European stocks hit by Trump tariff threat

Monitoring Desk

NEW YORK: European stocks were hit Wednesday by US President Donald Trump’s renewed threat to slap auto tariffs on imported cars and a gloomy auto sales forecast.

But Wall Street finished flat little moved either by strong earnings or a rising death toll blamed on a virus.

Markets in London, Frankfurt and Paris closed lower after Trump once again wielded the threat of a 25 percent punitive tax on European cars if Brussels fails to agree to a trade deal.

Analysts at Charles Schwab brokerage described traders as fairly cautious as the region mulled “the possibility of a showdown between Europe and the US.”

As trading wound down in Europe, the auto sector association ACEA contributed to the wary mood with a forecast that European new car sales would fall by two percent this year, their first decline in seven years.

Shares in carmakers Volkswagen slid by 1.2 percent and Daimler lost more than two percent, with Mercedes-parent Daimler also warning that its 2019 earnings could fall short of expectations owing to massive new charges related to diesel emissions cheating.

And after markets closed, Volkswagen got more bad news after a Canadian court ordered the carmaker to pay Can$196.5 million (US$150 million) after the automaker pleaded guilty to violating environmental laws in the long-running emissions cheating scandal.

Before Trump issued his latest trade threats, Frankfurt’s DAX 30 index had hit a record high at 13,640.06 points, with dealers hailing a recent China-US trade deal.

“German companies are among the most exposed to global trade worries, and therefore those enjoying the biggest bounce since US-China relations improved at the back end of last year, resulting in this month’s trade deal,” said Markets.com analyst Neil Wilson.

In Davos, Switzerland, European Commission President Ursula von der Leyen highlighted prospects for a wider trade truce, saying that an accord between Europe and the United States was also possible within weeks. (AFP/APP)