European shares log biggest daily drop since April after US tariffs hike
Investors shunned riskier equities globally as Trump continued his tariff blitz, announcing steep levies on exports from dozens of trading partners including Canada, Brazil, India and Taiwan with countries not listed subject to a base 10% rate ahead of a Friday trade deal deadline.
Healthcare stocks (.SXDP), opens new tab lost 1% after U.S. President Donald Trump sent letters to the leaders of 17 major pharmaceutical companies, including Novo Nordisk (NOVOb.CO), opens new tab and Sanofi (SASY.PA), opens new tab, outlining how they should slash U.S. prescription drug prices.
The sector was already singed this week by Novo Nordisk's profit warning. The Denmark-listed Wegovy-maker shed 1.8% and logged its steepest weekly decline on record.
"We saw during the week that companies like Novo Nordisk had different issues. European pharma is very close to bottoming and that's why it didn't react to the uncertainty around tariffs and policy," Anthi Tsouvali, a multi-asset strategist at UBS Global Wealth Management said.
"Europe is an export market... if we see heightened tariffs all over the world and trade being subdued, then that will have an impact on European companies regardless."
The pan-European STOXX 600 index (.STOXX), opens new tab slid 1.9% and marked its biggest one-week drop since early April when Trump unveiled his tariffs on world economies. The euro STOXX volatility index (.V2TX), opens new tab jumped 4.25 points to its highest in over one-month.
The STOXX index has lost over 5% from its March peak, after coming within 2% of that level earlier this week, dragged down by a record plunge in Novo Nordisk shares, and as investors assess the implications of the U.S.-EU trade deal.
Markets in Switzerland were shut for a holiday, but UK-listed Watches of Switzerland (WOSG.L), opens new tab declined 6.8%, while a U.S.-listed exchange traded fund (EWL.P), opens new tab tracking the country's equities slid to a more than three-month low and was last down 1.2%.
Most regional bourses were in the red, with Germany's blue-chip DAX (.GDAXI), opens new tab down 2.7%, while Denmark's OMXC (.OMXC20), opens new tab fell 1.8% to a nearly two-year low.
Banks, (.SX7E), opens new tab that had rallied earlier in the week, were down 3.4% and were the top sectoral underperformer as they notched their biggest one-day drop since early April.
Adding to the dour mood, U.S. data showed job growth slowed sharply in July, which boosted bets for an interest rate cut by the Federal Reserve next month, while traders also priced in a dovish move by the European Central Bank later this year.
In a bright spot, Italy's Campari (CPRI.MI), opens new tab was the top gainer on the STOXX 600 index, adding 7.9% after reporting an increase in second-quarter operating profit.
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BBC News
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How Europe is vying for rare earth independence from China
For almost 80 years rare earth metals have been pumped out of this industrial plant in La Rochelle on France's west as the materials become more and more crucial to the global economy, chemicals firm Solvay is expanding its processing plant next to the glistening Atlantic Ocean to meet surging demand across group of 17 metals are essential to huge amounts of modern technology such as smartphones, electric vehicles and wind turbines and MRI scanners. However, around 70% of rare earths mining, and 90% of refining, happens in China, as a result of years of support from the Chinese like many other parts of the world, is trying to reduce its dependence on importing these key metals from China. The future of Solvay's plant will be critical to those ambitions."This is a market that is growing fast, and, also, there is a greater demand for shorter supply chains," says Solvay's CEO Philippe Covid pandemic and the war in Ukraine have made companies and politicians try to remove some of the vulnerabilities in their supply chains."When you have a material that is coming almost 100% from one specific location, if you are dependent on this, you want to diversify your sourcing. This is what we can offer," explains the boss of the Belgian chemicals giant. That is why the EU's Critical Raw Materials Act came into force last year. It sets targets for reducing dependence on imports for the extraction, processing and recycling of the most important substances by only has two rare earth processing facilities, one in Estonia and this one in western France. It is the only plant outside of China that can process all 17 different rare earths. The increased investment in the facility comes as it is moving away from focusing on supplying rare earths for catalytic convertors, to instead focus on soaring demand for the magnets that are essential to electric car batteries, advanced electronics and defence now the focus is on recycling rare earths that are already in Europe. "We think that we can probably produce 30% of the rare earths needed by Europe just by recycling end of life motors and other equipment," says Mr demand continues to grow that will change, and more virgin material will be needed from countries such as Brazil, Canada and Australia. There are no operational rare earth mines in Europe. 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This is due to concerns about rivals potentially gaining some of the knowledge that is currently otherwise concentrated in we've been granted special access to one of the separation rooms that are a vital part of the closely-guarded know-how built up since this plant started operating in 1948."The objective of the liquid separation unit will be to purify cerium on one side, lanthanum on the other side," explains production manager Florian Gouneau as we walk up a flight of metal stairs."It's basically like if you have a multi fruit juice with orange juice, apple juice, pineapple juice, the objective of the liquid separation unit will be to separate apple juice on one side, orange juice on the other side, and so on." The room itself is about the size of a football pitch, and home to row after row of huge metal vats within which chemical reactions force the different rare earths 40-hectare site employs more than 300 people. 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They expel hot air into an atmosphere that is also punctuated by seagulls unaware that they have a unique view of one of the most important frontlines in the global French government is supporting this facility with about €20m ($23m; £17.4m) in tax credits."Having a dependency on a single source – it is dangerous because you cannot know what will happen to this source for various reasons," says Benjamin Gallezot, who is President Macron's adviser on strategic minerals and metals."It can be a geopolitical reason, but it can also be, you know, natural disaster or whatever."In the blazing sun he won't be drawn on the impact of China trying to restrict access to its rare earths exports, a subject at the heart of continuing US China trade talks. But Mr Gallezot does say: "I think economic cooperation is clearly more powerful than just only pure competition." The European Parliament wants the European Commission to do more to reduce that dependence on Chinese rare earths. It says Beijing's controls are "unjustified" and "intended to be coercive".On a recent visit to Germany, China's foreign minister Wang Yi said it was his country's "sovereign right", as well as being "common practice", to control exports of goods that have both commercial as well as military stance explains why securing access to raw materials has been at the heart of recent EU trade deals, such as the one it signed with Argentina, Brazil, Paraguay and Uruguay last firms in the rare earths sector say they need more government support if they are going to catch-up with their Chinese Moreno, the CEO of Australia's Viridis Mining, says this backing, both regulatory and financial, "is the key right now". His business is developing a vast rare earths mine in Brazil, which hopes to provide as much as 5% of the world's rare earths. 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Reuters
an hour ago
- Reuters
Trump says he could impose more tariffs on China, similar to India duties, over Russian oil
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Times
an hour ago
- Times
Trump's tariffs ‘risk pushing India towards Beijing'
For President Trump it was a risk. Further tariffs on India could nudge the world's most populous nation closer towards China and even push up the price of gas for the average American. But as his frustration grows over a failure to achieve a meaningful peace deal in Ukraine, it was a risk he thought was worth taking. On Wednesday Trump announced sweeping new tariffs against India. In addition to the 25 per cent levy due from Thursday, Trump announced a further 25 per cent that would take effect in 21 days — a punishment for India's refusal to stop importing Russian oil and gas. • Why India may grow old before it becomes rich In India, analysts and politicians are reeling. 'This is the first time in independent India's history that a US president is asking for a public display of subordination', said Sidharth Raimedhi, a fellow at the Council for Strategic Defence Research (CSDR) in Delhi. India's foreign ministry branded the move 'unfair, unjustified and unreasonable'. It said in a statement: 'It's extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their national interest.' Shashi Tharoor, an opposition MP, said Trump's additional 25 per cent tariffs showed a 'double standard'. This has 'not been a particularly friendly gesture', he told local media. 'They have given the Chinese a 90-day break — but the Chinese are importing far more Russian oil than we are.' For India, Trump's threat is galling. Until recently it had been encouraged to keep buying Russian oil to help keep the price of Brent crude stable. Janet Yellen, the US Treasury secretary under Joe Biden, said in November 2022 that the United States was 'happy' for India to continue buying as much Russian oil as it wanted. Geoffrey Pyatt, the assistant secretary of state, said in February last year: 'India has played a key role in efforts to stabilise global energy markets through its purchases of Russian crude.' The perceived hypocrisy is worsened by the fact that the US continues to import Russian uranium hexafluoride for its nuclear industry, palladium for its electric car industry, and various fertilisers and chemicals. India and the US — whose bilateral trade is worth more than $190 billion — have historically irreconcilable differences which hinders them at the negotiating table. 'India is unable to shed protectionism beyond a point,' said Ankit Tiwari, a research associate at the CSDR. Key issues which derail talks include India's resistance to opening up agricultural markets — the so-called 'third rail' of Indian politics. Closed-door trade talks in June are said to have broken down after five rounds despite technical agreements on most issues. Officials on both sides blamed mixed signals, bitterness and political misjudgment. India-US relations have been under greater strain since Trump claimed credit for mediation during the country's recent clashes with Pakistan. India tacitly refused to give Trump credit, while Pakistan publicly thanked Trump. India's position was that it negotiated directly with Pakistan. How Narendra Modi, the prime minister, responds now will be critical at home and abroad. The approach of Indian politicians is usually to appease Trump — an attitude that yields mixed results. 'India has been adopting a policy of appeasing the Trump team even before he took office,' said Raimedhi. 'There was a sense that India needed to get on the right side of Trump, and the only way to do that was to offer a trade deal. We did put all our eggs in that basket. 'India was conceding on things in an unprecedented manner — agreeing to import more American cars, for instance. So there's nothing to blame India for on that front. It appears it's more political. It's a psychological thing. 'If you show eagerness and weakness, Trump will try and take everything he can get.' Yet over the past few days the winds appear to have changed. Members of Modi's party, the BJP, came out openly criticising Trump, who has been increasingly ridiculed on Indian right-wing social media platforms. In terms of next moves, the Indian government 'will be split', said Raimedhi. Tiwari added: 'The Indian government's response will depend on whether it assesses the trade deal as a failure of appeasement and decides on a course correction, meaning giving more optical wins to Trump, or decides Trump's demands are unreasonable and adopts a harder negotiation posture in the next round of talks.' Monish Tourangbam, senior research consultant at the Chintan Research Foundation in Delhi, said the negotiations 'will play out on two levels'. For one, there is the 'usual bureaucratic business of negotiation'. Further trade talks are scheduled for August 25. But negotiations will also have a public face. 'The bilateralness of it, and the public, acerbic comments — these are something India will have to deal with on a domestic level. We might just have to wait out the Trump storm, like any other country.' In the case that negotiations failed, the risk is that the world's largest democracy might nudge closer towards Russia and China. 'I don't know if it's likely, but its definitely a possibility,' said Raimedhi. Talks have already begun between the usually hostile neighbours. Modi is expected to visit China this month for the Shanghai Cooperation Organisation summit, his first trip to the country since the Galwan clash in 2020. He will be joined by Xi Jinping and Vladimir Putin, among others. The summit is set to begin on August 31. Nonetheless, much of this may be Delhi posturing. 'There is going to be a lot of sound and fury about shifts in geopolitical orientations — the West being unreliable; India moving towards the Global South. But the broader structural reasons India moved towards the West, if you look at all the institutional linkages — the political circus playing out is not enough to shift the structural changes we've seen over the last decades,' said Tourangbam. 'There may be a lot of bargaining chips, but I don't see a substantial shifting on the ground.' He described a substantial shift towards China as 'far-fetched'. The Indian government is said to have asked ministers to see what more may be offered to the US before negotiations at the end of the month. Analysts say that Indian oil refineries may have already started to reduce Russian oil purchases. Meanwhile, India could also commit itself to more defence purchases from the US as hope remains for a diplomatic resolution.
