European Stocks Drop As Automakers Hit By Tariffs
European stocks fell as the U.S. continued to impose steep tariffs on automakers and threatened to impose bigger trade levies, reinforcing investor concerns about the impact on global economic growth.
The Stoxx 600 fell 1% at the open. Stellantis NV, which makes the Jeep Compass SUV in Mexico, fell about 6%, with similar losses at Mercedes-Benz Group AG and BMW AG. S&P 500 futures fell, while the 10-year Treasury yield edged up. Rapidly evolving U.S. trade sanctions against the country’s allies and foes have added to already heightened market concerns about the impact on global trade and economic growth. On Wednesday, President Donald Trump announced plans to add a 25% tariff on car imports and suggested further duties on the EU and Canada, widening the trade war and prompting threats of retaliation. “With investors linking tariffs to a higher risk of recession, any form of trade restrictions could trigger an early pullback – what we saw in today’s session,” said Jun Rong Yeap, market strategist at IG Asia.
St. Louis Fed President Alberto Musalem said it was unclear whether the impact of the tariffs would be temporary, and warned that secondary effects could prompt officials to keep rates steady for longer.
"While we think a material increase in U.S. tariffs will weigh on the U.S. economy, we do not expect a U.S. recession," said Carol Kong, a strategist at Commonwealth Bank of Australia. "That said, market participants may still be pricing in a higher U.S. recession risk as more tariffs are announced" which would boost the dollar against major currencies, she said.
Source: Bloomberg
