(Bloomberg) — European stocks fell as the US pushed ahead with harsh tariffs on automakers and threatened more sweeping trade levies, reinforcing investor concern about the hit to global economic growth.
Most Read from Bloomberg
The Stoxx 600 slid 0.5%. Stellantis NV, which makes the Jeep Compass SUV in Mexico, and Mercedes-Benz Group AG fell about 3%. Traders also sold US auto shares, with General Motors Co. tumbling 6% in pre-market trading. Tesla Inc. inched higher on speculation its US factories will help insulate it from tariffs.
Meanwhile, S&P 500 futures were little changed after the previous day’s 1.1% drop. Gold advanced and the dollar steadied.
Subscribe to the Stock Movers Podcast on Apple, Spotify and other Podcast Platforms.
President Donald Trump is moving quickly ahead with more trade levies, announcing on Wednesday that auto imports would be slapped with a 25% tariff and suggesting further duties on the European Union and Canada. According to Bloomberg Intelligence, Porsche AG and Mercedes-Benz are likely to be the hardest hit by the latest salvo.
“Tariffs are front and center on people’s minds,” said Arun Sai, senior multi-asset strategist at Pictet Asset Management. “We all know that tariffs are stagflationary and markets have been trying to price that to different extents. What we don’t know yet is what’s the ultimate lasting impact.”
(Get the Markets Daily newsletter to learn what’s moving stocks, bonds, currencies and commodities.)
The tariff drama is also casting doubt over European equities’ recent outperformance against US peers. Pictet’s Sai has downgraded his view on Europe, citing an inevitable hit to economic growth and earnings. Over at BlackRock Investment Institute, managers expect US stocks to soon regain their edge.
Meanwhile, the European Union is preparing for a massive round of tariffs set to target the bloc as soon as next week. Among its retaliatory options is considering to deploy one of EU’s most powerful trade-policy tools, the so-called anti-coercion instrument.
Euro-area bond yields slipped as expectations grew that the central bank will cut interest rates to cushion the fallout from trade-related shocks.
In the US, Treasury 10-year yields edged three basis points higher on concerns that trade levies will fan inflation, a fear voiced on Wednesday by St. Louis Federal Reserve President Alberto Musalem.
