European markets faced renewed pressure on Tuesday, with investor sentiment shaken by escalating U.S.-China trade tensions and disappointing corporate news from France. The pan-European STOXX 600 index fell 0.6% as of 0718 GMT, marking a near two-week low after a brief recovery on Monday.
The downturn followed a volatile few days in global markets after U.S. President Donald Trump reignited fears of a trade war by threatening 100% tariffs on Chinese goods in response to Beijing’s export restrictions on rare earths. Although Trump later softened his tone, both Washington and Beijing began imposing additional port fees on shipping firms, deepening investor unease.
Why It Matters
The latest moves have revived concerns about the global economy’s vulnerability to trade shocks, with Europe heavily reliant on exports and manufacturing seen as particularly exposed. The market’s reaction also highlights how interconnected supply chains and energy routes remain at risk from shifting U.S.-China relations.
Investors and manufacturers: European automakers, miners, and exporters face the brunt of renewed trade uncertainty.
Michelin and auto sector: Shares of French tyre maker Michelin plunged 9.3% after the company slashed its annual forecast, citing weak demand in North America. The ripple effect hit German parts maker Continental, down 3.7%, and Italy’s Pirelli, off 2.1%.
Tech sector: Providing a bright spot, Sweden’s Ericsson surged 12.4% after better-than-expected quarterly earnings and assurances that U.S. tariffs would not materially impact operations.
What’s Next
Markets are likely to remain volatile as traders await further signals on trade policy from Washington and Beijing. With both sides now imposing maritime fees, analysts warn of potential disruptions to global freight flows a scenario that could pressure European manufacturers in the months ahead.
With information from Reuters.