European stock markets plunge sharply, mirroring the downward trends of Asian markets

The European stock markets opened with a significant drop on Monday, following the Asian markets, due to Donald Trump’s unyielding stance on the colossal tariffs imposed on the trading partners of the United States.

Key Points

• The European stock markets opened with a significant drop on Monday, following the trend of Asian markets, due to Donald Trump’s unyielding stance on colossal tariffs imposed on the US trade partners.
• The Chinese government has accused the US of seeking “hegemony in the name of reciprocity,” labeling the actions as unilateralism, protectionism, and economic intimidation.
• Stéphane Séjourné, the Executive Vice-President of the European Commission, has asserted that the European Union possesses the means to challenge the Americans on the tariff issue, and plans for retaliation are underway, including a list of American products to be taxed.

This significant downturn is largely attributed to heightened fears of a global trade war, sparked by U.S. President Donald Trump’s recent tariff announcements. The pan-European Stoxx 600 index dropped by approximately 6% shortly after the opening bell, with all sectors experiencing declines. Major indices across the continent saw substantial losses: Germany’s DAX fell by as much as 10%, France’s CAC 40 declined by over 6%, Italy’s FTSE MIB dropped around 5.7%, and the UK’s FTSE 100 slid nearly 6%, reaching its lowest level since February 2024.

This follows a global market rout that began late last week, driven by investor concerns over the economic fallout from escalating trade tensions, particularly after China retaliated with its own tariffs on U.S. goods. The volatility reflects broader uncertainty about global growth and the potential for a recession, with markets reacting to the reality that these tariffs may not be temporary.

The Chinese Ministry of Foreign Affairs accused the US of practicing hegemony and sacrificing the legitimate interests of other countries to serve its selfish interests.

Central Huijin Investment, a Chinese state fund, stated its intention to contribute to the “stable operation” of the markets by increasing its holdings in stocks. The Tokyo and Seoul stock exchanges closed with a drop of 7.8% and 5.6% respectively, while Hong Kong continued to plummet by 12.65% in the last exchanges.

The Australian Treasurer, Jim Chalmers, stated that the world is trying to understand the consequences of a series of bad decisions made regarding tariffs, but that Australia is better positioned and prepared. The European stock markets opened with a sharp drop, with the Frankfurt Stock Exchange plummeting by 7.86% and the Paris Stock Exchange by 6.19%. The future contracts of the main European indices also fell sharply, suggesting that the European markets are heading for a drop at the opening. The Chinese government reaffirmed its commitment to remain “a safe land” for foreign investment, despite the trade war and the imposition of tariffs on imports from the United States.