European stocks tank 6% at open as global tariff rout deepens

European Stocks Tank 6% at Open as Global Tariff Rout Deepens

By Steven Orlowski, CFP, CNPR

April 7, 2025 — European equity markets plummeted at the opening bell on Monday, with major indexes down more than 6% across the board, as a deepening global tariff battle rattled investor confidence and sparked fears of a prolonged economic slowdown.

The Stoxx Europe 600 tumbled 6.2%, marking its steepest one-day drop since the early days of the COVID-19 pandemic. Germany’s DAX and France’s CAC 40 both opened down more than 6.5%, while London’s FTSE 100 shed 5.9% amid a broad-based selloff that spared no sector.

The latest shock came after the United States imposed a new wave of tariffs on a range of goods from China and the European Union over the weekend, prompting swift retaliatory measures. Beijing responded with levies targeting U.S. agricultural and technology products, while Brussels hit back with duties on American automobiles, industrial components, and select consumer goods.

“The markets are reacting violently because this is no longer a war of words—it’s a full-blown economic confrontation,” said Marianne Keller, chief economist at Frankfurt-based Alpine Strategy Group. “Global supply chains are under siege, and investors are pricing in the potential for recession across multiple regions.”

Fallout Spreads Across Sectors

The pain was widespread across European bourses. Automakers, industrials, and exporters were among the hardest hit. Shares of Volkswagen, Renault, and BMW plunged between 7% and 9%, as the EU’s tariffs on American car components raised fears of a retaliatory slump in overseas demand.

Technology firms also saw a sharp downturn, with ASML and SAP both falling more than 6% on worries about disrupted chip and software exports. Banks, already under pressure from sluggish economic growth and lower bond yields, fell in tandem with global peers.

“Investors are flying to safety, dumping equities and rotating into government bonds, gold, and cash,” said Rakesh Thakur, a senior market strategist at Geneva Capital Partners. “The uncertainty is simply too great.”

Safe Havens Rally

As risk assets plunged, traditional safe havens rallied. German Bunds saw yields sink to -0.14%, their lowest level in nearly a year. Gold prices surged 3.5% to $2,376 per ounce, continuing a month-long rally. The Swiss franc and Japanese yen both strengthened sharply against the dollar and euro.

Energy markets also took a hit, with Brent crude falling 4.1% to $77.80 a barrel as fears of slowing global trade volumes overshadowed supply concerns from ongoing Middle East tensions.

Central Banks in the Crosshairs

Attention now turns to the world’s central banks, particularly the European Central Bank (ECB) and the Federal Reserve, as market participants await signals on potential policy responses. With inflation still elevated but growth indicators softening, policymakers face a complex balancing act.

ECB President Christine Lagarde is set to speak later today at a press conference in Luxembourg. Analysts expect her to reaffirm the bank’s commitment to stability but stop short of announcing fresh easing measures—at least for now.

Outlook: Volatility Ahead

Market volatility is expected to remain high in the coming days, with further policy announcements, earnings reports, and geopolitical developments on the horizon. Traders warn that without a diplomatic breakthrough, equity markets could remain under sustained pressure.

“Until we see signs of tariff de-escalation or coordinated economic stimulus, the default direction for risk assets is down,” said Keller. “This is a classic flight-to-safety moment, and it may last longer than investors hope.”

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Disclaimer: The views expressed in this article are for informational purposes only and do not constitute investment advice.