European markets head south after Trump slaps 30% tariff on EU

U.S. President Donald Trump's menace to enforce a 30% tariff connected European Union goods has concern banks informing that the determination could trigger a "prolonged and deeper economical slowdown" crossed the continent and perchance unit the European Central Bank to chopped rates.

Goldman Sachs said the missive to the EU came arsenic a "surprise" that "reignited concerns astir the Euro country outlook," arsenic it followed what were seen arsenic "constructive" commercialized negotiations.

Economists astatine Barclays echoed the sentiment, forecasting a "deeper near-term contraction successful economical activity."

JPMorgan economists besides appeared to beryllium caught disconnected defender by the latest developments.

"This 30% tariff complaint comes arsenic a surprise, arsenic EU sources mentioned that negotiations had focused connected a 10% tariff complaint with immoderate sectoral exemptions," Raphael Brun-Aguerre, elder economist astatine JPMorgan, said successful a Monday note.

"We are not making immoderate changes to our forecast today. The result of EU-US negotiations should beryllium known by the extremity of the period and determination is room, successful our view, for US tariffs to settee astatine a little level than mentioned implicit the weekend," Brun-Aguerre added.

— Ganesh Rao

European defence stocks are mostly pursuing determination stocks little this morning, with the Stoxx Europe Aerospace and Defense scale past seen trading down by 0.3%, paring a deeper nonaccomplishment seen astatine the opening of Monday's session.

Paris-listed defence shares, however, are bucking the trend. French maritime robotics steadfast Exail Technologies was past seen 4.1% higher, portion pitchy shaper Dassault Aviation jumped 1.8%. French defence champion Thales gained 1.4%.

That comes aft French President Emmanuel Macron announced a 6.5-billion-euro ($7.6 billion) boost successful defence spending implicit the adjacent 2 years.

— Chloe Taylor

We're astir 30 minutes into the archetypal trading league of the week, and Europe-listed stocks are broadly edging little arsenic trading kicks off.

The pan-European Stoxx 600 was past seen trading adjacent to 0.5% lower, with astir sectors successful antagonistic territory. Tariff-sensitive autos stocks led losses, with the Stoxx Europe Automobiles scale shedding astir 1%.

Looking astatine large determination bourses, Germany's DAX is starring the sell-off aft moving 0.8% lower, portion London's FTSE 100 is bucking the determination inclination to commercialized 0.2% higher.

— Chloe Taylor

EU Trade Commissioner Maros Sefcovic told reporters connected Monday that U.S. President Donald Trump's threatened 30% tariff connected the European Union would practically eradicate commercialized betwixt the 2 economical powers.

In comments cited by quality bureau Reuters, however, Sefcovic besides expressed optimism that the U.S. and the EU could find a solution.

"The feeling connected our broadside was that we are precise adjacent to an agreement," helium reportedly said up of an EU commercialized ministers' gathering successful Brussels.

— Chloe Taylor

Earnings estimates for companies astir the satellite person fallen sharply successful caller months arsenic analysts effort to foretell the interaction of caller U.S. tariffs.

Earnings per stock crossed Europe's benchmark Stoxx 600 are expected to autumn 0.2% connected an annualized ground successful the 2nd quarter, according to LSEG I/B/E/S research. On April 1, up of Trump's alleged "Liberation Day," analysts expected 7.2% growth.

Analysts are watching 3 cardinal sectors arsenic Europe's largest companies hole to study connected their net — read astir them here.

— Matt Ward-Perkins

In an interview with British paper The Times, Bank of England Governor Andrew Bailey said the cardinal slope would deepen its rate-cutting rhythm should the U.K.'s occupation marketplace slow.

His comments came arsenic the U.K.'s astir caller ostentation people remained elevated astatine 3.4%, with economists polled by Reuters expecting the June speechmaking to beryllium level erstwhile it's released connected Wednesday.

But Bailey told The Times determination were "consistent" signs of British firms "adjusting employment," and said the U.K.'s economical struggles were creating "slack" that would assistance chill inflation.

"I truly bash judge the way is downward," helium said successful the interview, which was published connected Sunday night. "If we saw the slack opening up overmuch much quickly, that would pb america to a antithetic conclusion."

Markets are presently pricing successful a 25-basis-points chopped astatine the Bank of England's adjacent gathering successful August, according to LSEG data.

— Chloe Taylor

Following President Trump's determination to enforce 30% tariffs connected imports from the EU — we wanted to instrumentality a heavy dive into the volumes of commercialized betwixt the two.

When it comes to goods, successful 2024 the EU exported astir 530 cardinal euros' ($618 billion) worthy to the U.S. and imported 335 cardinal — giving it a surplus of astir 200 cardinal euros. But arsenic Brussels is speedy to constituent out: the U.S. leads the mode successful services wherever it enjoys a surplus of 150 cardinal dollars.

All successful all, that gives the EU a full commercialized surplus of conscionable $50 billion. 

And yet - what are the European industries and countries astir exposed to U.S. tariffs?
By sector, it is acold and distant the pharmaceutical sector, followed by autos and craft machinery. 

Looking astatine idiosyncratic economies, Germany and Ireland basal retired arsenic the astir exposed: Almost a 4th of each German exports are destined for the U.S., portion for Ireland that fig is much than a third. 

— David Martin

Good greeting from London, and invited to CNBC's unrecorded blog covering each the enactment and concern quality successful European fiscal markets connected Monday.

Futures information from IG suggests determination markets volition commencement the week level to lower, with London's FTSE 100 expected to flat, Germany's DAX down 0.6% and France's CAC 0.5% lower. Italy's FTSE MIB is seen opening 0.7% lower.

The dour temper for European markets comes aft U.S. President Donald Trump announced astatine the play that helium would enforce a 30% tariff connected goods imported from the EU, dealing a stroke to the bloc aft respective months of negotiations to effort to scope a commercialized deal. The work volition spell into effect connected Aug.1.

The EU has said it volition not retaliate consecutive distant but would look to scope a deal.

"Imposing 30 percent tariffs connected EU exports would disrupt indispensable transatlantic proviso chains, to the detriment of businesses, consumers and patients connected some sides of the Atlantic," European Commission President Ursula von der Leyen said successful a statement.

She said the EU remains "ready to proceed moving towards an statement by August 1."

"At the aforesaid time, we volition instrumentality each indispensable steps to safeguard EU interests, including the adoption of proportionate countermeasures if required."

— Holly Ellyatt