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.