European share markets fell on Thursday after US President Donald Trump threatened to impose 25 per cent tariffs on imports from the EU.
The STOXX 600 index dropped 0.6 per cent as European stocks weakened across the board as the White House slammed the EU for “screwing” the United States.
Despite the European decline, global stocks remained broadly steady following Nvidia’s quarterly results, which contained no major surprises. The euro shed 0.1 per cent but stayed within its trading range from last week.
Nvidia shares were down 1.1 per cent in pre-market trading, after falling 1.5 per cent after the bell on Wednesday, despite the chipmaker providing a strong growth forecast.
Trump created confusion over looming duties on Canada and Mexico on Wednesday, signalling they would take effect on April 2, suggesting a month-long extension.
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Trump is floating a trade war on the EU
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However, a White House official later contradicted this statement. The official said the previous March 4 deadline for the levies remained in effect “as of this moment”.
This contradiction has stirred further uncertainty about US trade policy direction. Markets are now left guessing which deadline will ultimately be enforced.
The mixed messages over tariffs come as trading partners prepare for potential significant changes to trade arrangements.
Yesterday, Donald Trump floated a 25 per cent “reciprocal” tariff on European cars and other goods, further unsettling markets.
Michael Brown, a senior research strategist at Pepperstone, broke down the growing economic tensions between the US and EU.
“We’re almost in a situation where there is so much news that it’s leaving traders paralysed, because they don’t know what to focus on what is a negotiating gambit and what is a serious policy proposal,” he said.
The US dollar has been under pressure in recent weeks, whilst Treasury yields have fallen amid soft economic indicators.
Growth concerns stemming from Trump’s tariff plans have compounded these market movements.
Traders have increased their bets for Federal Reserve interest rate cuts, now anticipating two quarter-point reductions this year.
The first cut from the Federal Fund Rate’s 4.25 per cent to 4.5 per cent range is likely to come in July, according to market expectations.
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“Markets are starting to feel less confidence about US growth,” said Shoki Omori, chief global desk strategist at Mizuho Securities.
The US dollar index rose 0.17 per cent to 106.64, extending its climb from a two-and-a-half month low reached earlier this week.
Markets will now focus on US gross domestic product (GDP) and durable orders data for signs of economic slowdown.