An oversized board with seemingly arbitrary numbers and a staged show to announce the newly imposed tariffs have triggered a day of free fall on the stock markets. The initiator of it all, Donald Trump, is pleased with the action and already looking forward to booming U.S. markets. But he may have miscalculated, as ultimately, prices for products in the U.S. will also rise, and capital inflows into the country are unlikely to pick up speed.
The world – including Europe – will nevertheless have to deal with this situation and find the best path forward. The DAX mirrored the American markets and took a significant hit. The German stock index dropped sharply by a hefty three percent this Thursday. Contrary to expectations, it wasn’t the automotive stocks that ended up at the bottom of the DAX, but rather shares of Adidas, Siemens, and Infineon, which suffered substantial losses. Meanwhile, real estate stocks such as Vonovia saw significant gains.
Brits Don’t Give Up on Negotiations with the U.S.
Although tariffs on exports from the UK to the U.S. have been set at only 10 percent, the FTSE 100 could not escape the general sell-off either. However, it’s worth noting that the index still closed above its 150-day moving average, keeping hopes alive for a market recovery.
In the UK, a determined Prime Minister continues to pursue a fair deal with the U.S., which seems to give investors hope that yesterday’s announcement was not the final word.
Banks and financial institutions saw the largest losses within the FTSE 100. Standard Chartered, for example, fell by over 13 percent due to fears that the tariffs could heavily impact growth.
The markets are currently experiencing high volatility, meaning that investors are likely to remain cautious until the situation calms and markets return to steadier ground.
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