European and US stocks rise on promising German economic data and hints of tariff relief

New York — Stock markets in Europe and the US advanced on Thursday as reassuring economic data from Germany and a report that its big car makers could be spared from US tariffs offset another gloomy session for Asia.

Shares of Mercedes-maker Daimler, BMW, Porsche and Volkswagen (VW) surged as much as 5% after reports of a US offer to suspend tariff threats on EU-made cars if the bloc lifts duties on US vehicles.

That fueled wider gains, with the European automotive sector enjoying its best day in more than two years. The mood was also helped by a stronger-than-expected jump in German industrial orders after four months of declines.

“With these stories coming out [about car tariffs], you have a sector that has been very over-sold meeting some potential good news on the trade-war front,” said Bank of America Merrill Lynch European equity strategist James Barty. “This is going to be the dominant issue of the summer. Are we heading for a full-blown trade war? In which case, it is very bad news for risk assets; or do we walk away from it, in which case, as we have seen today, markets are likely to rebound quite sharply.”

On Wall Street, the Dow Jones Industrial Average rose 74.82 points, or 0.31%, to 24,249.64; the S&P 500 gained 8.18 points, or 0.30%, to 2,721.4; and the Nasdaq Composite added 25.23 points, or 0.34%, to 7,527.90.

MSCI’s gauge of stocks across the globe gained 0.23%. The euro briefly topped $1.17 and bond yields rose after the brighter German data and a report that the European Central Bank (ECB) thinks markets are now too cautious on when it will raise eurozone interest rates next year.

Later in the day, traders will get the minutes from last month’s US Federal Reserve policy meeting, when it raised US rates for a second time this year.

“The euro is getting a bit of a lift on the German data, though the trade concerns will continue to dominate markets with the Fed minutes being the key data point,” said Kenneth Broux, a currency strategist at Société Générale in London.

Asian angst

Persisting concerns over US President Donald Trump’s trade-tariff plans extended a recent slide in Asian equity markets overnight, in particular Chinese shares, which are now deep into “bear” market territory.

On Friday, US tariffs on $34bn worth of Chinese imports will take effect. Beijing promised to retaliate in kind, though it said it would “absolutely not” fire the first shot in a trade war.

MSCI’s broadest index of Asia-Pacific shares outside Japan, which has dropped every day except three since mid-June, ended down 0.25%.

In commodities, Brent oil futures US crude rose 0.03% to $74.16 a barrel and Brent was last at $78.38, up 0.18%, a day after US President Donald Trump sent a tweet demanding that oil cartel Opec reduce prices for crude.

Brent had risen on Wednesday on a threat from an Iranian commander to disrupt oil shipments from neighbouring states if Washington continued to press all countries to stop buying Iranian oil, and a drop in US crude inventories.

Reuters