European shares dive to 16-month low on trade war gloom

Bangkok Post Group

European shares plunged to a 16-month low on Monday as investors grappled with the possibility of a recession after sweeping tariffs announced by United States last week. - REUTERS

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00:00European shares plunged to a 16-month low early Monday.

00:06Investors sold off as US President Donald Trump showed no sign of backing down from

00:11his tariff plans.

00:12They are now grappling with the possibility of a recession.

00:16Traders also priced in interest rate cuts by the European Central Bank and Federal Reserve.

00:22The pan-European Stock 600 slumped around 6 per cent in early trade.

00:27Monday's fall comes after the index saw its steepest one-day percentage decline since

00:32the pandemic on Friday.

00:34Trade-sensitive Germany's benchmark DAX dove about 6.5 per cent early Monday, and it was

00:40among the worst-hit indexes.

00:42German bank stocks felt the pain, with Commerzbank and Deutsche Bank each down by a tenth.

00:49Arms makers had surged earlier this year on the prospect of higher defence spending, but

00:53they were also down Monday.

00:56German defence companies Rheinmetall and Henselt saw falls of over 10 per cent.

01:02Meanwhile Britain's FTSE 100 slumped over 4 per cent, continuing its slide from last

01:06week.

01:07Monash University business expert Robert Brooks says there are good reasons for the global

01:12sell-off.

01:13The first of those is the concern that the global macroeconomic settings are going to

01:20worsen.

01:21We're going to be in a world of lower global growth and we're going to be in a world of

01:27higher inflation for some economies.

01:30And I think the other reason why we're seeing such a strong market reaction is in part the

01:37policy uncertainty concern, because no one's crystal clear on where this is actually going

01:43to land in terms of the global trading arrangements.

01:48Trump told reporters over the weekend investors would have to take their medicine.

01:52He said he wouldn't do a deal with China until the US trade deficit was sorted out, sparking

01:57a fresh wave of selling in Asian markets.

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