European Stocks Slide Amid Trade War Fears and Weak Economic Data

European stock markets ended the week on a downbeat note as concerns about a potential trade war with the U.S. and disappointing economic data weighed on investor sentiment.

Indices Under Pressure

• Germany’s DAX dropped 1.1%,
• France’s CAC 40 slid 1%,
• The UK’s FTSE 100 fell 0.4%.

Trade Tensions Escalate with U.S. Tariff Threats

President-elect Donald Trump reignited fears of a U.S.-EU trade war by threatening tariffs unless the EU addressed its trade deficit by purchasing more American oil and gas.

• The statement, issued on Trump’s Truth Social platform, added fresh strain to transatlantic relations.
• For the eurozone, already grappling with sluggish economic growth, including a beleaguered German economy, a trade war could bring further economic strain.

Economic Data Paints a Weak Picture

• Germany: Producer prices rose unexpectedly by 0.1% YoY in November, against expectations of a 0.3% decline, signaling persistent inflationary pressures.
• UK: Retail sales for November increased by a modest 0.2%, falling short of the anticipated 0.5% growth, further highlighting the slowing momentum in the British economy.

U.S. Government Shutdown Concerns

Sentiment was further dampened by political uncertainty in the U.S., with a partial government shutdown looming.

• A Trump-backed spending bill failed to secure sufficient support, as Republican lawmakers opposed provisions to extend government funding and suspend the debt ceiling.
• The legislative deadlock introduces new risks for global markets already uneasy over geopolitical tensions.

Stock Highlights

• ITM Power (LON:ITM): Shares rose 3% after securing a contract for a green hydrogen project in the EU, signaling positive momentum in the renewable energy sector.
• Synairgen (LON:SYNG): Shares plummeted 36% as the biotech firm launched a campaign to raise £19 million for phase 2 trials of its antiviral treatment.

Outlook

European markets face a challenging environment amid geopolitical uncertainties, slowing economic growth, and persistent inflation. The prospect of a U.S.-EU trade war, coupled with weak economic data, underscores the fragile state of the region’s recovery. Investors will be closely monitoring upcoming developments, particularly around U.S. fiscal policies and trade negotiations.