked strong. NatWest reported operating profit before tax of £1.8bn, up from £1.3bn in the same period last year, beating analyst consensus forecasts by £200m.
Paul Thwaite, NatWest’s chief executive, said:
In the face of increased global economic uncertainty, our customers remain resilient and we saw good levels of activity through Q1 2025. The strength of our balance sheet means we are well placed to help our customers navigate any challenges, whilst also investing in our business and delivering returns to shareholders.
The agenda
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9am BST: Eurozone manufacturing purchasing managers’ index (April; previous: 48.6 points; consensus: 48.7)
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10am BST: Eurozone inflation (April; prev.: 2.2% annual; cons.: 2.1%)
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10am BST: Eurozone unemployment (March; prev.: 6.1% annual; cons.: 6.1%)
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1:30pm BST: US non-farm payrolls (April; prev.: 228,000 jobs; cons.: 130,000)
