EUROPEAN EQUITIES UPDATE: Trump tariff turmoil takes toll

STOXX 600: -5.8%

• European bourses are entirely in the red as risk sentiment continues to get hammered, with focus still on Trump’s tariffs, China’s retaliatory measures and the associated economic growth woes.


• Pressure which follows a dire APAC session, which saw the Hang Seng shed 13.7% in the day; the Nikkei 225 fell 7.7% after triggering a circuit breaker in futures trade.


• Price action more recently has improved a touch, alongside a broader pick-up in risk sentiment; STOXX 600 has been clambering off lows, as have US equity futures, while the fixed income complex has been pulling back off highs.


• In terms of recent trade updates; US Commerce Secretary Lutnick said there is no postponing tariffs and April 9th tariffs are coming, while he stated tariffs are going to stay in place for days and weeks, according to CBS News. US NEC Director Hassett said more than 50 countries have reached out to the White House to begin trade negotiations.


• The EZ docket today included the EZ Sentix Index, which printed below expectations - largely attributed to Trump's tariffs, according to the accompanying report. "The tariff shock is fueling global recession fears".


• To contextualise the recent stock rout; the DAX 40 is down 15.6% over the past month, -2.9% YTD; FTSE 100 -11.5% (1M), -7% (YTD), STOXX 600 -15.2% (1M), -8.1% (YTD).


• Barclays cut its STOXX 600 year-end target to 490 (prev. forecast 580, currently 468.05)

Sectors: Negative

• European sectors are entirely in the red, in-fitting with the broader risk tone; as it stands, every sector is lower by more than 4%.


• Optimised Personal Care, Utilities and Telecoms fares better vs peers.


• Tech is unsurprisingly the laggard today, given the risk tone; Industrials, Energy and Consumer Products follow closely behind.


• Novo Nordisk (-3.5%) has been swept away by the broader market losses, but more specifically for weight loss makers, the Trump Administration drops Biden's Medicare obesity drug coverage proposal.

Majors: FTSE 100 -5.1%, CAC 40 -5.9%, DAX 40 -6.9%

• The FTSE 100 is on the backfoot but ultimately faring a little better vs peers; nonetheless, the entirety of the index sits in the red – Melrose (-8%) underperforms whilst Severn Trent (-1.4%) tops the pile. Given the continued turmoil in the commodities sector, the likes of Shell (-7.5%), BP (-6.6%), Antofagasta (-8%) all move lower. On the former, the Co. reported its Q1 Production Update, which showed volumes down but margins higher.


• The DAX 40 is underperforming and sits just shy of the 19.5k mark; the entirety of the index, with the exception of Qiagen (+2%), is in negative territory. The diagnostics company reported +5% Y/Y growth in its net sales figure and lifted its FY guidance. Other key movers; Rheinmetall (-8%) gapped lower by more than 20% at the open, but this downside has seen a slight paring. Adidas (-8.5%) sits towards the foot of the pile, amid the continued fears of tariffs levied on key suppliers such as Bangladesh and Vietnam.

US Equity Futures: ES -3.2%, NQ -3%, RTY -3.6%

• Futures are entirely in the red, with the ES and NQ having gapped lower by 4.5% and 4.9% respectively, at the reopen of futures trading – price action since has seen a slight pick-up, though still reside in reach of worst levels.


• Amid the ongoing growth/inflationary uncertainty, the VIX briefly topped 60 for the first time since 5th August 2024; before that, the level was not seen since Covid.


• The US day sees the release of March's employment trends data, which follows a decent NFP report on Friday. US Consumer credit stats for February are also due. On the speaker's front, US President Trump will make a number of public appearances today; he will be visiting the LA Dodgers, before bilateral meetings with Israeli PM Netanyahu.


• US Equity Market Circuit Breakers: E-mini S&P 500 Futures (ESM5): Level 1 = 4755.25 (7% decline) 15-minute halt. E-mini Nasdaq-100 Futures (NQM5) (17539.00 reference): Level 1 = 16321.25 (7% decline) 15-minute halt. E-mini Russell 2000 Index Futures (RTYM5) (1839.30 reference): Level 1 = 1711.50 (7% decline) 15-minute halt.


• A leading Tesla analyst at Wedbush cut his price target for Tesla by 43% (from USD 550 to USD 315), attributing the decline to a "brand crisis" driven by CEO Elon Musk and US President Trump’s trade policies. The firm estimates Tesla has already lost 10% of its future customer base, and said that the impact of US-China trade tensions, including retaliatory tariffs, is expected to hurt Tesla's sales in China. Its analyst Daniel Ives called on CEO Elon Musk to lead the company more effectively during these uncertain times.

07 Apr 2025 - 10:00- ForexEU Research- Source: Newswires