Europe's Mid-Session Bell: Asian Stocks Rise on Trade Hopes, Europe Positive, ZEW Sentiment Ahead

Asian stock markets mostly went up after US stocks rallied, as hopes grew that the US-China trade truce might end the tariff war.

Japanese stocks led the way, with the Topix rising for the 13th straight day. Markets in Australia and Taiwan also gained. However, the Hang Seng Index and US stock futures dipped after strong gains on Monday.

Markets are still digesting the announcements yesterday by US-China officials. In a carefully coordinated joint statement, the US slashed duties on Chinese products to 30% from 145% for a 90-day period, while Beijing dropped its levy on most goods to 10%.

Furthermore, The U.S. will lower the "de minimis" tariff on low-value shipments from China, according to a White House executive order on Monday. Another positive in developments between the two global powers.

European indexes and shares have remained positive despite pullbacks seen in US futures overnight. European stocks inched up on Tuesday, supported by positive corporate news that maintained markets at their highest level in six weeks. The STOXX 600 index across Europe gained 0.2% at the time of writing, marking its fourth day of growth in a row.

On the FX front, China's yuan hit a six-month high at 7.1855/USD, boosting the Australian and New Zealand dollars.

The Aussie rose 0.64% to 0.6412, and the kiwi gained 0.55% to 0.5889, as these currencies often follow the yuan’s moves.

Meanwhile, the yen and euro recovered after sharp losses against a stronger dollar. The yen climbed 0.48% to 147.76/USD, bouncing back from a 2% drop on Monday. The euro rose 0.25% to 1.1114 after a 1.4% slide the previous night.

The dollar dipped 0.25% against the Swiss franc to 0.8429, undoing part of Monday’s 1.6% rise. Sterling edged up 0.16% to 1.3199.

Currency Strength Chart - Strongest to Weakest: NZD, AUD, CHF, JPY, EUR, GBP, CAD, USD

There is a strong possibility that the tariffs imposed by President Trump may still impact markets in the months ahead. For now though sentiment has definitely improved but the situation remains fluid and could change quickly. President Trump has landed in Saudi Arabia today for a four-day visit to Gulf states as he looks to strike further trade deals and investments. Positive developments from his trip may also affect sentiment moving forward and may be worth monitoring.

From a data standpoint, UK jobs data was released this morning. Regular pay in the UK, not including bonuses, grew by 5.6% to £671 a week in the three months leading up to March 2025. This was down from 5.9% in the previous period and below the expected 5.7%. It’s the slowest wage growth since November 2024, with pay increases slowing in both the private and public sectors.

The number of people on payroll in the UK fell by 33,000 (0.1%) to 30.3 million in April 2025. This follows a revised drop of 47,000 in the previous month and marks the third month in a row of declines, as the £26 billion tax hike went into effect.

In the European session we have Germany’s ZEW economic expectations, where a recovery is anticipated, along with speeches from a few ECB officials.

From a technical standpoint, the DAX index has pulled back to its key confluence area. (previous resistance turned support.

The one area of concern for bulls is yesterday's daily candle close which was a doji or indecision candle which could hint at a deeper pullback.

However if a deeper pullback, the DAX will need to record a daily candle close below 23212 which could open up a run toward support resting at 22405.

It is important to note that there is a golden cross pattern which has formed as the 20-day MA crosses above the 50-day MA which would hint at further upside.

In short the DAX appears to be giving mixed signals and this should not come as a surprise given that there still remains a host of uncertainties for global markets moving forward.

DAX Daily Chart, May 13, 2025

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