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MORNING BID EUROPE - Bright signs from Beijing and bad omens for Apple

Ankur Banerjee gives us a look at what the future holds for European and global markets

The possibility of a de-escalation in trade tensions between Beijing, Washington and other countries provided a boost to the markets on Friday. It boosted risk sentiment and lifted stocks worldwide just as Apple's earnings reminded investors of the true cost of a trade war.

China's Commerce Ministry stated that Beijing is "evaluating" Washington's offer to hold discussions over President Donald Trump's tariffs of 145% and that Beijing's doors are open for discussion. China also said that Washington should show "sincerity in negotiations" and be ready to drop its unilateral tariffs.

Investors were relieved by the prospect of trade negotiations, as tariffs had caused global markets to tremble and raised fears of a recession. The data for the two largest economies in the world has begun to show signs that they are weakening.

S&P 500 futures and Nasdaq were surging, and European bourses are set to open strongly ahead of an avalanche of corporate earnings led by oil giant Shell and German chemicals company BASF.

The current earnings season has shown the costs of the erratic U.S. Trade Policy and its back-and forth tariffs. This led many companies around the world to lower or even withdraw their profit forecasts.

Apple cut its share-buyback program by $10 billion on Thursday and warned that tariffs may add $900 million to costs in this quarter. This has dimmed some of the optimism following strong results from Microsoft Meta Platform.

Apple CEO Tim Cook explained how Apple has begun stockpiling products to ensure that most of the iPhones sold in the U.S. during this quarter won't come from China.

While the markets may have taken comfort in the comments made by Beijing on Friday, there has still not been any resolution to the trade discussions that the U.S. and its allies have held.

This was especially evident when Japan’s Finance Minister said on Friday that the country could use their $1 trillion plus holdings of U.S. Treasuries in trade negotiations with Washington. It raised explicitly for the very first time, its leverage as an enormous creditor of the United States.

The following are key developments that may influence the markets on Friday.

Economic events: April flash data on inflation for the eurozone, manufacturing PMI data in France and Germany

Earnings of ING, BASF NatWest, Shell

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(source: Reuters)