Published : 2 weeks ago, on 26/11/2024

By Joao Manuel Vicente Mauricio and Ankika Biswas

(Reuters) -European shares fell across the board on Tuesday, led by automakers, as Donald Trump’s tariff threat on the United States’ largest trading partners prompted worries that the bloc might share the same fate in a likely global trade war.

U.S. President-elect Trump, who takes office in January, plans to impose a 25% tariff on imports from Canada and Mexico and slap “an additional 10% tariff, above any additional tariffs” on China, hurting the positive market sentiment following the nomination of Scott Bessent as U.S. Treasury secretary. The dollar rose, while global equities declined.

“This just revived the worries that Europe could be next on the list of tariffs… It looks like the rest could materialize very, very quickly, and that’s a major worry,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

The pan-European STOXX 600 was down 0.6% as of 0940 GMT and set to snap a three-day winning streak, with concerns over tariffs re-stoking global inflation and weighing on monetary-policy easing also dampening investor mood.

The auto sector, expected to be among the worst hit under Trump tariffs, was down nearly 2%, with Stellantis and Volkswagen among the top losers, shedding 4% and 2%, respectively.

“European carmakers have seen clear weakness in their sales over the past few years and they have also been in the crossfire with the Chinese trade tensions … They are no longer in a position to afford additional tariffs,” Ozkardeskaya added.

Retail and miners were some of the other badly hit sectors, down more than 1% each, with the latter taking a hit on weak metal prices.

The momentum in European stocks has stalled in the final stages of the year as investors grapple with the likely impact of trade tariffs, sagging Chinese spending and heightened geopolitical tensions, among others.

After hitting record highs earlier in 2024, the STOXX 600 is up just 6% this year, much behind the over 25% gains in the U.S. S&P 500.

Among specific stocks, Avolta fell 8.5% to the bottom of the STOXX 600 after Barclays downgraded the Swiss duty-free retailer’s stock to “underweight” from “overweight”.

Roche fell over 1% after its late-stage lung cancer study failed to meet primary endpoint of overall survival. The Swiss company also plans to acquire U.S. biopharma firm Poseida Therapeutics in a cash deal worth up to $1.5 billion.

Meanwhile, Melrose Industries led gains on the STOXX 600, rising 8%, after J.P. Morgan upgraded its target price on the aerospace part-maker’s stock.

(Reporting by Joao Manuel Maurcio in Gdansk and Ankika Biswas in Bengaluru; Editing by Varun H K and Maju Samuel)