European Stocks Resume Selloff as Trump’s Tariffs Go Into Effect

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European Stocks Resume Selloff as Trump’s Tariffs Go Into Effect.

stock :: 2025-04-09 :: source - bloomberg

By Levin Stamm and Julien Ponthus

(Bloomberg) -- European stocks slumped on Wednesday as US President Donald Trump’s tariffs took effect, triggering a renewed selloff across global financial markets.

The Stoxx Europe 600 Index sank 2.3% at 9:02 a.m. in London, with every sector declining. Health care, energy stocks and telecoms fell the most, while automakers and media stocks outperformed. Drugmakers including Novo Nordisk A/S slid after Trump said “a major tariff” on the industry would be coming soon.

Imports from the European Union will be taxed at a 20% rate under the latest tariffs, while levies imposed on China are now as high as 104%. The moves have shaken global markets and asset classes, with US government bonds sliding amid growing cracks in the haven status of Treasuries.

“This isn’t a buy opportunity yet. We’re waiting for some clarity on where tariffs will land, and the longer this goes on, the major risk of an accident in financial markets,” said Frederique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia. “There’s an erosion of trust and it’s difficult to remedy that.”

European stocks had rebounded in the previous session as investors hoped for last-minute deals on tariffs. The Stoxx 600 closed 2.7% higher on Tuesday, offsetting some of last week’s declines.

Dominik Schmidlin, head of investment strategy and research at St. Galler Kantonalbank, said he expects more volatility over the coming weeks. “We are positioned defensively amid the current uncertainty with a slight underweight on equities.”

Trump’s sweeping tariffs are threatening to upend the global economic order and raising fears about a recession. After a record outperformance of US stocks in dollar terms in the first quarter, Europe’s benchmark index is now down for this year.

“The market is panicking, and for the right reasons,” said Charu Chanana, chief investment strategist at Saxo Markets. “The world’s two largest economies are coming head to head, and the scale of potential global repercussions is massive. This isn’t just about tariffs or FX — it’s about capital flows, geopolitics and fiscal sustainability colliding in real time.”

Here is what market participants are saying:

Laurent Lamagnere, head of development at Alphavalue

“There are concerns now that there could be very heavy losses among hedge funds seeking to unwind highly leveraged basis-trades. There’s a sense of panic in some areas of the market that that something systemic could happen should a major hedge fund fall while unwinding a big trade. There’s also speculation floating around that the Fed could intervene.”

Guillermo Hernandez Sampere, head of trading at asset manager MPPM

“The markets are providing a clear response to the current developments. In addition to the loss of assets, confidence is being severely strained. A reasonable solution is currently not in sight.”

Alexandre Baradez, chief market analyst at IG in Paris

“What’s clear now is that the US bond market is no longer a safe haven for investors but on the contrary is pilling on pressure on stock markets. We’re in a moment when both asset classes are falling at the same time. We’re well into an escalation phase in the trade war and investors have just nothing to hold on to at the moment.”

Jerome Legras, head of research at Axiom Alternative Investments

“The implementation of the Trump administration’s trade plan was much more extreme and absurd than what the market had anticipated. Investors were taken aback and if Trump’s idea was to lower US yields, then it backfired spectacularly. To be honest I’m a bit perplexed by what’s going on 10-year US treasuries, there are several theories floating around, like foreign investors selling or hedge funds unwinding trades but none is really satisfying.”

--With assistance from Kurt Schussler and Sagarika Jaisinghani.

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