European Markets Plunged to Multi-Month Lows as Recession Fears Dominate Sentiment

Bridgette Randall
07 Apr, 2025
London

European markets opened sharply lower in Monday's trading and extended losses of the previous week amid fears of a global recession as the U.S.-led trade war intensified. 

Benchmark indexes in Frankfurt, Paris, Milan, and London plunged as much as between 7% and 4% after the European Union leaders vowed to respond to the U.S. import tax. 

The base tariffs of 10% went into effect this Sunday, and China's policymakers suggested that Beijing is ready to retaliate with additional tariffs if need be. 

Over the weekend, the Trump administration stepped up its defense of the import tax and added the Secretary of Treasury falsely claimed that most consumers will see very little impact of tariffs.

U.S. automobile makers are preparing to hike prices between $3,000 and $12,000 as early as next week, and food prices are already scaling higher between 15% and 30%. 

In addition, U.S. home construction costs are expected to jump at least 20% after the implementation of tariffs on goods from China, the European Union, and Canada.

Closer to home, on the economic front, investors reviewed the latest updates on retail sales in the eurozone, German industrial production, and the UK home price index. 

Germany's imports rose at a faster pace than exports in February, driving its trade surplus lower, according to data available from the Federal Statistical Office. 

Seasonally and calendar-adjusted goods exports increased 0.1% to €131.6 billion, imports declined 4.6% to €113.8 billion, and the trade surplus shrank to 13.6% to €17.7 billion from €20.5 billion a year ago, respectively.

Germany's industrial production declined 4% from a year ago in February, faster than the fall of 1.6% in January, the Federal Statistical Office said on Monday. 

The Halifax House Price Index in the UK rose 2.8% from a year ago in March, the slowest pace of increase since July 2024, according to Halifax and Bank of Scotland. 

On a monthly basis, prices fell 0.5%, and the average home price edged down to £296,699 from £298,602.

“Our customers completed more house sales in March than in January and February combined, including the busiest single day on record,” said Amanda Bryden, Head of Mortgages at Halifax.

Retail sales in the eurozone rose at a faster annual pace of 2.8% in February from the upwardly revised 1.8% in the previous month, Eurostat reported Monday. 

On a monthly basis, retail sales rose 0.3% after stagnating for three consecutive months. 

 

Europe Indexes and Yields

The DAX index decreased by 7.3% to 19,135.79, the CAC-40 index edged lower 6.1% to 6,831.57, and the FTSE 100 index declined by 4.5% to 7,688.93.

The yield on 10-year German bonds inched lower to 2.49%, French bonds decreased to 3.26%, the UK gilts moved down to 4.39%, and Italian bonds edged lower to 3.74%.

The euro increased to $1.10; the British pound was higher at $1.29; and the U.S. dollar was lower and traded at 84.66 Swiss cents.

Brent crude decreased $2.65 to $62.95 a barrel, and the Dutch TTF natural gas was lower by €2.33 to €34.20 per MWh.

 

Europe Movers

Banks, defense, and mining companies led the decliners in European trading. 

BNP Paribas decreased 3.5% to €66.53, Societe Generale dropped 2.9% to €33.59, UniCredit SpA declined 3.5% to €42.38, and Deutsche Bank fell 4.1% to €18.02. 

Rheinmetall AG declined 3.3% to €1,237.0, Rank Group PLC decreased 2.5% to 78.20 pence, MTU Aero Engines AG dropped 6.1% to €269.0, and Hensoldt AG plunged 4.3% to €55.25.