European Markets Slide Amid U.S. Tariff Uncertainty, But Euro Surges
London – European stocks finished the week on the back foot as renewed concerns over U.S. tariff policies rattled investor confidence. Major indices across the continent posted declines, with Germany’s DAX falling 1.6%, France’s CAC 40 slipping 1.2%, and London’s FTSE 100 shedding 0.5%. The pullback reflected growing nervousness over the potential impact of fresh trade tensions on economic growth.
Despite the broad sell-off in equities, currency markets painted a different picture. The euro surged to its strongest weekly gain since the financial crisis, buoyed by rising expectations of higher interest rates and looser fiscal policies across the eurozone. Meanwhile, Bitcoin, which had enjoyed a rally earlier in the week following President Donald Trump’s announcement of a U.S. strategic crypto reserve, dipped 2.7% but remained 11% higher over the week.
Stocks Under Pressure as Tariff Concerns Resurface
Markets had been enjoying a period of relative stability, but fresh uncertainty surrounding U.S. trade policy proved enough to send equities lower. Reports that Washington is considering imposing new tariffs on European imports reignited fears of a slowdown in global trade, weighing particularly on export-heavy sectors.
Germany's DAX, home to some of Europe's largest industrial and manufacturing firms, experienced significant selling pressure due to concerns that increased tariffs could significantly impact German exporters. Automakers and engineering firms led the declines, with shares in Volkswagen, Siemens, and BMW all closing lower.
In Paris, the CAC 40 saw declines in luxury and consumer goods stocks, as investors weighed the potential impact of higher trade barriers on demand for European products abroad. London’s FTSE 100 fared slightly better, helped in part by gains in commodity stocks, but still ended the session in negative territory.
Euro Defies Market Weakness with Strongest Weekly Gain Since 2008
While stocks struggled, the euro staged an impressive rally, posting its best weekly performance since the 2008 financial crisis. The single currency’s strength was driven by shifting expectations on monetary policy, with traders increasingly betting that the European Central Bank (ECB) will raise interest rates sooner than previously anticipated.
At the same time, signals from European governments suggesting a willingness to ease fiscal policies and boost public spending added to the euro’s momentum. “We’re seeing a fundamental shift in how investors perceive the eurozone’s economic outlook,” said a senior currency strategist at a major investment bank. “The combination of tighter monetary policy and looser fiscal policy is creating a more supportive environment for the currency.”
Bitcoin Pulls Back but Remains in Uptrend
Bitcoin, which had surged earlier in the week following the White House’s announcement of a U.S. strategic crypto reserve, faced a slight pullback on Friday. The cryptocurrency slipped 2.7%, reflecting some profit-taking among traders, but remained up 11% on the week, its strongest weekly performance in months.
Analysts see Bitcoin’s resilience as a sign of growing institutional acceptance, particularly after the U.S. government signaled its recognition of digital assets as part of a long-term strategic reserve. “There’s been a clear shift in sentiment around Bitcoin,” said a crypto market analyst. “Even with today’s dip, the broader trend remains positive, and we’re seeing more investors viewing it as a legitimate asset class.”
Looking Ahead
Investors now turn their focus to the coming week, with attention shifting to key economic data releases and further developments in U.S. trade policy. Markets remain on edge, with the possibility of tariff escalation likely to keep volatility elevated.
For now, the contrast between equities and the euro highlights the complex dynamics at play in global markets. While uncertainty lingers, the eurozone’s shift toward tighter monetary policy and looser fiscal measures could mark a turning point for European assets in the months ahead.