Live Markets: How much steam is left in the "fading trade tensions" rally?

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14/11/2025 11:24

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HOW MUCH STEAM IS LEFT IN "FADING TRADE TENSIONS" RALLY?

The STOXX 600 has scaled fresh record highs in recent days, and is up over 3% since late September. Bank of America equity strategists attribute some of recent gains to fading trade tensions.

But they ask: how much steam is left in this trend?

A few elements in the trade story have been supportive recently.

Last month's U.S.-China escalation turned out to be leverage building ahead of Trump's meeting with Xi, they say, and additionally expectations have been building for a U.S-India deal that could see tariffs on Indian imports to the U.S. fall to 15% from around 50%.

"...the U.S. also appears to be on the cusp of reducing tariffs on Switzerland from around 40% to 15%," says BofA, with optimism already reading through to Swiss stocks which have outperformed recenty.

"Amid all these developments, global trade policy uncertainty has fallen back to less than one standard deviation above the historical average," says BofA.

But don't get too excited.

The "pricing-out of trade uncertainty" in the European sector space has largely already played out, BofA adds.

Specifically, the dynamic at play has been better momentum for key European exporters and a fading appeal for domestic exposure. BofA notes that some of the impact on exporters from trade tensions is still likely.

It has also closed its overweight rating on luxury goods to embrace a number of domestically exposed assets, given an expectation for German fiscal stimulus to start showing up in the data next year.

"In particular, we raised European telecoms and small versus large caps to overweight in October," BofA said.

(Lucy Raitano)

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EARLIER ON LIVE MARKETS:

EUROPEAN MARKETS RETREAT, BUDGET UNCERTAINTY HURTS FTSE CLICK HERE

EUROPE BEFORE THE BELL: FUTURES WILT, EQUITIES STILL SET FOR HEFTY WEEKLY RISE CLICK HERE

MARKETS TUMBLE AS FED CUT HANGS IN THE BALANCE CLICK HERE

US stock prices today https://www.reuters.com/graphics/MARKETS-AUTOMATED/US-PCT-CHANGE-TODAY/byprebynxve/chart.png

European shares retreat on ebbing Fed rate cut bets https://www.reuters.com/graphics/GLOBAL-STOCKS/dwpkqaezmpm/chart.png