European markets faced a challenging Friday morning, primarily driven by heightened tensions arising from trade disputes and sharp declines in technology stocks. The downturn was led by a significant drop in mining stocks following the Chinese government's stern warning of countermeasures should the United States impose further import tariffs. As the week drew to a close, regional markets continued to reel from President Donald Trump's pronouncements of potential 25% duties on European imports.
The Stoxx Technology index played a pivotal role in the losses, shedding 1.1% by mid-morning in London. The tech sector's decline was mirrored across other industries, with shares of European semiconductor companies declining sharply. This downturn followed a major sell-off of chipmaker Nvidia's stock on Wall Street the previous day.
The pan-European Stoxx 600 index recorded a 0.3% drop at 10:48 a.m. London time, marking a recovery from more significant early session losses. However, the mining sector bore the brunt of the market's struggles, with the Stoxx Basic Resources index down 1.3%. Within this index, Syensqo saw a 3% decrease, Voestalpine fell by 2.7%, and Norsk Hydro dropped by 2.6%.
Meanwhile, German retail sales showed resilience, rising 0.2% in real terms between December and January according to preliminary figures. This growth defied analyst expectations of stagnation for January retail sales. In France, inflation cooled to 0.8% year-on-year in February as reported by the national statistics agency Insee.
China's Ministry of Commerce issued a statement in response to President Trump's tariff threats, emphasizing their strong opposition to the proposed measures.
"firmly opposes" – China's Ministry of Commerce spokesperson (translated by CNBC)
The spokesperson further warned that China would take decisive action if necessary.
"If the U.S. insists on its own way, China will take all necessary countermeasures to defend its legitimate rights and interests" – China's Ministry of Commerce spokesperson (translated by CNBC)
In addressing the situation, the spokesperson called for a return to constructive dialogue.
"We urge the U.S. side to not repeat its own mistakes, and to return as soon as possible to the right track of properly resolving conflicts through dialogue on equal footing" – China's Ministry of Commerce spokesperson (translated by CNBC)
Amid these international tensions, President Trump hinted at the possibility of avoiding new tariffs with the United Kingdom, praising UK Prime Minister Keir Starmer for his diplomatic efforts.
"He tried! He was working hard, I'll tell you that. He earned whatever the hell they pay him over there. But, he tried… I think there is a very good chance that in the case of these two great friendly countries, I think we could end up with a real trade deal that… where the tariffs wouldn't be necessary. We'll see." – U.S. President Donald Trump
President Trump also lauded Prime Minister Starmer's dedication in negotiations.
"He was working hard, I'll tell you that. He earned whatever the hell they pay him over there." – U.S. President Donald Trump
He concluded with optimism about reaching an agreement that could preclude tariffs.
"I think there's a very good chance in the case of these two great, friendly countries, I think we could very well end up with a real trade deal where the tariffs wouldn't be necessary" – U.S. President Donald Trump
On a more positive note, financial giant Allianz reported a record annual operating profit of 16 billion euros ($16.6 billion), underscoring robust performance amid broader market pressures.