EU Morning Session: Europe Starts in the Red After New Tariffs from Trump

European indices are declining shortly after the market opens as President Donald Trump imposed a 25% tariff on car imports to the U.S., raising fresh concerns that his trade policy will hurt corporate profits and the economy. The Stoxx Europe 600 index is down, with Germany’s DAX leading the losses as it includes some of the continent’s largest automakers. The Stoxx Automobile & Parts index is falling by 3.2%, with Mercedes-Benz Group AG shares down 4.2%, Volkswagen AG declining 3.6%, and Stellantis NV dropping 5.8%. Auto parts manufacturer Valeo SE is plunging 5.2%.

Investors are also anticipating further tariffs from Trump, who promised so-called reciprocal tariffs on April 2, likely to escalate tensions with key trading partners.

“The announcement regarding car imports shows that markets must realize that the April 2 statements will be significant in terms of reciprocal tariffs,” said Alexandre Hezez, Chief Investment Officer at Group Richelieu in Paris. “We remain cautious in the short term regarding stock markets, which have yet to absorb this change. Watch European defense stocks on Thursday, as regional leaders will gather in Paris for an impromptu defense summit, aiming to secure a role in U.S.-led ceasefire negotiations regarding Russia’s war in Ukraine.

Follow stocks of companies such as Rheinmetall, Hensoldt, Renk, Saab, Kongsberg, Leonardo, Dassault Aviation, and BAE Systems. Goldman Sachs’ portfolio of European defense companies has risen by 75% this year.

By midday, European indices are expected to continue their decline, led by Germany’s DAX, due to Trump’s new trade measures, including the 25% tariff on car imports to the U.S. This raises concerns about the impact on corporate profits and the economy. The decline is most evident in the automotive sector, with shares of major manufacturers like Mercedes-Benz, Volkswagen, and Stellantis falling significantly. Investors are also awaiting new trade measures that will add further strain to relations with allies. Attention will also turn to the defense sector, where increased activity is expected in connection with the upcoming summit in Paris.

What to Watch in European M&A Today:

Deal News:

• NESN SW: In October, buyout firms were reportedly considering Nestlé’s €5 billion water business.
• BAYN GY: Elliott and PE groups held talks about Bayer’s healthcare division – FT.
• WHR LN: Blackstone’s bid for Warehouse REIT will be adjusted to account for dividends.
• PRY IM: Prysmian’s CEO sees significant M&A opportunities starting in 2027.
• PSM GY: MFE makes a cash and stock offer to increase its stake in ProSieben.
• ALC US: Alcon acquires a majority stake in Aurion for eye disease treatment.

IPO/Placements/Buybacks/Stake News:

• VOW GR/MAN GR: VW is reportedly considering options, including a listing of its MAN Energy unit.
• Air Baltic says a ceasefire in Ukraine would improve its IPO prospects.
• MBHBANK HB: Hungary’s MBH Bank is reportedly turning to Citi as the government considers selling a stake.
• Tether claims to be acquiring a 30% stake in the Italian media company Be Water.
• ALCAR FR: Carmat secures a flexible equity financing line for up to 9 million shares.
• EDR SM: Permira offers a 5.5% stake in eDreams Odigeo via Goldman – terms.

Events:

• Ex-Dividend: Crest Nicholson, Segro, Lundbeck.
• General Meeting: ABB, UniCredit.
• Extraordinary Meeting: UniCredit.
• Earnings/Updates: Symrise, United Internet.
• Capital Markets Day: Umicore.