Introduction
European shares experienced a decline on Wednesday, driven largely by losses in the healthcare sector, as investors awaited crucial tariff announcements from U.S. President Donald Trump that could potentially hinder global growth and inflate prices.Context
The pan-European STOXX 600 index closed down 0.5%, while Germany's trade-sensitive DAX fell 0.7%. Investors were particularly focused on Trump's announcements regarding reciprocal tariffs on global trading partners, which will be enforced immediately upon their disclosure at 2000 GMT. The market has shown volatility this week in response to these anticipated tariffs, with the STOXX 600 currently hovering around two-month lows and approximately 5.1% below its all-time high recorded in March.Developments
Filip Carlsson, a quantitative strategist at SEB, noted that the impending tariffs would influence market risk appetite and emphasized the importance of identifying the potential pressure points. He also mentioned that a noticeable shift towards European equities earlier this year was beginning to wane.French Industry Minister Marc Ferracci stated that Europe would react to the tariffs in a "proportionate manner", while British Finance Minister Rachel Reeves indicated a cautious approach to countering tariffs to avoid jeopardizing ongoing trade negotiations. The head of the European Central Bank (ECB) warned that Trump's tariffs would have negative repercussions globally, although ECB policymaker Francois Villeroy de Galhau suggested they would not disrupt the current decline in European inflation.
The healthcare sector was particularly hard-hit, falling 1.7% to reach its lowest level of the year, with prominent stocks such as Sanofi and Novartis each dropping about 1.6%. Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, mentioned that the impending tariffs were causing market jitters, particularly affecting pharmaceutical stocks. Novo Nordisk emerged as the largest negative contributor to the benchmark index, decreasing by 2.6%.
In a separate development, 25% tariffs on U.S. auto imports are set to take effect on April 3, resulting in a slight decline of 0.1% in the automobile and parts sector.
Meanwhile, Svitzer shares soared by 30.2% after Denmark's A.P. Moller Holding announced a cash offer of 9 billion Danish crowns for the towage and marine service provider. Additionally, shares in another company rose 3% following news that a Canadian fund was in discussions with shareholders regarding a potential new takeover attempt.