DE40: potential Chinese tariffs on imported EU cars put pressure on DAX 📣

• DAX is down 0.30% at the time of publication
• Potential Chinese tariffs remain on the table
• Lagarde from the ECB takes a dovish stance

European indices are down on Wednesday, with declines ranging from approximately 0.30% to 0.50%. The largest selling pressure is observed on indices from France, Poland, Austria, and the UK. Despite the dovish stance of ECB President Christine Lagarde, European investors' attention is focused on potential Chinese tariffs and higher inflation from the UK.

Chinese tariffs on EU cars

Recent information from Chinese lobbyists suggests that China may consider raising temporary tariffs on imported cars with large engines to a maximum of 25%. The China Chamber of Commerce to the EU stated that this potential move has implications for European and American car manufacturers and follows the Biden administration's increase of tariffs on Chinese electric cars to 100%.

As a result of these events, we are seeing the extension of yesterday's declines for all major car manufacturers and the broader automotive market. The biggest losers are German manufacturers like Mercedes-Benz (MBG.DE), BMW (BMW.DE), and Volkswagen (VOW1.DE), as well as French manufacturers like Renault (RNO.FR).

Lagarde's speech

European Central Bank President Christine Lagarde expressed confidence that eurozone inflation is under control due to the diminishing impact of the energy crisis and supply chain bottlenecks. Lagarde indicated that a rate cut is likely next month. With this confirmation, investor attention is now focused on the outlook for the coming months. The president also emphasized that Europe must prepare for the potential re-election of Donald Trump as US president, which could have significant consequences, including the imposition of tariffs.

DAX

At the time of publication, the German DAX index is down 0.30% at 18,770 points. For several trading sessions, the index has been in a slight downward trend after a failed attempt to break the 19,000-point level. Considering the equally low volatility on Wall Street, it seems the market is waiting for a clear signal, which could be the results from Nvidia after today's session close in the US.

Source: xStation 5

Company news

The automotive industry is experiencing another day of declines under the pressure of potential Chinese tariffs on EU cars. Mercedes-Benz (MBG.DE) is down 1.20%, BMW (BMW.DE) is down a larger 1.80%, and Volkswagen (VOW1.DE) shares are down 0.90%. French Renault (RNO.FR) is trading lower by as much as 4.60%.

Source: xStation 5

British retailer Marks & Spencer (MKS.UK) reported a 58% rise in annual profit on Wednesday, surpassing market expectations, as its strategy to reshape the business resulted in robust sales growth in both its food and clothing divisions.

Source: xStation 5