Market Update
European Markets Traded Down Amid Deteriorating Credibility of Trump Administration
Bridgette Randall
12 Jun, 2025
London
European market sentiment worsened after the U.S. president ramped up threats to impose higher tariffs ahead of the fast-approaching deadline.
Benchmark indexes in Frankfurt, Paris, Milan, and London fell as much as 0.7% as Donald Trump threatened to impose unilateral tariffs on key trading partners, including the European Union.
Financial markets have grown accustomed to constantly changing U.S. trade policy, and investors accelerate selling of the U.S. dollar-denominated assets.
The European Union member nations are increasingly looking to reduce their holdings of the U.S. stocks, bonds, and dollar-linked securities amid the waning safe-haven status of the U.S.
The European Union and the U.S. are expected to wrap up their trade talks before July 9, but negotiators in Brussels are signaling slow progress and a lack of an agreement.
U.S. Treasury Secretary Scott Bessent suggested that the current pause in sky-high import tax proposed by the U.S. may be extended by another three months for countries demonstrating "good faith" negotiations.
On Wednesday, Trump claimed that a trade framework with China has been finalized, without specifying the level of tariffs and scope of export controls.
But Chinese negotiators voiced their skepticism in Beijing, signaling that the two sides are far apart from a deal.
Europe Indexes and Yields
The DAX index decreased by 0.7% to 23,770.54, the CAC-40 index edged lower 0.5% to 7,736.72, and the FTSE 100 index declined 0.02% to 8,862.54.
The yield on 10-year German bonds inched lower to 2.50%, French bonds decreased to 3.20%, the UK gilts moved down to 4.52%, and Italian bonds edged lower to 3.44%.
The euro increased to $1.15; the British pound was higher at $1.35; and the U.S. dollar was lower and traded at 81.69 Swiss cents.
Brent crude decreased $0.74 to $69.03 a barrel, and the Dutch TTF natural gas was higher by €0.38 to €36.36 per MWh.
Europe Movers
Kering SA decreased 2.3% to €176.18, LVMH fell 0.4% to €468.75, and Hermes International SCA declined 1.3% to €2,320.0.
Volkswagen AG dropped 1.2% to €90.60, Mercedes-Benz Group fell 1.6% to €51.18, Porsche Automobil Holding SE decreased 1.2% to €34.15, and Renault SA declined 1.2% to €43.70.
Europe Movers: Tesco PLC
Inga Muller
12 Jun, 2025
Frankfurt
Tesco PLC gained 1.3% to 390.20 pence after the grocery and general merchandise retailer released its first-quarter trading statement.
Sales in the quarter increased to £16.38 billion from £15.30 billion a year ago, as same-store sales climbed 4.6%.
Comparable sales at UK locations increased 5.1% to £12.3 billion, and at Booker wholesale rose 2.0% to £2.3 billion, and in Central Europe advanced 4.1% to £997 million.
Food sales up increased5.9% from a year ago, with a strong contribution from fresh food; non-food sales excluding toys surged 6.2%, with strong growth in home and apparel, benefiting from new and extended ranges as well as warmer weather conditions.
Tesco registered growth in all its channels, led by the online segment, where sales were up 11.5% from a year ago.
The company guided full-year adjusted operating profit to be between £2.7 billion and £3.0 billion, compared to £3.13 billion a year earlier.
The retailer bought back £448 million worth of its own shares, and the balance of £1.45 billion will be completed by April 2026.
Europe Movers: Tesco PLC
Inga Muller
12 Jun, 2025
Frankfurt
Tesco PLC gained 1.3% to 390.20 pence after the grocery and general merchandise retailer released its first-quarter trading statement.
Sales in the quarter increased to £16.38 billion from £15.30 billion a year ago, as same-store sales climbed 4.6%.
The company launched over 350 new products, including the new Finest Regional Italian range and enhancements to the company’s Fire Pit barbecue range.
Tesco registered growth in all its channels, led by the online segment, where sales were up 11.5% from a year ago.
The company guided full-year adjusted operating profit to be between £2.7 billion and £3.0 billion, compared to £3.13 billion a year earlier.
The retailer bought back £448 million worth of its own shares, and the balance of £1.45 billion will be completed by April 2026.
Japan Indexes Halt Four-Day Rally, Business Sentiment Deteriorates
Akira Ito
12 Jun, 2025
Tokyo
Tokyo stocks halted a four-day advance amid renewed worry about the U.S. trade policy uncertainty.
The Nikkei 225 Stock Average fell 0.7%, and the broader Topix eased 0.2% as investors reviewed the latest update on business sentiment.
The Business Survey Index for large manufacturing companies in the second quarter weakened further to 4.8% from 2.4% in the first quarter, the Cabinet Office reported Thursday.
The sentiment deteriorated to the lowest level since the first quarter of 2024, amid renewed trade tensions and trade barriers introduced by the Trump administration.
The weakening confidence signals mounting challenges for Japan's economy, which relies heavily on exports to the U.S. and other international markets.
Despite the current slump in the sentiment, executives at large manufacturing companies are optimistic about the immediate future.
Japan Indexes and Stocks
The Nikkei 225 Stock Average declined 0.7% to 38,173.09, and the broader Topix decreased 0.2% to 2,782.97.
Toyota Motor declined 1.6% to ¥2,616.50, Honda Motor decreased 1% to ¥1,400.50, and Nissan Motor eased 0.2% to ¥363.70.
Marubeni Corp. increased 0.4% to ¥2,880.0, Itochu Corp. fell 1.1% to ¥7,381.0, Mitsubishi Corp. decreased 0.7% to ¥2,857.0, and Mitsui & Company eased 0.1% to ¥2,940.0.