No Relief Anytime Soon: European Indices Crash As Tariff Shockwave Rattles Markets

European equities suffered a major blow on Monday and sank to a 16-month low as investors tried to brave through the aftermath of US President Donald Trump's staggering tariffs. 

The European markets echoed the sentiments of the Asian indices as investor sentiment turned sharply negative in the wake of escalating trade tensions between the United States and China. The dramatic selloff followed Washington’s announcement of sweeping tariffs, which rattled global markets and amplified fears of a looming recession.

Despite retaliatory measures from Beijing, US President Donald Trump maintained a defiant stance. Speaking to reporters over the weekend, Trump said that he was not concerned about losses across the global stock markets. 

"I don't want anything to go down. But sometimes you have to take medicine to fix something," he added. He noted that the US has no intention of reaching a deal with China until the trade deficit gets resolved, reported Reuters.

The statement further stoked uncertainty, setting off a renewed wave of selling in Asian equities and heightening pressure on European bourses.

The broader STOXX 600 index tumbled 5.8 per cent around noon on Monday, extending Friday’s sharp losses — its worst single-day percentage drop since the onset of the COVID-19 crisis. The decline was led by economically sensitive sectors and major national indices.

Also Read : Investors' Nightmare Continues: Taiwan's Market Tanks 10%, Hong Kong Sees Worst Crash In 16 Years

German Stocks and Defence Sector Take a Beating

Germany’s DAX, often considered a bellwether for European trade activity, plunged 6.6 per cent, with financial stocks among the hardest hit. Commerzbank saw its shares dive 10.7 per cent, while Deutsche Bank fell by 10 per cent.

Defence companies, which  rallied earlier this year on expectations of increased military spending, were also caught in the crossfire. Rheinmetall, a tank manufacturer, suffered the largest decline on the STOXX 600, sliding 23.7 per cent. Meanwhile, other defence players such as Hensoldt and Renk saw their shares retreat between 17 per cent to 21 per cent.

The turmoil  also reshaped expectations around monetary policy. Traders are now factoring in a possible shift in central bank strategies. With tensions showing no sign of easing and global trade relationships under strain, investors remain on high alert for further volatility in the days ahead.

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