European stocks plummet on open as tariffs hammer markets
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The news: Monday’s European open tracked a deep rout in Asia overnight, with European equity indexes opening sharply lower and defence stocks plummeting after US President Donald Trump’s tariffs prompt a global selloff.
The numbers: Asian markets followed a bleak day on the ASX, with the Australian sharemarket closing 4.23% lower, paring losses of over 6% at Monday’s open.
The Hang Seng China Index fell 20% from its March high, while Japan’s Nikkei 225 fell over 7.8%, down 20% from its December high to enter a bear market. Taiwan’s tech-heavy equity benchmark slid 9.7%, the most on record and on track to enter a bear market, while India’s key stock index slumped as much as 5.1%.
Germany’s DAX index was down 6.4%, after briefly plunging 10% at the open, the Stoxx Europe 600 dropped 5.7% while the FTSE 100 declined as much as 6% on open.
The FTSE 100 plunge is the biggest drop since February 2024, if the decline holds it will also mean the FTSE 100’s market value will have fallen below £2 trillion ($4.27 trillion) for the first time since that month. Close to £250 billion in value has been wiped from the FTSE in three sessions, falling below well 8,000 points.
The Euro Stoxx 50 futures was also down over 5%, compounding an 8% drop the two sessions prior.
European bank stocks were also hit on Monday, with an index of EU institutions (STXE 600 Banks) dropping off 4.8%. The declines were stronger in European defence stocks, with Germany’s Rheinmetall plummeting as much as 27% before being halted for volatility, Hensoldt was down 22%, Rolls-Royce off by 14%, and Thyssenkrupp dropped as much as 24%.
As US equities plummet ahead of the US market open, the S&P 500 is on pace to confirm a bear market. Contracts on the index were down 3.5% in premarket trading, while the Nasdaq 100 Index futures tumbled 3.8%.
The context: The brutal selloff on Monday came as Goldman Sachs raised its expectations of a US recession to 45% from 35%, the second time it has cranked up its forecast in one week as the Trump-driven trade war continues to escalate. Ahead of Trump’s tariff announcement last week Goldman raised its estimate from 20%, but later acknowledged that the US tariffs were steeper than it had anticipated. At least seven leading investment banks have also raised their recession risk forecasts, with JP Morgan pinning their forecast at a 60% likelihood of a global recession.
Posting on Truth Social on Sunday night, Trump said: “We have massive Financial Deficits with China, the European Union, and many others. The only way this problem can be cured is with TARIFFS, which are now bringing Tens of Billions of Dollars into the U.S.A. They are already in effect, and a beautiful thing to behold.”
Asked about the market selloffs, Trump told reporters that “sometimes you have to take medicine to fix something.”
The sources: Bloomberg, Reuters, Financial Times
