Investing.com — European markets fell Tuesday as investors weighed the ramifications of US President-elect Donald Trump’s proposed tariff measures and the potential for a global trade war.
At 06:50 ET (11:50 GMT), Germany’s DAX fell 0.4%, the France’s CAC 40 dropped 0.4%, and the UK’s FTSE 100 was down 0.2%.
Trump’s tariffs weigh on sentiment
Trump announced on social media plans to impose a 25% tariff on imports from Canada and Mexico when he takes office in January, and slap “an additional 10% tariff, above any additional tariffs” on China, hurting global market sentiment as such moves could result in a global trade war.
Investors also are concerned that the inflationary impact of these aggressive tariffs could prompt the Federal Reserve to slow its pace of interest rate cuts, slowing the economic recovery in the world’s major growth driver.
“That Europe was not mentioned in Trump’s first tariff post could perhaps be welcome news on the Continent. Yet local policymakers will remain fearful that it will just be a matter of time before Trump turns his attention to the European auto sector or tariffs more broadly,” said analysts at ING, in a note.
The auto sector was hit hard Tuesday, with Stellantis (NYSE:STLA) down almost 5%, while the likes of Volkswagen (ETR:VOWG), Porsche (ETR:PSHG_p) and BMW (ETR:BMWG) all down around 2%.
Halfords soars after 1H
Elsewhere, Compass Group (LON:CPG) stock rose 3% after the food catering group forecast a high single-digit rise in fiscal 2025 profit, after matching market expectations for the previous year.
Halfords (LON:HFD) stock soared over 11% after the automotive retailer reported better-than-expected first-half profits, aided by stronger performance in its retail division and improved cost management.
Melrose Industries (LON:MRON) stock rose 6% after the aerospace company announced an increase in its share buyback.
Central bank speakers in focus
In the UK, Bank of England Chief Economist Huw Pill will testify before the House of Lords, offering an opportunity to gauge the bank’s approach to managing persistent inflation and weak economic growth.
In the eurozone, European Central Bank board member Elizabeth McCaul is scheduled to deliver remarks in Frankfurt, while her peer Mario Centeno will present the Bank of Portugal’s latest financial stability report.
Both events are likely to shed light on the ECB’s strategy as it addresses high inflation and uneven recovery within the bloc.
As far as economic data was concerned, British retailers’ optimism has fallen to a two-year low, the Confederation of British Industry said, and is its weakest for around two years.
The CBI’s quarterly survey of retailers showed their assessment of the business situation dropped to -21 in November from -13 in August, its lowest since a reading of -22 in November 2022.
Crude rebounds after recent losses
Crude prices rose Tuesday, bouncing after the previous session’s hefty losses as investors took stock of a potential ceasefire between Israel and Lebanon’s Hezbollah.
By 06:50 ET, the U.S. crude futures (WTI) gained 1% to $69.61 a barrel, while the Brent contract rose 0.9% to $73.14 a barrel.
Both contracts dropped around 2% on Monday after multiple reports that Israel and Lebanon had agreed to the terms of a deal to end the Israel-Hezbollah conflict, weighing on oil’s risk premium.
(Navamya Acharya contributed to this article.)