Published by Global Banking & Finance Review®
Posted on March 7, 2025
3 min readLast updated: January 25, 2026
Add as preferred source on GoogleSTOXX 600 ends its 10-week rally amid US tariff policy uncertainty, impacting European shares and luxury stocks.
By Nikhil Sharma and Purvi Agarwal
(Reuters) - European shares closed Friday lower, as investors grappled with whipsaw changes in U.S. trade policy throughout the week and digested a slightly softer than expected U.S. jobs report earlier in the day.
The pan-European STOXX 600 was down 0.7% for the week, and snapped a 10-session winning streak, its longest since early 2024.
U.S. President Donald Trump on Thursday suspended the 25% tariffs he had imposed this week on most goods from Canada and Mexico, in the latest twist to his trade policy that has led markets to increasingly look at tariffs as a negotiating tactic.
Trump had imposed the trade duties on the two countries on Tuesday and soon followed it with an exemption on automakers that complied with the existing free trade agreements.
"Because of the chop and change of U.S. trade policy, there is a lot of uncertainty in the air. We still don't know what kind of tariffs Europe may be hit with," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
However, China could not escape and now has a 20% duty on its exports to the U.S. Data on the day also showed a surprise shrinking in Chinese imports.
Luxury stocks, exposed to Chinese consumers, fell, with Burberry down 6.8%, Kering falling 3.9% and LVMH off 2.8%. The region-wide European luxury index sank about 2.7%.
Industrial goods and services, that house defence stocks, led declines with a 1.8% loss. Miners followed with a 1.6% decline as copper prices eased.
On the other hand, telecommunications led gains with a 2.1% rise.
Meanwhile, a softer-than-expected U.S. jobs reading helped some sentiment recover, despite a pickup in job growth in February.
"We are now seeing three rate cuts still pencilled in ...there may be a little bit of a delay, but there's likely to be a bit of an acceleration towards the end of the year," Streeter said.
Germany's plans to create a 500 billion euro ($543 billion) infrastructure fund and overhaul borrowing rules led to expectations of higher bond supply, putting German long-dated bonds at the helm of a global debt sell-off, but they showed signs of a recovery on Friday.
German mid-cap and small-cap indexes outperformed peers this week on hopes of greater fiscal spending.
The European Central Bank's 25 basis-point interest rate cut also remained in the spotlight, with the central bank warned of "phenomenal uncertainty" and raising prospects of a pause in its policy easing next month.
Grid operator Elia Group jumped 17% to top the STOXX 600 and logged its best day on record, after surpassing market expectations for full-year results.
($1 = 0.9213 euros)
(Reporting by Nikhil Sharma and Purvi Agarwal in Bengaluru; Editing by Mrigank Dhaniwala and Hugh Lawson)
The STOXX 600 snapped its 10-week winning streak due to uncertainty surrounding U.S. trade policy and a slightly softer than expected U.S. jobs report.
U.S. tariffs led to declines in European shares, particularly impacting luxury stocks that are reliant on Chinese consumers.
There are still three rate cuts penciled in, with expectations of a slight delay but an acceleration towards the end of the year.
The softer-than-expected U.S. jobs reading helped some sentiment recover, despite a pickup in job growth in February.
Germany plans to create a 500 billion euro infrastructure fund, which has led to expectations of higher bond supply and outperformance of mid-cap and small-cap indexes.
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