Stock markets around the world fell sharply last Friday after China imposed 34 per cent tariffs on US imports in response to Donald Trump’s measures.
The S&P 500 index fell 4.8 per cent, the Dow Jones lost 1,719 points (-4.3 per cent) and the Nasdaq dropped 4.9 per cent. European indices lost more than 4 per cent, oil fell to its lowest since 2021, and copper and other commodity prices fell on recession fears.
The stock plunge continued on Monday, with defence stocks taking the brunt of the blow amid a collapse in European stock markets – in particular, shares in Germany’s Rheinmetall AG plunged 27 percent, the sharpest one-day drop on record.
Shares in France’s Thales SA, Germany’s Hensoldt AG, Italy’s Leonardo SpA and Sweden’s Saab AB also collapsed.
“The hopes of defence companies in Europe have collided with reality. Increased defence spending has yet to materialise and we are now in for a sell-off in equities in general,” Chris Beauchamp, chief market analyst at IG Group, commented.
In 2024, the European Union’s defence spending was €326bn, or 1.9% of the bloc’s GDP, according to the European Defence Agency. In the next four years, the EU plans to increase spending: in early March, the countries of the community approved a plan to rearm ReArm Europe worth €800bn, which was presented by the head of the European Commission Ursula von der Leyen.
The collapse in global markets was triggered by the tariffs announced by US President Donald Trump. A Reuters report that US company Howmet Aerospace Inc. that supplies parts for Airbus SE and Boeing Co. aircraft declared force majeure because of Trump’s tariffs further dampened the mood.
Germany’s DAX stock index collapsed nearly 10% in early trading on Monday. It crashed more than 8 per cent for the week, the biggest weekly drop since the fighting in Ukraine began.
Europe’s Stoxx 60 index fell 5.8 per cent, the decline continuing for the fourth consecutive session. The Stoxx 60 came close to its sharpest one-day drop since the COVID-19 pandemic began.
Commerzbank and Deutsche Bank lost 10.7 and 10 per cent respectively on Monday.
Trump, commenting on falling stock markets, said: “I don’t want anything to go down. But sometimes you have to take medicine to fix something.”
Since March, the US imposed 25% tariffs on steel and aluminium imports from the EU worth $28 billion have been in effect. On April 2, Trump also announced the imposition of “mirror” tariffs on dozens of countries. For the EU, the tariff will be 20 per cent.
Europe is ready to respond to the tariffs, the head of the European Commission Ursula von der Leyen said but suggested “to move from confrontation to negotiation.”
