From Bloomberg via MSN, April 9:
European stocks slumped as China retaliated with higher tariffs on the US, escalating President Donald Trump’s trade war.
The Stoxx Europe 600 Index tumbled 4.01% by 12:24 p.m. in London, with all sectors in the red. Health care, energy and real estate stocks fell the most.
China said it would raise the tariff on US goods to 84% from 34%, effective April 10. The moves follow Trump’s latest levies that went into force at midday Wednesday in Beijing, taking the cumulative rate announced this year to 104%.
“This confirms that we are still in the escalation phase, we will now anxiously await the European response,” said Raphael Thuin, head of capital markets strategies at Tikehau Capital.
Imports from the European Union will be taxed at a 20% rate under the latest tariffs. The moves have shaken global markets and asset classes, with US government bonds sliding amid growing cracks in the haven status of Treasuries.
European drugmakers slid after Trump said “a major tariff” on the industry would be coming soon. Novo Nordisk A/S fell 6.57%, Novartis AG dropped 7.2% and Roche Holding AG was down 6.6%.
“This isn’t a buy opportunity yet,” said Frederique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia. “We’re waiting for some clarity on where tariffs will land, and the longer this goes on, the major risk of an accident in financial markets.”
Dominik Schmidlin, head of investment strategy and research at St. Galler Kantonalbank, said he expects more volatility over the coming weeks. “We are positioned defensively amid the current uncertainty with a slight underweight on equities.”
Trump’s sweeping tariffs are threatening to upend the global economic order and raising fears about a recession. After a record outperformance of US stocks in dollar terms in the first quarter, Europe’s benchmark index is now down for this year.
“The market is panicking, and for the right reasons,” said Charu Chanana, chief investment strategist at Saxo Markets. “This isn’t just about tariffs or FX — it’s about capital flows, geopolitics and fiscal sustainability colliding in real time.”
Here is what market participants are saying:
Laurent Lamagnere, head of development at Alphavalue
“There are concerns now that there could be very heavy losses among hedge funds seeking to unwind highly leveraged basis-trades. There’s a sense of panic in some areas of the market that that something systemic could happen should a major hedge fund fall while unwinding a big trade. There’s also speculation floating around that the Fed could intervene.”
Guillermo Hernandez Sampere, head of trading at asset manager MPPM
“The markets are providing a clear response to the current developments. In addition to the loss of assets, confidence is being severely strained. A reasonable solution is currently not in sight.”
Alexandre Baradez, chief market analyst at IG in Paris
“What’s clear now is that the US bond market is no longer a safe haven for investors but on the contrary is pilling on pressure on stock markets. We’re in a moment when both asset classes are falling at the same time. We’re well into an escalation phase in the trade war and investors have just nothing to hold on to at the moment.”
Jerome Legras, head of research at Axiom Alternative Investments
“The implementation of the Trump administration’s trade plan was much more extreme and absurd than what the market had anticipated. Investors were taken aback and if Trump’s idea was to lower US yields, then it backfired spectacularly. To be honest I’m a bit perplexed by what’s going on 10-year US treasuries, there are several theories floating around, like foreign investors selling or hedge funds unwinding trades but none is really satisfying.”
Thomas Wille, chief investment officer at Copernicus Wealth Management
“The stock market has infected the bond market, volatility has risen massively, within three days the 10-year treasuries have risen by over 50 basis points. It cannot be ruled out that the US Fed will take action at the long end of the curve this week. European equities are under massive pressure, especially pharmaceutical stocks, as the next tariff hammer is expected there. The headline risk is currently massively high, which is why we are sticking to our defensive positioning and favouring both gold and defensive sectors. It cannot be ruled out that the central banks (US Fed and ECB) will become more active this week.”
Dan Boardman-Weston, chief investment officer at BRI Wealth Management
“It looks pretty miserable....
....MUCH MORE
