Europe: Stocks down with bank and healthcare drag, US-EU tariffs in focus

[BENGALURU] European shares closed lower on Friday (Jul 11), as losses in banks and healthcare stocks weighed at the end of a week marred by US President Donald Trump’s tariff announcements, with the European Union (EU) also awaiting a letter on levies from Trump.

The pan-European Stoxx 600 index closed 1 per cent lower, snapping a four-day win streak and clocking its biggest single-day decline in over three-months.

Germany’s DAX and Britain’s FTSE both came off their record high levels seen this week to fall 0.8 per cent and 0.4 per cent, respectively, on Friday.

The EU initially hoped to strike a comprehensive trade agreement with the US, including zero-for-zero tariffs on industrial goods, but months of difficult talks have led to the realisation it will probably have to settle for an interim agreement and hope something better can be negotiated.

“We had expected it to be approved on Wednesday, so the longer this drags on, the more we worry that Trump isn’t on board, and the EU could get hit with significantly higher tariffs yet again,” TD Securities analysts said in a note.

HSBC estimates that a 10 to 20 per cent hike in import tariffs by the US on regional goods could suppress the overall revenue of the FTSE Europe index by 1.2 per cent-2.4 per cent and the net income in the range 4 to 6 per cent.

Risk sentiment took a hit globally after Trump announced a 35 per cent tariff rate on all imports from Canada from Aug 1 and floated a blanket 15 per cent or 20 per cent tariff rate on other countries, up from the current 10 per cent baseline rate.

European banks were at the forefront of the selloff with a 1.8 per cent fall. Norway’s largest bank DNB lagged with an 8.8 per cent slide after reporting an earnings miss for the second quarter, hit by weaker than expected interest income and higher loan losses.

Healthcare stocks, which hold a weight of more than 12 per cent on the Stoxx, also saw heavy losses on Friday with Danish drugmaker Novo Nordisk down 3.6 per cent.

A rare bright spot was energy, with shares of BP up 3.4 per cent after the British oil giant said its second quarter upstream output is set to be higher than previously forecast.

Despite Friday’s losses, most European blue-chip bourses clocked weekly gains in excess of 1 per cent. Automobiles and mining stocks were the top performing sectors in Europe this week and telecoms the worst.

Global investors have been on edge as Trump has broadened his trade war this week, setting new tariffs on a number of countries, along with a 50 per cent tariff on copper.

In other single stock news, Gjensidige Forsikring rose 7.8 per cent to a record high after the Norwegian insurer reported better-than-expected top-line results for the second quarter. REUTERS