[BENGALURU] European stocks logged their biggest one-day drop in over three months on Friday (Aug 1), at the end of a busy week as investors grappled with the repercussions of fresh US levies on dozens of countries, including a 39 per cent tariff on Switzerland.
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 per cent rate ahead of a Friday trade deal deadline.
Healthcare stocks lost 1 per cent after US President Donald Trump sent letters to the leaders of 17 major pharmaceutical companies, including Novo Nordisk and Sanofi, outlining how they should slash US prescription drug prices.
The sector was already singed this week by Novo Nordisk’s profit warning. The Denmark-listed Wegovy-maker shed 1.8 per cent and logged its steepest weekly decline on record.
“We saw during the week that companies such as 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.”
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The pan-European Stoxx 600 index slid 1.9 per cent and marked its biggest one-week drop since early April when Trump unveiled his tariffs on world economies. The euro Stoxx volatility index jumped 4.25 points to its highest in over one-month.
The Stoxx index has lost over 5 per cent from its March peak, after coming within 2 per cent of that level earlier this week, dragged down by a record plunge in Novo Nordisk shares, and as investors assess the implications of the US-EU trade deal.
Markets in Switzerland were shut for a holiday, but UK-listed Watches of Switzerland declined 6.8 per cent, while a US-listed exchange traded fund tracking the country’s equities slid to a more than three-month low and was last down 1.2 per cent.
Most regional bourses were in the red, with Germany’s blue-chip DAX down 2.7 per cent, while Denmark’s OMXC fell 1.8 per cent to a nearly two-year low.
Banks, that had rallied earlier in the week, were down 3.4 per cent and were the top sectoral underperformer as they notched their biggest one-day drop since early April.
Adding to the dour mood, US 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 was the top gainer on the Stoxx 600 index, adding 7.9 per cent after reporting an increase in second-quarter operating profit. REUTERS
