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(Bloomberg) -- European stocks got caught in the crossfire of escalating tensions between the U.S. and China again on Wednesday, heading for their steepest drop in almost two weeks.

The Stoxx Europe 600 Index fell 0.7 percent after China said it would levy 25 percent tariffs on imports of 106 U.S. products including soybeans, automobiles, chemicals and aircraft. The Asian nation’s actions were a response to proposed American duties on its high-tech goods.

It’s another example of European stocks succumbing to worsening global sentiment on trade even as the European Union secured a temporary exemption from some of President Donald Trump’s import tariffs. Investors are eyeing a May 1 deadline for Trump to decide whether to prolong an exclusion for the EU from import tariffs of 25 percent on steel and 10 percent on aluminum.

Shares of technology, chemicals and mining companies -- sectors that have been in the spotlight globally since trade tensions began to worsen -- fell the most in Europe. Among regional benchmarks, Germany’s exporter-heavy DAX Index dropped the most.

“This war is clearly between the U.S. and China, but investors fear broad consequences for exporting markets like Germany, that’s why the DAX is taking another beating today,” Stephane Ekolo, equity strategist at TFS Derivatives, said by phone. “It brings a lot of uncertainty and it comes just when the macro data start to lose steam in Europe.”

Wednesday’s retreat pushes the Stoxx 600’s 2018 drop to 5.8 percent. That’s after the gauge entered correction territory last week, falling more than 10 percent from its peak in late January. A number of factors besides sentiment over global trade, including a strong euro and weakening economic momentum, are clouding the outlook for the region’s stocks over the coming months.

“Trade war headlines create a lot of noise, spooking fast money,” said Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany. “Many investors are waiting for the final market ‘puke’ and, until then, it’s fast money selling roller-coaster tickets.”

--With assistance from Ksenia Galouchko

To contact the reporters on this story: Aleksandra Gjorgievska in London at agjorgievska@bloomberg.net, Blaise Robinson in Paris at brobinson58@bloomberg.net.

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Paul Jarvis, John Viljoen

©2018 Bloomberg L.P.

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