European stock markets moved lower on Friday as investors reacted to renewed trade tariff threats from US President Donald Trump and a sharp sell-off in the semiconductor sector following Nvidia’s decline on Wall Street.
The pan-European Stoxx 600 index was down 0.34% as of 1:40 p.m. London time, recovering from steeper losses earlier in the session. While Germany’s DAX and France’s CAC 40 each declined around 0.5%, London’s FTSE 100 managed a 0.3% gain.
The Stoxx Technology index led the market downturn, falling around 1.5% in afternoon trading. Semiconductor stocks bore the brunt of the losses after Nvidia saw $273 billion wiped off its market value following a major sell-off in the US on Thursday. In Europe, Dutch semiconductor firm BE Semiconductor dropped 1%, while Infineon and ASML each declined around 2.5%.
Markets were already under pressure following Trump’s announcement of potential 25% tariffs on European imports, including automobiles. The president also confirmed that Canada and Mexico would face sweeping 25% tariffs from March 4, with China subject to additional 10% duties starting the same day. The uncertainty surrounding these trade policies weighed on investor sentiment across Europe.
After meeting with UK Prime Minister Keir Starmer in Washington, Trump suggested that Britain might secure a trade agreement that could exempt it from these tariffs. He noted that Starmer had made strong efforts to negotiate favorable terms, but no final agreement has been reached.
In addition to trade concerns, investors monitored key economic data releases on Friday. German annual inflation remained steady at 2.8% in February, slightly above economists’ expectations of 2.7%. French inflation cooled to 0.8%, marking the lowest annual rate in four years. Meanwhile, German retail sales rose 0.2% in January, surpassing expectations.
Earnings season also remained in focus, with major European companies such as Allianz, Sberbank, British Airways owner IAG, Holcim, and UCB reporting their financial results.
Beyond Europe, Asian markets also reacted negatively to the tariff threats and semiconductor sector downturn. Japan’s and South Korea’s stock markets saw notable declines, with chipmakers like SK Hynix shedding 4.5%. In the US, futures indicated a slight rebound in equity markets after the previous session’s losses, with investors awaiting the Federal Reserve’s preferred inflation measure for further guidance on interest rates.
Despite the ongoing challenges, European markets have outperformed their US counterparts in February. The Stoxx 600 is up nearly 3% for the month, compared to declines in major US indices, including a 5.52% drop in the Nasdaq Composite.
With input from CNBC, the Wall Street Journal, and Bloomberg.
