European equity markets finished in the red on Thursday as motor stocks were dragged by US president Donald Trump’s decision to slap a 25 per cent import tax on cars.
The German Dax was firmly lower as Volkswagen and other car manufacturers lost value. The Cac 40 ended 0.51 per cent lower for the day and the Dax index was down 0.77 per cent.
“The trade war has escalated and, unsurprisingly, German carmakers are leading the declines or are among the biggest decliners today. We saw sharp drops in shares of Porsche, Mercedes and other carmakers such as BMW and VW,” Fawad Razaqzada, market analyst at City Index said.
Dublin
US investment giant BlackRock confirmed on Thursday that it was behind the placing more than a 3 per cent stake in AIB on the market during the week, taking advantage of a surge in the share price so far this year. This brought its holding down to 8.48 per cent, according to a stock exchange filing. The bank’s share price rose 1.25 per cent to €6.07 while rival Bank of Ireland was marginally lower on the day at €11.26. Homebuilders Cairn and Glenveagh were down 3.4 per cent and 1.8 per cent respectively as the Government mulls possible changes to the lending rules for developers in a bid to boost investment in construction.
Europe
European stocks fell, with weakness in shares of Europe’s top carmakers such as Volkswagen down nearly 2 per cent, while BMW lost almost 3 per cent and Mercedes-Benz slid more than 4 per cent. The pan-European Stoxx 600 index was down 0.5 per cent after falling as much as 1.1 per cent to a two-week low. Euro zone bond yields dropped, with Germany’s 2-year yield hitting its lowest since March 5th. Tariffs and their effect on the global economy, as well as their potential to delay Federal Reserve rate cuts, have weighed on stocks in recent weeks, though they have shown signs of stabilising lately.
London
British equities closed lower on Thursday, with mining stocks leading declines, after US president Donald Trump announced new tariffs on all foreign-made vehicles and auto parts. Late on Wednesday, Trump announced a 25 per cent tariff on imported cars and light trucks starting next week, widening concerns about the global trade war he kicked off upon returning to the White House this year.
The FTSE 350 automobiles and parts stocks fell 1.4 per cent to their lowest since early January, with luxury carmaker Aston Martin falling 6.7 per cent to an all-time low. The blue-chip FTSE 100 fell 0.3 per cent, while the midcap FTSE 250 index was down 0.6 per cent. Finance minister Rachel Reeves said Britain was working intensely with Washington to secure an exemption from the US, the second-biggest importer of British-made cars, on auto tariffs and could review subsidies enjoyed by Elon Musk’s Tesla to better support its industry.
Anglo American, Glencore, Rio Tinto and Antofagasta were among the top decliners in the FTSE 100, falling between 1.4 per cent and 6 per cent. On the flip side, Next gained 10.5 per cent after raising its profit forecast for the current year, as the clothing retailer’s earnings topped one billion pounds for the first time.
New York
Wall Street seesawed between marginal gains and losses on Thursday, as investors grappled with president Trump’s latest trade gambit that sent auto stocks into a tailspin, all while digesting a myriad of economic data. In a late-night announcement on Wednesday, Trump unveiled his plan to implement 25 per cent tariffs on imported cars and light trucks effective next week, while those on auto parts are expected to begin from May 3rd. Trump’s mercurial trade policies have injected a dose of uncertainty into markets, as investors fret over potential disruptions to supply chains, hampered investment, and the specter of inflationary pressures threatening global economic growth.
“We believe that he’s using (auto tariffs) as a trade negotiation. The markets are jittery because nobody really knows what’s going to happen and what will come out in future,” said Nicolas Lin, chairman and interim chief executive of Aether Holdings. Automakers faced significant pressure, with General Motors plummeting 7.7 per cent and Ford declining 3 per cent. Car-parts manufacturers such as Aptiv and BorgWarner each experienced a 5.5 per cent drop.
Tesla defied the trend, rising 4.6 per cent, bolstering the consumer discretionary sector. Analysts highlighted that the electric vehicle maker might remain unscathed by the auto tariffs. - Additional reporting by Reuters
