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Europe tumbles by the close as Trump’s tariff announcement spooks investors

  • The pan-European STOXX 600 extended losses throughout the session, closing down 2.06 percent provisionally. All sectors closed sharply lower.
  • President Donald Trump said the U.S. would impose a 25 percent tariff on steel imports and 10 percent on aluminum.
  • LafargeHolcim reported Friday that a 3.8 billion Swiss franc ($4.04 billion) impairment charge contributed to a net loss of 3.13 billion Swiss francs for its fourth quarter.

Stocks in Europe finished Friday's session sharply lower after President Donald Trump announced upcoming tariffs on steel and aluminum, raising fears of a potential trade war.

The pan-European STOXX 600 extended losses throughout the session, closing down 2.06 percent provisionally. On the week, the STOXX 600 fell 3.68 percent.

In industry news, all sectors closed sharply lower with many finishing the session down over 2 percent, including basic resources, banks, autos and industrials.

Symbol
Name
Price
 
Change
%Change
Volume
FTSE
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DAX
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CAC
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IBEX 35
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Looking to bourses, the U.K.'s FTSE 100 closed down 1.47 percent, while France's CAC 40 tumbled 2.39 percent and Germany's DAX slid 2.27 percent.

On Thursday, Trump said the U.S. would impose a 25 percent tariff on steel imports and 10 percent on aluminum, which could end up hurting companies both inside and outside the U.S. Some analysts argued that U.S. businesses would still have to import such materials while steel and aluminum production develops, potentially meaning higher costs for consumers.

The European Commission has since responded, saying it won't sit idly and will take the decision to the World Trade Organization (WTO). Trump's decision could potentially lead other countries to raise tariffs on products that U.S. consumers buy.

The negative sentiment was seen across global markets Friday, with Asia closing deep in the red and stocks on Wall Street sliding, with the Dow off over 250 points at Europe's market close. Europe's basic resources fell 3 percent, making it the worst performing sector, as miners slipped on the news.

At the same time, recent comments from newly-appointed Fed Chairman Jerome Powell put markets on edge, after he said there are no signs that the U.S. economy is overheating. Investors have become more certain that the Fed will increase rates at a faster pace in 2018.

Earnings, data, Brexit

Aside from macroeconomic issues, the focus in Europe is also on earnings, data releases and a key speech from U.K. Prime Minister Theresa May.

In the corporate space, LSE shares fell over 2.5 percent after reporting its latest 2017 results. The group posted a 47 percent increase in full-year operating profit.

LafargeHolcim reported Friday that a 3.8 billion Swiss franc ($4.04 billion) impairment charge contributed to a net loss of 3.13 billion Swiss francs for its fourth quarter. The stock sunk 7.5 percent, making it one of the worst performers on the STOXX 600.

Shares of Elekta jumped 12.5 percent by the close after reporting above-forecast earnings. Meantime, Italy's Atlantia announced that it had acquired a 15.49 percent stake in channel tunnel operator Getlink, formerly known as Eurotunnel. Shares of the French group soared 11.5 percent following the news.

In Europe, investors and policymakers have been monitoring remarks from U.K. leader Theresa May who outlined her vision Friday for how the U.K.'s relationship with the EU should be — once it leaves the EU.

During her speech, May said she would like to uphold close ties between the U.K. and the European Union post-Brexit, when it comes to regulations and standards, in an attempt to prevent goods from being delayed at the border, Reuters reported.

In terms of data, growth numbers in Italy, released just two days before voters head to the polls in a key general election, showed an expansion of 0.3 percent in the fourth quarter from the previous three-month period. Preliminary estimates also showed a 1.6 percent growth figure for the year.

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