European shares pressured by Trump's new tariff threats
Most regional bourses were trading lower, with Germany's DAX down 0.6%. (EPA Images pic)
FRANKFURT : European shares retreated today after rounding off monthly gains in May, as US President Donald Trump's new tariff plans threatened to rekindle global trade tensions.
The continent-wide STOXX 600 was down 0.5% as of 7.59am, after recording about a 4% gain in May.
Late on Friday, Trump said he planned to increase tariffs on imported steel and aluminum to 50% from 25%, to which the EU said it was prepared to retaliate.
Steel companies such as ArcelorMittal and Aperam were down about 1% each.
Automakers saw the biggest impact, with Milan-listed Stellantis down 3%. Mercedes-Benz, BMW and Volkswagen fell between 1.4% and 2%. The sector dipped 1.6%.
Luxury stocks, among Europe's exports, also dipped with the broader gauge down 1.6%.
An index measuring volatility in the market was up 1.7 points at 20.88, its highest in a week.
'The latest announcement renews tensions… it's also an indication that the trade negotiations may not be going toward the right direction,' said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
'The trade tensions have a very direct impact on the luxury sales, because for the biggest exports of the major European companies, America is one of the biggest markets,' Ozkardeskaya said.
Most regional bourses were trading lower, with Germany's DAX down 0.6%.
However, oil stocks tracked prices of the commodity sharply higher, after producer group Opec+ decided to increase output in July by an amount which is less than feared by many.
An index tracking defence companies also ticked higher as tensions between Russia and Ukraine flared again over the weekend, but representatives were due to meet today.
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 1.2%.
Elsewhere, stocks in Poland fell 1.4%, after nationalist opposition candidate Karol Nawrocki won the second round of the country's presidential election.
Ozkardeskaya said that Poland's election outcome will not have an impact on its position within the EU.
Hensoldt topped the STOXX with a 7.2% gain after JPMorgan upgraded the defence company's stock to 'overweight' from 'underweight'.
This week, the spotlight will be on the European Central Bank's (ECB) interest rate decision on Thursday, and a crucial set of US jobs data on Friday.
Comments from Federal Reserve chair Jerome Powell and ECB president Christine Lagarde will be on tap, alongside a slew of economic data out of the trade bloc.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Free Malaysia Today
7 hours ago
- Free Malaysia Today
Mercedes sees itself as ‘sounding board' in tariff talks, says CEO
Mercedes-Benz CEO Ola Kaellenius said negotiations take place at the EU level because trade policy falls within the EU's remit. (EPA Images pic) BERLIN : Mercedes-Benz views itself as a 'sounding board' that contributes ideas in tariff negotiations between the EU and the US, CEO Ola Kaellenius told the Frankfurter Allgemeine Zeitung newspaper today. 'As a company, we hold talks with political decision-makers – in the EU as well as in China and the US,' said Kaellenius. 'However, negotiations take place at EU level because trade policy falls within the EU's remit. 'We are available as a sounding board, contributing ideas and presenting scenarios showing how certain decisions would affect us,' he added. Mercedes-Benz, as well as BMW and Volkswagen, are in talks with Washington over a possible import tariff deal, sources told Reuters late last month. 'Under one proposal on the table, German carmakers would get credits for cars they export from the US, which could then be deducted from tariffs,' one of the sources said. Kaellenius' interview was published hours before Germany's new chancellor, Friedrich Merz, will hold his first face-to-face talks with US President Donald Trump as Europe seeks to stave off looming US tariffs.
Free Malaysia Today
11 hours ago
- Free Malaysia Today
Clean energy investment rising despite economic uncertainty, says IEA
The International Energy Agency said the shift in US policies is expected to impact investment in renewable energy. (Freepik pic) PARIS : Investment in clean energy technologies is set to strike a record this year despite global economic uncertainty, double the spending on fossil fuels that will dip for the first time since 2020, the International Energy Agency (IEA) said today. While the Trump administration has been hostile to renewable energy sources and trumpets boosting oil production, the IEA said security concerns, as well as rising demand for electricity, including from artificial intelligence (AI) and data centres, are driving investment in clean energy sources. 'Amid the geopolitical and economic uncertainties that are clouding the outlook for the energy world, we see energy security coming through as a key driver of the growth in global investment this year to a record US$3.3 trillion as countries and companies seek to insulate themselves from a wide range of risks,' executive director Fatih Birol said as the IEA published its latest annual World Energy Investment report. It expects investment in clean technologies, including nuclear and electricity distribution grids, to hit a record US$2.2 trillion this year. Meanwhile, investment in oil, natural gas and coal is set to dip to US$1.1 billion, as companies react to falling prices and lower demand expectations. Most of drop is due to investment in US oil production, while investment in liquefied natural gas (LNG) projects there and elsewhere is expected to lead to the largest-ever capacity growth in 2026-2028. Since returning to the White House, Trump has slapped a 10% tariff on most trading partners, alongside higher rates on dozens of economies, including China and the EU, that have since been reduced or put on pause until early July while negotiations are held. Earlier this week the OECD slashed its annual global growth forecast, warning that Trump's tariffs blitz would stifle the world economy. However, energy investments haven't suffered yet. 'The fast-evolving economic and trade picture means that some investors are adopting a wait-and-see approach to new energy project approvals, but in most areas we have yet to see significant implications for existing projects,' Birol said. US renewables to 'level off' However, IEA said the shift in US policies would impact investment there in renewables. 'Spending on renewables and low-emissions fuels in the US almost doubled over the last 10 years but is now set to level off as supportive policies are scaled back,' it said. The report found the rapid rise in electricity demand – for industry, cooling, electric mobility, data centres and AI – was also shaping investment trends. The sector is expected attract US$1.5 trillion in investments this year, 50% more than fossil fuels. The IEA also noted that nuclear energy has been making a comeback as electricity demand from data centres risks doubling in the next five years. While renewables are expected to meet most of that additional demand, the steady supply that nuclear plants offer have prompted a number of tech companies to enter into supply agreements. However, the Paris-based IEA, which advises industrial nations on energy policy, warned that spending on electricity grids was not keeping up with investment into generation. In addition to lengthy permitting procedures, grid expansion was also being held back by tight supply of transformers and cable, it found. Despite the rising levels of investment in renewable energy production, the IEA said it must double to achieve the goal set at the 2024 UN climate conference: a tripling of the installed renewable capacity by 2030. The urgent demand for power means new plants using dirty fuels such as coal are still being built, with a 4% increase in investment expected this year. 'In the face of rapid electricity demand growth and concerns linked to security of supply, such as various geopolitical risks as well as uncertainties over hydropower output, China and India are approving increasing amounts of new coal-fired power,' said the IEA report.
Free Malaysia Today
11 hours ago
- Free Malaysia Today
Hanoi, Washington to speed up trade talks
Vietnam was expected to sign deals with the US to buy more than US$2 billion worth of agricultural products. (EPA Images pic) HANOI : Vietnam and the US have agreed to speed up trade talks, Hanoi said today, as it announced US$600 million in deals to buy US agricultural products. Vietnam has the third-biggest trade surplus with the US, after China and Mexico, and is anxious to address the imbalance to head off president Donald Trump's threatened 46% levy as part of his global tariff blitz. Vietnamese and US officials agreed at a meeting in Paris on Wednesday to 'focus maximum efforts to achieve the best results in the third technical negotiation round' scheduled for the first half of June, the communist country's trade ministry said in a statement. Trade minister Nguyen Hong Dien affirmed Vietnam's 'determination and goodwill' to reach an agreement with the US, while his American counterpart Jamieson Greer said a deal would be important for Washington as well as Hanoi, according to the statement. Meanwhile, a delegation from Vietnam's agriculture ministry visiting the US signed memorandums of understanding (MOU) to buy raw materials for animal feed from Ohio worth US$600 million, the ministry said in a separate statement on its website today. That comes after Vietnam announced five MOUs to buy products worth around US$800 million from Iowa over three years, including soybean meal, corn, wheat, dried soybeans and dried distillers grains. The Southeast Asian country was expected to sign deals with the US to buy more than US$2 billion worth of agricultural products in total, the statement added. Vietnam has been seeking help to solve the tariff stand-off from several US tech and industry giants, including Lockheed Martin, SpaceX and Google. It also signed an agreement with US company Westinghouse Electric on nuclear power development. Trump's real estate group broke ground last month in Vietnam on a US$1.5-billion luxury resort and golf course 40 kilometres (25 miles) southeast of the capital Hanoi. His son Eric Trump, an executive vice president of the Trump Organization, and his wife Lara attended the event, as well as local partner the Kinhbac City Development Corporation. Eric Trump has also been scouting locations for a potential tower project in Ho Chi Minh City, Vietnam's southern business hub.
