- European stocks sold-off in early trade on Tuesday morning.
- Stocks followed the lead of the US markets, where all three major indices fell more than 3% on Monday.
- Falls were driven by President Trump’s anti-tech agenda, and continued fears of a trade war between the US and China.
- European markets strengthened as the day progressed, with most indices flat by around 2.30 p.m. BST.
European stocks started the second quarter on the back foot following a US market sell-off, before pulling back as the day progressed.
The majority of European indices did not trade on Monday as the continent observed Easter, but trading in the US resumed, where all three major indices saw big losses on the day.
The tech-heavy Nasdaq 100 – which has been a lightning rod for market volatility in recent weeks – plummeted as much as 3.9% to lead all major US indexes. Meanwhile, the benchmark S&P 500 dropped as much as 3.3%, and the 30-company Dow Jones industrial average at one point slid more than 3.1%, or 759 points.
Those drops initially spread into Europe on Tuesday, with all the continent’s major markets nursing losses in the first hours of trade. However, by the afternoon, stocks have recovered
“The fall in tech stocks and escalating trade tensions continued to rattle markets after the Easter break,” Hussein Sayed, chief market strategist at FXTM said in an email.
Here’s the scoreboard just after 2.30 p.m. BST (9.30 a.m. ET):
- Britain’s FTSE 100 – down 0.01% at 7,056 points.
- Germany’s DAX – down 0.51% at 12,034
- France’s CAC 40 – down 0.06% at 5,163
- Spain’s IBEX 35 – down 0.34% at 9,568
Monday’s sell-off in the US, which triggered the negative action in Europe, came ahead of the Trump administration’s plan to unveil this week a list of Chinese imports targeted for US tariffs. The list of $US50 billion to $US60 billion worth of annual imports is expected to target “largely high-technology” products.
“Concern that the US and China are on the cusp of a trade war just will not go away. On Monday China announced that it has implemented aforementioned tariffs on 128 types of US goods,” Jasper Lawler, head of research at the London Capital Group said.
“Implementing the tariffs makes China’s response to Trump’s steel and aluminium tariffs official. China has to show it is serious. We still expect a settlement in trade negotiations between the two nations. Sentiment will be fragile until the result of trade negotiations become clear.”
On Monday, Trump also continued to criticise Amazon, having claimed the online giant costs the US Postal Service, and therefore taxpayers, a huge amount of money every year.
“Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country…not a level playing field!” – he tweeted.
“Even if the president Trump succeeds in increasing taxes or raising shipping costs for Amazon, that should have no direct bearing on international companies. Because Amazon has been one of the U.S. market leaders, the decline in its share price has investors scrambling replacements,” Lawler said.
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