- STOXX 600 down 0.9 pct
- Autos tumble on trade tariff fears
- Siemens and Airbus lead industrials down
- Multinational clothes, luxury stocks sell off
- Debenhams falls after another profit warning
An escalating protectionist war between the United States and China extended a sell-off in European shares on Tuesday, with autos, mining and technology stocks in the eye of the storm.
Europe‘s main equity benchmarks sank 1 to 1.7 percent by 0825 GMT after Trump warned Washington would impose a 10 percent tariff on $200 billion of Chinese goods after Beijing decided to raise tariffs on $50 billion in U.S. goods.
“For now we are talking about the U.S. and China, not Europe directly, but certainly overall it’s a de-risking because global trade integrates everything,” said Britta Weidenbach, head of European equities at DWS.
The pan-European STOXX 600 was down 0.9 percent by 0845 GMT, at its lowest since April 26, while euro zone stocks tumbled 1.3 percent. A gauge of volatility on the Eurostoxx 50 rose to its highest level since June 8.
Germany’s DAX, home to some of the world’s biggest carmakers that Trump has explicitly targeted in his tariffs rhetoric, suffered the worst fall, down 1.6 percent.
Autos stocks were the biggest drag, with Daimler, Volkswagen and BMW down 1.4 to 2.8 percent. The STOXX 600 autos sector hit its lowest in seven months as traders priced in higher tariffs.
“The automotive sector is one of the main sectors that could potentially be impacted by import tariffs,” said Weidenbach, adding that the impact on different German carmakers may depend on how much of their production is U.S.-based.
“The devil is in the detail in the end, but certainly the discussions are not helpful for the sector,” she said.
Europe‘s companies are in general far more exposed to the global economy than U.S. counterparts, making them more vulnerable to countries slapping higher tariffs on goods.
Some 18 percent of European company revenues comes from North America and 9 percent from China, while 32 percent is derived from emerging markets.
U.S. companies get just 4 percent of their revenues from China and 10 percent from Europe, according to Morgan Stanley.
Multinational sportswear company Adidas fell 2 percent, as the fear of an end to unfettered access to global markets also bruised luxury stocks Kering, Hermes , LVMH and Moncler.
Industrial conglomerate Siemens was one of the biggest drags on the STOXX along with French planemaker Airbus .
Mining shares tumbled 2.2 percent, tracking a decline in London copper prices on the escalating trade tensions.
Highly valued tech stocks were also selling off as investors shed the sectors that have led the strong equity rally. The tech sector sank 1.8 percent, having hit a 17-year high as recently as Friday.
Outside trade war moves, the most impressive falls were in the UK retail and housing sectors.
Debenhams shares plummeted 19 percent at the open, then recovering to trade down 8.6 percent after the department store warned on profits for the third time in six months, blaming its poor trading on increased competitor discounting and weakness in its key markets.
Trade war fears have been one factor that has driven Germany’s DAX into negative territory for the year.