Europe open: Stoxx rallies despite tariff war; Kering tanks on Gucci pick
European shares rallied at the open on Friday as US tariffs remained in focus and traders assessed an unexpected contraction in UK economic growth in January.
The pan-regional Stoxx 600 index was up 0.33% to 542. Germany’s DAX was 0.37% higher and France’s CAC 40 rose 0.38%.
Shares closed lower on Thursday, after the White House threatened to place a 200% tariff on EU wine, champagne and spirits in response to the bloc's own retaliatory measures.
The day before Brussels had threatened to impose levies on US exports of whiskey in a riposte to US duties on aluminium and steel that had gone into effect the night before.
“The song remains the same. Another day, another tariff threat and more market tantrums in response,” said Richard Hunter, Head of Markets at Interactive Investor.
“Enter the President. The latest tirade threatened 200% tariffs on alcoholic products from the EU, while confirming that the planned broader set of tariffs due to take place on 2 April would be going ahead. The constant barrage of measures over recent weeks which are likely to hamper the economy have already disrupted markets, with the benchmark S&P500 now joining the Nasdaq in correction territory.”
In economic news, UK GDP in January contracted by 0.1% from December’s growth of 0.4% and expectations for 0.1% growth.
“The UK economy is flatlining at best, and this report does not consider the market turmoil since President Trump entered the White House,” said XTB research director Kathleen Brooks.
“ECB President Christine Lagarde warned that President Trump’s decisions could hurt economic growth, and a trade war would have ‘severe consequences’ for the global economy. We may see key global figures stand up to President Trump in the coming weeks, although it is hard to know if this will have a moderating influence on him.”
In equity news, BMW shares fell as the German automaker forecast profit margins would be below expectations due to the impact of US tariffs and anticipating an even more intense trade war.
Kering shares tanked as investors expressed disappointment on the appointment of Demna Gvasalia as design chief of its Gucci brand in an effort to revive its fortunes.
Reporting by Frank Prenesti for Sharecast.com