EUROPEAN shares ended at their lowest in nearly two weeks on Thursday, dragged by auto stocks after US President Donald Trump announced 25 per cent import tariffs on all vehicles and foreign-made auto parts, exacerbating fears of a global slowdown.
The pan-European Stoxx 600 closed 0.44 per cent lower at 546.31 points, having dipped as much as 1.1 per cent. The blue-chip index for Germany, among the biggest suppliers of car and car parts to the United States, fell 0.7 per cent.
Volkswagen, Europe’s top carmaker, fell 1.5 per cent. Chrysler-parent Stellantis slumped 4.2 per cent, BMW fell 2.5 per cent and Porsche slid 2.6 per cent.
French automotive supplier Valeo sank 7.8 per cent, saying it would not be able to absorb recent tariffs and would have to raise prices.
The Stoxx 600 autos sector slumped 1 per cent, erasing all of its gains so far this year.
The new levies, set to take effect on April 3, could increase the cost of an average US vehicle by thousands of dollars, given the intertwined supply chains across North America.
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The announcement compounded investors’ worries as they also braced for Trump’s reciprocal tariffs on trade partners, due on April 2.
“The US tariff story is not only a negative for the global economy, but for European equities,” said Roland Kaloyan, European equity strategist at Societe Generale.
Washington has told the European Union it should not expect any trade negotiations before the United States has imposed more tariffs on the bloc next week, EU diplomats said.
The constant back-and-forth around US trade policies dented investor sentiment around the globe.
But the Stoxx 600 index is still set for its strongest quarterly performance in two years, on the back of hopes of an economic boost from Germany’s historic fiscal spending plans and a rotation out of US stocks.
The basic resources index led Thursday’s losses, tumbling 1.8 per cent, tracking a drop in copper prices.
But real estate stocks surged 2.1 per cent as shorter-dated euro zone bond yields dipped following Trump’s auto tariff announcement.
Germany’s 2-year bond yield was down about 5 basis points to 2.069 per cent, its lowest since March 3.
Among individual stocks, Swedish banks Handelsbanken and Swedbank tumbled 12.4 per cent and 8 per cent, respectively, as both traded ex-dividend. The two were the biggest individual decliners on the main index.
ProSiebenSat.1 dropped nearly 10.1 per cent after MFE made a low-ball bid for shares in the German media group it does not already own. REUTERS
