Europe: Shares stumble on Trump’s new tariff threat

EUROPEAN shares began June on a dour note as markets grappled with US President Donald Trump’s new tariff plans that threatened to reignite a fresh wave of global trade tensions.

The continent-wide Stoxx 600 slipped 0.14 per cent to 547.92 on Monday, after recording about a 4 per cent gain in May.

Late on Friday, Trump said he planned to increase tariffs on imported steel and aluminium to 50 per cent from 25 per cent, to which the European Union said it was prepared to retaliate.

Steel companies as ArcelorMittal and Aperam pared some losses and closed marginally lower.

The automobile sector, however, bore the brunt of the trade jitters, falling 2.1 per cent, the most among sectors.

Milan-listed Stellantis was down 5 per cent. Mercedes-Benz, BMW and Volkswagen fell between 1.9 per cent and 2.7 per cent.

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Even Luxury stocks, reliant on global exports dropped, with the broader gauge was down 0.8 per cent.

An index measuring volatility in the market climbed 4.3 per cent - at a one-week high.

“The market was definitely in what we would call risk off mode,” said Steve Sosnick, chief market analyst at Interactive Brokers.

“But each piece of rhetoric is having less of an effect than the prior ones because markets have mostly learned to shrug it off. Yet it cannot be shrugged off entirely.”

Data-wise, European manufacturing moved closer to stabilisation in May, according to HCOB Eurozone PMI data.

However, Europe’s largest economy, Germany, remained the weakest performer among the big euro zone members with a PMI of 48.3.

Germany’s DAX closed 0.3 per cent lower.

Oil stocks outperformed, with the sector jumping 1.4 per cent, as crude prices surged after Opec+ announced a smaller-than-feared production increase for July.

Some of the UK’s defence manufacturers gained after the news that Britain will expand its nuclear-powered attack submarine fleet.

Babcock International Group and QinetiQ Group advanced 8.2 per cent and 4.5 per cent respectively.

In Poland, stocks were flat. Opposition candidate Karol Nawrocki narrowly won the presidential election, dealing a significant blow to the centrist government’s pro-European agenda.

Media stocks such as France’s Publicis Groupe and WPP fell 3.8 per cent and 2.8 per cent respectively. The Wall Street Journal reported that Meta Platforms aimed to fully automate ad creation with AI by the end of next year.

Among other stocks, Sanofi agreed to buy US-based Blueprint Medicines Corporation, paying US$129 per share, representing an equity value of approximately US$9.1 billion.

Shares in the French pharma group fell 1.8 per cent.

This week, all eyes will be on the European Central Bank’s interest rates on Thursday, with money market traders are almost fully pricing in a quarter-point cut.

Insights from ECB President Christine Lagarde are due at 1730 GMT. REUTERS