European Markets Tumble as Trade Tensions Escalate and Economic Indicators Disappoint

European stock markets plunged sharply on Friday, with major indices and sectors suffering broad-based losses as escalating trade tensions between the U.S. and China stoked fears of a global recession. The latest tariff exchanges and weak economic data fueled a sweeping market sell-off, driving several European benchmarks to fresh multi-month lows.

The sharp decline followed U.S. President Donald Trump's decision to impose an additional 34% tariff on Chinese imports, effectively raising total U.S. levies against China to 54%. In retaliation, China’s finance ministry announced matching tariffs on all U.S. goods starting April 10. The tit-for-tat measures heightened concerns over a global trade war, prompting investors to exit risk assets en masse.

European leaders were quick to voice opposition. French President Emmanuel Macron reportedly urged domestic companies to reconsider or suspend planned investments in the United States. The prospect of escalating protectionism and its implications for international trade triggered selloffs across all major sectors, including banking, mining, energy, pharmaceuticals, retail, and real estate.

The pan-European Stoxx 600 index dropped 5.12%, its steepest decline in months. London's FTSE 100 and Frankfurt's DAX lost 4.95% each, while Paris' CAC 40 fell 4.26%. Switzerland’s SMI shed 5.14%.

Losses extended across other European markets, with indices in Austria, Italy, the Netherlands, and Sweden plunging between 3% and 7%. Russia and Turkey closed down 2.5% and 1.1%, respectively.

In the UK, heavyweights including Rolls-Royce Holdings, Fresnillo, Antofagasta, and Glencore saw steep declines of 9–13%. Banks and energy companies like Barclays, BP, Anglo American, and Weir Group also posted significant losses, ranging from 7% to 9%. Meanwhile, JD Sports Fashion defied the trend, gaining nearly 3%.

Germany’s market was equally battered. Deutsche Bank plummeted nearly 10%, with other major companies such as Siemens Energy, Infineon, Allianz, and Zalando declining 5–8%. Auto and healthcare sectors also took hits, with BMW, Daimler Truck, Merck, and Siemens Healthineers down significantly.

In France, Societe Generale fell over 10%. Major players like Airbus, TotalEnergies, BNP Paribas, and Kering also ended the session with sharp losses, reflecting widespread investor pessimism.

Economic data across the region added to the negative sentiment. In the UK, construction PMI from S&P Global showed a sustained downturn in March. The index rose slightly to 46.4 from February’s 44.6, but remained below the 50-mark that separates expansion from contraction. Civil engineering activity deteriorated at the fastest pace since October 2020, with commercial construction seeing its steepest fall since early 2021.

Germany’s economic indicators were equally disappointing. Factory orders stagnated in February despite expectations of a 3.4% increase. New orders remained flat after a 5.5% drop in January. Meanwhile, Germany’s construction PMI fell to 40.3 in March, down from 41.2, signaling a steeper contraction in the sector.

The auto sector, a key pillar of the German economy, also faltered. New car registrations dropped for the fifth consecutive month, falling 3.9% year-on-year in March to 253,497 units.

France offered a mixed picture. While industrial production grew 0.7% month-on-month in February, helped by a 1.4% rise in manufacturing output, the automotive sector faced headwinds. Passenger car registrations plunged 14.5% year-on-year, marking the third straight month of decline.

The convergence of trade uncertainties, tariff hikes, and weak domestic economic data across the continent has heightened investor unease. With fears of a global recession mounting, analysts warn of continued market volatility in the weeks ahead, particularly if trade negotiations between the U.S. and China remain stalled.