European stock markets confirm correction on their worst day since 2020 following China's response to tariffs.
The pan-European STOXX index closed down 5,1%, its biggest daily loss since the Covid-19-driven sell-off in 2020.
Reuters - European stocks fell on Friday, with the benchmark STOXX 600 index and Germany's DAX confirming correction territory, after China's retaliation to US tariffs intensified fears of a global recession triggered by the trade war.
China announced a series of countermeasures against tariffs imposed by US President Donald Trump, including additional 34% tariffs on all US products and export restrictions on some rare earth elements. This move came after the US adopted reciprocal tariffs on trading partners on Wednesday.
The pan-European STOXX index closed down 5,1%, its biggest daily loss since the Covid-19-driven sell-off in 2020. The index has fallen almost 12% from its all-time closing high on March 3, confirming that it is in correction territory.
The index's weekly loss of more than 8% was also the worst in five years, as investors avoided risk and sought safe-haven assets. Yields on eurozone government bonds fell sharply.
The German DAX index and the eurozone blue-chip index also confirmed the correction, falling 5% and 4,6%, respectively.
An indicator of eurozone stock market volatility rose 8,68 points to 34,2, the biggest one-day increase in more than two years.
"There have only been a few occasions when risk aversion has been worse than it is now," said Benjamin Ford, strategist at Macro Hive. "One was during the great financial crisis and the other was during Covid-19."
Tariff increases between the world's largest economies mark a sharp escalation in the global trade war, threatening to raise prices, disrupt supply chains, and reduce corporate profit margins.
In LONDON, the Financial Times index fell 4,95% to 8.054,98 points.
In Frankfurt, the DAX index fell 4,95% to 20.641,72 points.
In Paris, the CAC-40 index fell 4,26% to 7.274,95 points.
In Milan, the FTSE MIB index fell 6,53% to 34.649,22 points.
In Madrid, the Ibex-35 index fell 5,83% to 12.422,00 points.
In Lisbon, the PSI20 index fell 4,75% to 6.635,79 points.
