European markets fall sharply after Trump stokes recession fears; Stoxx 600 hits 3-month low

European stocks traded sharply lower Friday morning after U.S. President Donald Trump announced plans to impose a 5% tariff on all Mexican imports from June 10, stirring fears of a global recession.

The pan-European Stoxx 600 dropped 1.3% to its lowest point since February 19. Autos led the losses with a 2.8% drop as all sectors traded in the red. Telecoms stocks were the best performer, falling just 0.4% during morning trade.

President Trump announced the sweeping tariffs on Mexican goods Thursday afternoon in response to what he claimed is a “border crisis,” throwing the fate of the United States-Mexico-Canada Agreement, or USMCA, into question.

In Asia, stocks traded mixed Friday afternoon as China’s manufacturing data missed analysts’ expectations, Japan’s Nikkei 225 leading losses with a 0.82% dip during afternoon trade. Shares of Asian automakers tumbled on the tariff news.

Stateside, investors will be monitoring the fallout from the announcement of the tariffs, which President Trump said could increase to 25% by October 1 this year if Mexico doesn’t stem the flow of undocumented migrants to the U.S. southern border. Prominent former diplomat John Negroponte told CNBC’s“Street Signs” on Thursday evening U.S. time that the move was “bad politically and bad economically.”

Back in Europe, Italy’s “anti-establishment” 5-Star Movement on Thursday backed leader Luigi Di Maio to continue in his role, following a bruising defeat in European parliamentary elections.

Allianz went on a British buying spree Friday, snapping up the remaining 51% stake in U.K.-based LV General Insurance Group for up to £578 million ($727.4 million) and acquiring a 100% of Legal & General Insurance for £242 million. The two deals are set to make Allianz the second largest insurer in the U.K., but the company’s shares still traded 1.6% lower Friday morning.

Investors will also have an eye on German April retail sales figures and May inflation data, while Italy reported fourth-quarter GDP of -0.1% quarter-on-quarter and 0% over the year. The Bank of Italy also cautioned the anti-establishment government in Rome against widening the country’s deficit, suggesting that 2019 public debt could rise more than forecast.

In terms of individual stocks, German payments company Wirecard tumbled 11.1% after a German media report suggested the firm may have processed payments for a network of fraudulent trading websites.

Wizz Air shares fell 6% despite posting net profit Friday of 292 million euros ($325 million) in the 12 months to March 31.

Newsletter Subscription

Sign Up to enjoy top Finance Articles and Insights Delivered to your inbox.
  • Programic Asia Pvt Ltd may keep me informed with eMails about & finance newsletters. See our Privacy policy for more details