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European equity markets retreated on Wednesday, mirroring losses in Asia and on Wall Street, as a sharp escalation in the U.S.-China trade war reignited concerns over global economic growth and pressured risk sentiment.
As of 03:05 ET (07:05 GMT):
- Germany’s DAX fell 0.5%
- France’s CAC 40 slipped 0.7%
- U.K.’s FTSE 100 declined 0.3%
- The Stoxx 600 was also trading lower, in line with broader market weakness
Trump Targets Critical Minerals, Markets React
Investor sentiment deteriorated after U.S. President Donald Trump ordered a probe into new tariffs on critical mineral imports, a move widely seen as targeting China, which dominates the global supply chain for rare earths and battery metals.
The move added to the already tense trade environment, following the recent hike in U.S. tariffs on Chinese goods to 145%, with Beijing retaliating with 125% tariffs on American imports.
“This is no longer just a tit-for-tat—it’s becoming a broad-based economic cold war,” one analyst remarked.
Nvidia’s China Exposure Fuels Tech Jitters
Late Tuesday, AI leader Nvidia (NASDAQ:NVDA) disclosed it expects up to $5.5 billion in charges in its upcoming Q1 results, stemming from U.S. chip export controls on China. The announcement weighed heavily on tech sentiment globally, casting a shadow over the sector’s earnings outlook.
China GDP Beats, But Risks Ahead
Despite geopolitical headwinds, China’s Q1 GDP rose 5.4%, beating estimates of 5.2%. However, the stronger-than-expected data may be misleading, as it does not reflect the full impact of the latest U.S. tariffs.
“This could be the calm before the storm,” analysts warned, with fresh tariffs and retaliations likely to dent future growth.
U.K. Inflation Cools, Rate Cut Prospects Rise
In positive economic news, U.K. inflation eased in March:
- CPI slowed to 2.6% YoY, down from 2.8% in February
- Below market expectations of 2.7%
The cooling inflation increases the likelihood of a Bank of England rate cut in May, especially as wage pressures remain elevated but consumer prices begin to normalize.
Eurozone CPI Eyed Ahead of ECB Decision
The Eurozone inflation report is due later today and is expected to show annual growth slowing to 2.2% in March from 2.3% previously.
- The European Central Bank meets Thursday
- A 25-basis-point rate cut, taking the deposit rate to 2.25%, is widely expected
Corporate Movers: ASML, Heineken, Nordea, Edenred
- ASML (AS:ASML): Disappointed on net bookings, raising concerns about slowing demand for chipmaking tools despite reaffirming its full-year forecast
- Heineken (AS:HEIN): Beat expectations with a 0.9% rise in Q1 organic net revenues, defying forecasts for a decline amid trade concerns
- Nordea Bank (ST:NDASE): Posted a better-than-expected Q1 operating profit, thanks to higher income, lower costs, and reduced loan losses
- Edenred (EPA:EDEN): Maintained full-year outlook, with strong Mobility segment growth helping offset softer results elsewhere
Outlook: Risk-Off Mood Likely to Linger
With geopolitical tensions mounting, corporate warnings increasing, and central bank decisions looming, risk appetite remains fragile.
Markets will be closely watching:
- Further developments in the U.S.-China trade conflict
- ECB policy signals on Thursday
- Corporate guidance from European tech and manufacturing firms, which are most exposed to global demand and supply chain risks
For now, volatility is expected to stay elevated, and any relief rallies may prove short-lived without a clear de-escalation in trade tensions.
