European Markets Face Stronger Headwinds Amid Trade and Geopolitical Tensions

Bridgette Randall
26 Nov, 2024
London

European stock markets headed lower amid rising investor anxiety surrounding economic outlook, geopolitical tensions, and political instability in the region. 

Benchmark indexes in Paris, Frankfurt, Milan, and London edged down as investors focused on a growing list of negative factors building in the background. 

Political parties ramped up their campaigns in Germany as far-right parties aggressively seek a change of leadership. 

France's Le Pen Party leader promised to bring down the minority government if changes are not made in the budget bill discussed in the parliament. 

The party is opposing pension reform as lawmakers struggle to lower the government deficit and meet the European Union guidelines by 2027. 

Moreover, rising trade tensions with the U.S. contributed to the market gloom after president-elect Donald Trump reiterated his commitment to impose 25% tariffs on all goods shipped from Mexico and Canada and an additional tariff of 10% on shipments from China. 

On the campaign trail, Trump also had threatened to levy punitive tariffs on European goods, targeting vehicles manufactured in the region and agricultural products.

In addition, investor sentiment was dented after a survey of private businesses last week showed a weak business environment and a decline in export orders. 

 

Europe Indexes and Yields

The DAX index decreased by 0.7% to 19,279.69; the CAC-40 index fell by 0.7% to 7,203.45; and the FTSE 100 index eased by 0.2% to 8,263.45.

The yield on 10-year German bonds edged lower to 2.20%, French bonds inched down to 3.02%, the UK gilts edged lower to 4.36%, and Italian bonds increased to 3.46%.

The euro edged higher to $1.05; the British pound inched up to $1.25; and the U.S. dollar strengthened to 88.53 Swiss cents.

Brent crude increased $0.69 to $73.61 a barrel, and the Dutch TTF natural gas rose by €0.27 to €48.17 per MWh. 

 

Europe Stock Movers

Automobile stocks dived for the third week in a row amid growing prospects of higher U.S. tariffs on luxury vehicles shipped from the European Union. 

Mercedes-Benz Group declined 1.4% to €52.11, BMW AG fell 1.5% to €68.24, Volkswagen AG dropped 2.6% to €80.24, and Renault SA decreased 1% to €39.52. 

UniCredit SpA increased 0.4% to €36.30 after the Italian bank made an unsolicited €10.1 billion bid to acquire the rival Banco BPM. 

Telecom Plus PLC dropped 3.4% to €20.60 despite the energy utility and telecom company reporting an increase in half-year pre-tax profit and reiterating its full-year outlook.

Halfords Group soared 11.9% to 144.66 pence after the UK-based automobile and motorcycle retailer reported higher-than-expected profit in the first half.

Profit in the interim period ending on September 27 increased to £21.3 million, and analysts estimated the company to achieve a £29 million profit for the full year. 

The vehicle dealer said it plans to increase its retail location footprint to 40 stores from the current 22 stores but did not specify the time period.