DE40: European Stocks Slide On Tariff Anxiety (04.07.2025)

European markets record sharp declines, as investors’ anxiety grows ahead of the looming tariff negotiation deadline. Donald Trump’s pledge to send letters warning that trade partners “will have to pay to do business in the US” has reignited fears in key sectors (automotive, mining, steel and aluminium). Most of the bluechip indices trade mid-session in the red (DAX: -0.7%; CAC40: -1%; FTSE 100: -0.2%; FTSE MIB: -0.9%; IBX35: -1.75%; SMI: -0.6%).

Within the Euro Stoxx 600, the IT sector is the biggest drag, with heavyweights like ASML Holding (-2.6%), SAP (-1%), and STMicroelectronics (-1.3%) pulling the index lower. Pharmaceuticals are the only sector in the green, thanks largely to a strong performance by Novo Nordisk (+1.3%).

Volatility in Euro Stoxx 600 sectors. Source: Bloomberg Finance LP

DE40 (H1)

DAX futures slipped below the 23.6% Fibonacci retracement level (H1) at the start of the European session and have remained below eversince. With trade tensions escalating ahead of the July 9 negotiations deadline, a strong rebound appears unlikely. Key levels to watch are 23,900 as resistance and 23,775 as support. The flat trend in both EMAs underscores the current lack of momentum and overall market stagnation in Europe.

Source: xStation5

Company news:

• Air France-KLM (AF.FR) has begun the process to raise its stake in Scandinavian airline SAS to a controlling 60.5%, acquiring shares from Castlelake and Lind Invest. The move aims to deepen European airline consolidation and strengthen competition with Lufthansa and IAG. The Danish government will retain a 26.4% stake. SAS, emerging from Chapter 11 restructuring, has shown improved performance and is expanding its fleet. Air France-KLM initially invested in 2023 with an option for majority control.

• Airbus (AIR.FR): Spain’s Iberia is seeing stronger-than-expected performance from its new Airbus A321XLR jets, enabling profitable long-haul routes previously unreachable for narrowbodies. The fuel-efficient aircraft has boosted flexibility, allowing off-season Washington flights and increased Boston frequencies. Iberia, part of IAG, received its first XLR in November and plans to expand the fleet despite minor delivery delays. The carrier, now a key contributor to IAG’s profit, will direct 70% of its €6 billion investment plan through 2030 toward new aircraft.

• Commerzbank (CBK.DE) plans to sell a significant risk transfer (SRT) tied to €2 billion in corporate loans to free up capital and strengthen its independence amid UniCredit’s renewed takeover interest. The €140 million SRT is part of CEO Bettina Orlopp’s broader strategy to cut €10 billion in risk-weighted assets by 2028. Moody’s recently upgraded Commerzbank’s rating, while SRT issuance is rising across Europe, with several banks exploring similar deals.