Paris Stock Exchange closes higher after Sino-American trade announcements

The Paris Stock Exchange's flagship index, the CAC 40, closed up 1.37%, a gain of 106.35 points, to 7,850.10 points. On Friday, it had closed up 0.64%, reaching 7,743.75 points.

The United States and China announced Monday the suspension for 90 days of most of the prohibitive customs duties they had imposed on each other, marking a de-escalation in their trade war that has shaken the global economy.

"It's a real breath of fresh air in a market that needs good news," said Christopher Dembik, investment strategy advisor at Pictet AM, in an interview with AFP.

Specifically, for 90 days starting Wednesday, the customs surcharges imposed by the United States on Chinese products will drop from 145% to 30%. Conversely, China, which had retaliated against Washington by raising its customs duties on American products to 125%, will reduce them to 10%.

This pause in the trade war between the United States and China, as well as the trade agreement concluded between the Americans and the British last week, suggests, in the most optimistic scenario, "a myriad of other agreements that could be finalized," continues Mr. Dembik.

Enthusiasm in the markets remains cautious, however.

Investors are "certainly relieved that a pause has been implemented, but recent experience has shown that even during such a truce, reversals in US trade protectionism remain possible," notes Martin Wolburg, chief economist at Generali AM.

Especially since "previous agreements are not respected much in practice, especially between the United States and China," recalls Christopher Dembik.

Luxury in mind

"The sectors that have been most severely affected (by the trade war), such as luxury goods, are reacting very well" to the announcement of a lull in the trade war, comments Mr. Dembik.

The truce improves the economic outlook for both the United States and China, a country to which the luxury goods heavyweights, which dominate the CAC 40 index, are highly exposed.

LVMH, the global leader in the sector, soared, with shares closing up 7.01% at €530.50, while Kering climbed 5.86% to €188.34. Hermès, which recently became the world's largest luxury goods company, closed up 3.51% at €2,539 per share.

Defense in the red

kyiv and its European allies demanded a "complete and unconditional" 30-day ceasefire starting Monday over the weekend, a precondition they said was for the start of direct peace talks between Russians and Ukrainians in Turkey, as proposed by Russian President Vladimir Putin.

"The prospect of a ceasefire means that defense needs will be reduced," said Andrea Tueni, head of client relations and markets at Saxo Bank, which is pushing the sector lower on Monday.

The Thales group closed down 2.96% at 239 euros per share and Dassault Aviation lost 4.70% to 299.80 euros per share.