European Stocks Broadly Negative Amid U.S. Tariff Announcement

• Jefferies analysts have reduced their forecast for BASF
• German auto-parts manufacturer Continental expressed concerns about “high levels of uncertainty” regarding tariffs
• Mercedes-Benz is evaluating the potential withdrawal of its entry-level models from US

European markets are broadly negative as investors await President Trump’s tariff announcement. The volatility gauge VSTOXX rose 1.00% to 20.13, with Spain’s SPA35 the only other gainer, up 0.39% to 13279. Germany’s DE40 led declines (-0.77% to 22553.6), followed by Italy’s ITA40 (-0.59% to 37549) and France’s FRA40 (-0.42% to 7854.2). The EU50 fell -0.40% to 5230.6, while UK’s UK100 showed minimal losses (-0.03% to 8616.0).

The sell-off comes as Trump is set to announce “reciprocal tariffs”, which will take immediate effect following today’s 4 pm Eastern Time announcement. Reports suggest duties could reach 20% on most imports, with a specific 25% levy on foreign-made vehicles. European Commission President von der Leyen has warned of potential retaliation while preferring a negotiated solution.

Dax Returns by Sector. Source: Bloomberg Financial LP

Volatility is currently observed in the broader European market. Source: xStation

The German DE40 Index is attempting to regain bullish momentum after retesting the 78.6% Fibonacci retracement level, which now acts as resistance. Bulls will aim to recapture the ATH at 22,996, while bears will look for a move below the 61.8% Fibonacci retracement level after a test of the 30-day SMA at 22,829. The RSI is in bearish divergence, which could be broken if the current high surpasses the previous high. The MACD is starting to widen after a bearish crossover. Source: xStation

Market News

• Jefferies analysts have reduced their forecast for BASF’s (BAS.DE) Q1 Ebitda by approximately 5%, citing persistent demand weakness particularly in U.S. and agricultural end markets. The German chemical company faces headwinds from tariff uncertainties, though automotive demand remains relatively stable. Despite these challenges, analysts believe BASF can outperform competitors due to strategic catalysts including planned portfolio changes and divestments.
• German auto-parts manufacturer Continental (CON.DE) expressed concerns about “high levels of uncertainty” following President Trump’s announcement of 25% tariffs on global automotive imports to the U.S. The company projects first-quarter light-vehicle production volumes to decrease year-over-year in the mid-single-digit percentages, with its automotive division’s adjusted EBIT margin expected to hover around break-even. Continental anticipates improved free cash flow compared to the prior year and will release full Q1 results on May 6.
• Mercedes-Benz (MBG.DE) is evaluating the potential withdrawal of its entry-level models, including the GLA SUV, from the U.S. market in response to President Trump’s impending 25% auto tariffs. The German luxury automaker is weighing contingency plans as the duties would likely make sales of these less profitable vehicles economically unfeasible. This strategic shift aligns with CEO Ola Källenius’ upmarket focus on higher-margin models, though Mercedes remains committed to the U.S. market, particularly for its more profitable larger SUVs. Bloomberg Intelligence estimates Mercedes and Porsche could face a combined €3.4 billion ($3.7 billion) impact from the new tariffs.
• The automotive sector faces growing uncertainty as additional details about President Trump’s tariff plans remain unclear. Industry consultants report manufacturers are struggling to make strategic decisions without crucial specifics, particularly regarding Annex 1, which lists parts and components subject to the 25% duty. The White House has described April 3 as “Liberation Day,” with tariffs on “all cars that are not made in the United States” set to take effect immediately, while reports suggest a potential 20% levy on most imports could be announced after European markets close on Wednesday.

Other news coming from individual DAX index companies. Source: Bloomberg Financial LP

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