European shares are trading firmly in the red Monday as investors retain a cautious stance now that US President Trump confirmed he will go ahead with his China import hikes. China has said it will retaliate with its own import tariff hikes.
In addition to this, an escalating disagreement over Germany’s migrant policy is also weighing on investor sentiment.
By 1215 BST, the EUROSTOXX 600 was down 1.01%, while the EUROSTOXX 50 lost 1.07%. Meanwhile, regional bourses were also uniformly negative. The German DAX was 0.74% in the red, the French CAC fell 0.48% and the Spanish IBEX was off 1.08%.
US-China trade worries
From Friday July 6, some 800 Chinese goods will be subject to a 25% US import tariff as US President Trump has opted to go ahead with his tariff plan, despite talks. China has said it will retaliate and plans to impose the same tariff increase on a number of US products, also starting on July 6.
US trade war tensions have been apparent for some weeks now and investors remain cautious over the eventual impact of Trump’s decisions.
Also attracting investors attention is the precarious position of the German coalition government after just 3 months in power.
While German Chancellor Angela Merkel wants Germany to agree to a pan-European plan to tackle the crisis, other coalition members have stated they would prefer a national policy.
The coalition there took much longer to form than in previous years, with the country’s migration policy one of the major sticking points during the protracted talks before an agreement was finally struck.
Against that politically charged backdrop, there were some negative stock movers of note.
Volkswagen shares and Audi shares are both trading lower as Audi’s CEO Rupert Stadler was arrested earlier Monday as German prosecutors expand their investigation into the emissions scandal at the German carmaker.
Meanwhile, French commercial cable manufacturer Nexans shares were also sharply lower after it warned profits would be lower than previously anticipated. Nexans shares fell 16.58% to hit €30.40.