The STOXX 50 sank 6.8% on Monday, plunging to its lowest level since August, while the broader STOXX 600 tumbled 5.6% to reach lows not seen since December 2023.
European shares sink by 6%
The sharp declines extended the steep losses from the previous week, which had already marked the worst weekly performance since the COVID-driven turmoil of 2020. Investor sentiment remains under intense pressure as mounting fears of a deepening global trade war continue to rattle markets. Concerns over a potential recession, stagflation, and disrupted supply chains have prompted a widespread risk-off attitude, with traders shedding riskier assets and moving into cash and safer havens.
The latest blow to market confidence came last Friday, when China announced sweeping retaliatory measures in response to the U.S.’s newly imposed tariffs, slapping 34% tariffs on a wide array of U.S. goods effective April 10. The move signaled a further escalation in the trade conflict between the world's two largest economies, sending shockwaves through European equity markets. President Trump, meanwhile, dismissed investors’ concerns over inflation and recession as overblown, reiterating that the U.S. economy remains strong and that the market “needs to take its medicine” as part of his broader economic strategy. His tone offered little reassurance to already-nervous investors.
Traders await EU response to Trump
Traders are now anxiously awaiting the European Union’s official response to Trump’s latest tariff announcements, particularly the 20% levy imposed on EU goods. European leaders, including French President Emmanuel Macron and German Chancellor Annalena Baerbock, have called emergency meetings to discuss potential countermeasures, while the European Commission signaled it is considering targeted retaliatory tariffs and support packages for affected industries. Market participants fear that tit-for-tat responses could evolve into a sustained tariff war, severely damaging exports, manufacturing activity, and consumer sentiment across the bloc.
The market decline was broad-based, with virtually all major sectors in the red. Banks, energy, and insurance were among the hardest hit, as recession fears raised questions about loan defaults, weaker commodity demand, and deteriorating balance sheets. Defensive stocks, which had previously provided a haven during earlier phases of market volatility, also came under pressure as investors locked in profits and raised liquidity by selling prior winners. Even the healthcare and consumer staples sectors failed to provide shelter from the downturn.
Several blue-chip names saw steep declines
Several blue-chip names saw steep declines: Novo Nordisk fell 5.1%, SAP dropped 6%, LVMH lost 5.1%, and Nestlé declined by 5.3%, reflecting the extent of the sell-off across different industries. Tech and luxury brands, often seen as more resilient due to strong pricing power and global customer bases, were not spared, underscoring the depth of investor anxiety. With volatility surging and macroeconomic uncertainty at its highest in years, analysts warn that further downside could be ahead unless there is a swift de-escalation in trade tensions or clear policy support from central banks and governments.
