[BENGALURU] European stocks lost ground on Friday (Apr 11), with the Stoxx 600 down for a third week, after a surge in volatility in response to abrupt US tariff shifts that deepened fears over the economic impact of a trade war.
The pan-European Stoxx 600 edged 0.1 per cent lower to 486.8, after China raised tariffs on US goods to 125 per cent from 84 per cent in an escalation of the trade tensions between the world’s two largest economies.
The week has been one of the most volatile for financial markets in years as US President Donald Trump first imposed, then paused some steep reciprocal tariffs on its trading partners, while hiking them on Chinese imports to 145 per cent.
The Stoxx 600 briefly hit a near 1-1/2-year low earlier this week, then surged on Thursday after the tariff pause, with both the benchmark and several regional indices having their strongest session since 2022.
The Stoxx 600 fell 1.8 per cent on a weekly basis, its third straight week in the red.
“Markets don’t really know what to expect right now and that’s why they’re playing it a little bit close to the vest, both in Europe and the US,” said Steve Sosnick, chief strategist, Interactive Brokers.
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Regional indices were mixed on the day, with trade-exposed Germany falling 1 per cent and the UK’s FTSE 100 up 0.6 per cent.
The 90-day tariff pause shifts the focus to whether the US will strike trade deals with individual countries. The European Union held off on retaliatory levies, and trade commissioner Maros Sefcovic will hold talks with US officials on Monday.
“The change in Trump’s plans limits the hit especially in Europe and increases the chances of tariffs being used as a negotiation tool rather than a permanent source of income,” analysts at Danske Bank said.
Despite global volatility, eurozone financial markets are functioning well amid global turbulence and the European Central Bank is attentive to the impact of the US dollar’s depreciation, European Central Bank (ECB) President Christine Lagarde said.
The ECB’s policy meeting next Thursday, where money markets have fully priced in a quarter-point rate cut, will be closely watched for policymakers’ views on how tariffs are impacting the economic outlook.
First-quarter results are also a big focus, with investors looking to see how tariff uncertainty will hit company earnings and forecasts.
The rate-sensitive real estate sector rose 2.1 per cent, while the industrial goods and services index was the biggest sectoral decliner, down 1.3 per cent.
Among individual stocks, Stellantis shares dropped 3.8 per cent after the carmaker’s first-quarter shipments were down 9 per cent compared with last year.
Shares of BNP Paribas lost 2.4 per cent after a report the ECB was opposed to it using a favourable capital treatment for its deal to buy French insurer AXA’s asset management business. REUTERS
