European equities fell sharply on Friday, capping their worst weekly performance in nearly two years, as investor sentiment soured following sweeping U.S. tariffs announced by President Donald Trump. The pan-European STOXX 600 index dropped 0.9% in early trading, extending its weekly losses to 4.4%—the sharpest decline since June 2022.
The market downturn was fueled by heightened recession fears, as Trump’s new trade measures placed a 20% tariff on imports from the European Union. Investors increasingly bet on the European Central Bank (ECB) stepping in with interest rate cuts to counter the economic fallout.
Banking Sector Leads Market Declines
Among the worst-hit sectors was banking, which shed 3.8% as concerns grew over slowing economic activity. European financial institutions are particularly sensitive to trade disruptions and shifting monetary policies.
- Deutsche Bank (DBK.DE): Down 4.2%
- BNP Paribas (BNPP.PA): Dropped 3.7%
- Santander (SAN.MC): Fell 3.5%
With investors now pricing in potential ECB rate cuts as early as June, financial stocks faced additional pressure, given their reliance on higher interest rates for profitability.
German Industrial Data Offers Mixed Signals
Amid market turmoil, fresh data from Germany suggested a fragile industrial sector. February’s industrial orders stagnated, showing no growth after an upward revision of January figures. While this suggests the sector may have hit a bottom, a strong recovery remains uncertain.
- Key Takeaways from German Data:
- February industrial orders showed no growth.
- January figures were revised higher, signaling potential stabilization.
- Analysts warn of a slow rebound amid global trade tensions.
Meanwhile, individual stock movements reflected investor unease. Gerresheimer AG (GXIG.DE) plummeted 6% following reports that private equity giant KKR withdrew from a proposed takeover consortium for the German specialty packaging company.
As investors await the March U.S. jobs report, set for release at 12:30 GMT, market watchers are closely analyzing economic indicators that could shape future policy responses.