EUROPEAN EQUITY UPDATE: Stocks slip as US tariffs slap sentiment

STOXX 600: -1.2%

• European bourses are entirely and markedly in the red in the fallout of US President Trump’s “Liberation Day”, where the reciprocal tariff announcement was viewed as worse than feared. Wedbush writes that the levies was a “worst case scenario” for Wall Street (details in the US section below).


• Price action has been relatively rangebound today, though indices have been attempting to edge higher more recent, but still reside firmly in the red.


• The EZ docket today has included Final PMI metrics out of the region; Spain printed below expectations whilst France, Germany and the EZ-wide figure were all revised a touch higher. Little reaction was seen following these figures. ECB commentary today came from de Guindos and Stournaras; the latter suggested that US tariffs are not an obstacle to cutting in April.

Sectors: Negative

• European sectors are mostly lower and hold a clear negative and defensive bias, in-fitting with the risk tone.


• Real Estate is by far the clear outperformer today amid action across rates, and Healthcare is modestly in the green owing to the defensive risk tone and as the pharmaceutical industry avoided reciprocal tariffs (for now); AstraZeneca (+1.5%), GSK (+1.4%).


• Consumer Products is underperforming today, given the losses in the Luxury sector as trader’s brace themselves for the hefty tariffs set on China. Banks are hit by yield environment whilst Tech/Basic Resources suffer from the risk tone.

Majors: - FTSE 100 -1%, DAX 40 -1.4%, CAC 40 -1.8%

• The FTSE 100 is faring relatively better vs peers, but still trades markedly in the red as traders digest the recent tariff updates from Trump; for the UK specifically, he levied 10% on all imports from the UK – less than the EU/China. Diageo (+2.4%) tops the pile with the levies seen as better than feared for the spirits market. Banks are broadly on the backfoot given the relatively lower yield environment – those banks with heavy exposure to China seem to be underperforming today; Standard Chartered (-7.7%), HSBC (-5%).


• The CAC 40 is the clear underperformer in Europe today, with losses in the luxury sector hit in reaction to Trump’s reciprocal tariffs on China. In brief, the President hit China with 34% reciprocal tariffs which brings the total levy on all imports to 54%. The likes of LVMH (-3.7%), Hermes (-3.2%) and Kering (-3.1%) all move lower today.


• It is worth noting the hefty losses seen in sports retailers such as Adidas (-10%) and Puma (-10%) today in reaction to US tariffs on key sourcing markets for these companies (e.g. Vietnam hit with 46% tariff, Bangladesh 37%).

US Equity Futures: ES -2.9%, NQ -3.2%, RTY -3.9%

• Futures are markedly lower as traders digest the latest reciprocal tariff announcements from US President Trump.


• In brief, US President Trump unveiled individual reciprocal tariffs for each country which are essentially half of what countries were charging the US. The US is to apply a 20% tariff on imports from EU, 34% tariff on imports from China, 26% tariff on imports from India and 25% tariff on imports from South Korea. A full Newsquawk tariff analysis can be found on the headline feed
  


• In wake of US President Trump’s tariff announcements, Commerce Secretary Lutnick will be doing the media rounds in the premarket, and is due to give interviews to CNBC at 13:00BST/08:00EDT, and at 13:30BST/08:30EDT on Bloomberg TV.


• Key pre-market movers: Apple (-6%), Amazon (-4.5%), NVIDIA (-3.3%), Tesla (-3.7%).


• The data docket includes: US Challenger Layoffs, Jobless Claims and ISM Services PMI are all scheduled.

03 Apr 2025 - 10:20- ForexEconomic Commentary- Source: Newsquawk