5 days ago
- Automotive
- New Straits Times
European shares fall amid fresh Trump tariff threat, autos lead decline
LONDON: European shares fell on Monday, led by automobiles, as US President Donald Trump's latest threat to impose steep tariffs on the European Union and Mexico kept investors on edge.
The pan-European STOXX 600 index was down 0.5 per cent at 544.74 points, as of 0830 GMT. Other regional indexes also declined, barring the UK's FTSE 100, which was up 0.2 per cent.
On Saturday, President Trump threatened to impose a 30 per cent tariff on imports from the European Union and Mexico, effective August 1, after weeks of negotiations with major US trading partners failed to yield comprehensive trade agreements.
"The market is definitely taking the news negatively, but it's not pricing it are taking this with a pinch of salt and assuming that it's just the start of a conversation and that over the next few weeks the news flow will gradually improve", said Michael Field, chief equity market strategist EMEA at Morningstar.
In response, the EU said on Sunday it would extend its suspension of countermeasures to US tariffs until early August and continue to press for a negotiated settlement.
Italy's Foreign Minister, Antonio Tajani, said in a newspaper interview that the EU has already prepared a list of tariffs, worth more than 21 billion euros (US$24.5 billion), on US goods if the two sides fail to reach a deal.
The EU trade commissioner Maros Sefcovic said that the EU will seek a favorable trade agreement with the US, while preparing possible countermeasures should negotiations break down.
According to Field the EU is taking the right approach by being cooperative yet firm at the moment, noting "they're still playing hardball a little bit in saying that if push comes to shove down the line, we still have a plan."
In the market, European automobile sector declined by 1.5 per cent following Trump's new tariff threats, with no indication of special treatment for autos, which remain subject to a 27.5 per cent duty.
Carmarkers such as Porsche dropped 2.4 per cent, while BMW and Mercedes-Benz each fell 2 per cent. Volkswagen declined by 1.9 per cent
Among individual stocks, Lifco slumped 9.1 per cent after the company missed second-quarter pre-tax profit.
Conversely, AstraZeneca rose 1.8 per cent after the drugmaker said its drug Baxdrostat met all the main and secondary goals of a late-stage study in patients with uncontrolled or treatment-resistant hypertension.
Meanwhile, Morgan Stanley downgraded their 2025 MSCI Europe local currency earnings per share growth forecast to -1.0 per cent from +1.3 per cent due to currency and tariff uncertainties.
