FRANKFURT: European shares fell to their lowest levels in more than a month on Tuesday on fears that US trade policies could dent growth after President Donald Trump doubled tariffs on imports of steel and aluminium products from Canada to 50%.
The pan-European STOXX 600 was down 1.7%, closing its fourth consecutive session lower, its longest losing streak since December.
Trump also threatened more tariffs on cars coming into the US next month, if other tariffs are not dropped by Canada.
Europe’s automobile and parts sector lost 1.9%.
Every tariff headline adds to investor worries that the 25% tariffs floated on the European Union could become a reality, although there is little clarity on their implementation.
All major sub-sectors on the STOXX 600 closed lower and so did all the regional bourses.
The volatility index in the region rose to a seven-month high of 25.086 before coming off session highs.
“The new measures announced today don’t have anything to do with Europe, but that level of policy uncertainty puts investors a little bit more on edge than usual settings, we’re just seeing that kick in,” said Iain Barnes, chief investment officer at Netwealth.
Trump’s announcements have been a source of constant volatility in markets, with investors questioning to what extent they will materialize.
Travel and leisure stocks were the biggest losers, with IAG down 6.1%, Lufthansa losing 5.3% and Entain off 2.6%, after major US carrier Delta Airlines lowered its quarterly profit estimates due to US economic uncertainty.
Investor focus also remains on any political headlines out of Germany with its fiscal stimulus plan running into hurdles, after the Greens forwarded rival proposals on Monday.
“If it doesn’t (pass), there’s a sense that it will increase fears of a broader German political crisis. And there is no appetite for that,” Barnes said.
In a bright spot, the region-wide aerospace and defence index was 0.8% higher, after three sessions of declines.
Italy’s Leonardo gained 1.7% after nudging up its revenue and order guidance for this year.
Comments
Comments are closed for this article.