Europe midday: Stoxx slumps as Trump tariffs turn markets red

(Sharecast News) - European shares were a sea of red at midday as US President Donald Trump announced the latest raft of tariffs in his trade war with the rest of the world.

The pan-regional Stoxx 600 index was down 1.42% at 538 at 1153 BST, with all major bourses following suit. Germany's DAX fell 2% and France's CAC 40 declined by 2.3%.

Trump ordered a 10% tariff on all countries except for a random list of 92 nations that would be subjected to higher levies - including a 39% hit on Switzerland. Canada was slapped with a 35% rate on goods not covered by the trade deal with the US and Mexico in a political retaliation for Ottawa's decision to recognise a Palestinian state.

However, in line with his recent actions, Trump said the measures would be delayed by a week, once again extending a deadline threat. Mexico was given another 90 day extension to come up with a deal.

"Global markets are heading lower as we close out a week of major volatility, with a raft of corporate, economic, central bank, and trade headlines hitting the newswires on a daily basis," said Rostro analyst Joshua Mahony.

"For the most part we have seen the strength of US tech earnings and positive trade agreements helping to prop up market sentiment for many markets, although that strength has started to falter as risks grow. With the DAX falling to the lowest level in a month, we have clearly started to see sentiment sour after relative stability."

"Part of the problem for markets is the question of who will pay for these tariffs, with the best-case scenario being that foreign businesses bear the brunt through lower margins. However, that is not entirely the case, with US consumers starting to feel the pinch through higher prices, while earnings from the likes of GM, Ford, and Apple have highlighted the fact that they are expected to lose billions."

In equity news, Engie shares slumped as the French energy utility posted lower half-year earnings.

Melrose Industries gained as the defence company beat profit forecasts on strong demand.

British Airways owner IAG gave up early gains after the company said it expected a slight rise in costs linked to air traffic control issues.

Pharma stocks were lower after Trump sent letters to 17 major drugs companies outlining how they should slash US prescription drug prices. The news saw shares in Novo Nordisk fall to an almost four-year low.

Reporting by Frank Prenesti for Sharecast.com