Markets drop at the open, but gain at the close

U.S. stocks initially traded lower but turned to gains late in the session Wednesday, with Wall Street benchmarks jumping to new heights following the announcement of a pact to ease trade tensions between the U.S. and the European Union announced after Donald Trump met the EU’s Jean-Claude Juncker. The Dow Jones Industrial Average rose 172.16 points, or 0.7%, to 25,414.10 whilst the S&P 500 surged by 25.67 points, or 0.9%, to 2,846.07.

European markets meanwhile finished modestly lower as investors awaited fresh catalysts with earnings season approaching its peak. The U.K.’s FTSE 100 lost 0.7% to 7,658.26 and Germany’s DAX 30 index ended down 0.9% at 12,579.33. The biggest move came from STMicroelectronics NV which lost 8.6% even after reporting a jump in second-quarter profit.

China blocks Qualcomm-NXP takeover

Qualcomm Inc. scrapped its $44 billion bid for rival chipmaker NXP Semiconductors NV after Chinese regulators failed to approve the largest-ever deal in the chip industry. NXP’s management, after waiting almost two years for the deal to go through, will now have to find a way to convince customers and investors it has a strong future as an independent company.

The aborted takeover may be the highest-profile victim yet of the trade spat between China and the U.S., with every other relevant jurisdiction in the world clearing the bid months ago. While China denied its decision had anything to do with trade tensions, Qualcomm Chief Executive Officer Steve Mollenkopf said "there were probably bigger forces at play here than just us." Shares of Eindhoven, Netherlands-based NXP tumbled 7.2 percent to $91.26 in pre-market trading.

Trump and Juncker withdraw tariffs – Markets react

European carmakers climbed after President Donald Trump backed off his threat to levy tariffs on cars imported to the U.S. during a meeting with European Commission President Jean-Claude Juncker, averting for the time being an escalating trade war. The two met Wednesday at the White House with Trump warning that he would move forward with 25 percent tariffs on auto imports if the meeting with Juncker didn’t go well, prompting the EU to respond that such a move would bring significant retaliatory measures on U.S. goods.

The breakthrough came after about three hours of talks, leading to their impromptu announcement in the Rose Garden. Reaction in Germany, which would be one of the biggest losers in a trade war, was broadly positive. Economy Minister Peter Altmaier tweeted that the meeting’s outcome was a “breakthrough” that “can avoid trade war and save millions of jobs.” Ulrike Demmer, a deputy government spokeswoman, reaffirmed Germany’s backing for the Commission in future negotiations.