Stocks in Europe Experience a Decline Due to Trade Deal Worries and Subpar Earnings Reports
In a day marked by trade tensions and mixed economic data, European stock markets ended on a negative note on Friday. The pan-European Stoxx 600 closed 0.24% lower, while the U.K.'s FTSE 100, Germany's DAX, and France's CAC 40 closed lower by varying percentages.
The current status of trade negotiations between the European Union and the United States is that they have reached a new trade deal, establishing a 15% tariff on European imports, excluding pharmaceuticals and metals. This agreement, while viewed positively by European leaders and businesses for providing greater clarity and market stability, has caused concerns among investors, leading to a dip in stock market performance. For instance, the Dutch Prime Minister highlighted the benefit of improved predictability for EU businesses, particularly given the Netherlands' significant exports to the US (€50 billion annually).
However, the EU-US trade negotiations have also been met with optimism. European Union officials are optimistic about a possible trade deal with the United States, but President Trump’s position is seen to have hardened. If talks fail, member states of the European Union have adopted a list of countermeasures targeting €93 billion worth of U.S. products, effective August 7.
In the UK market, several companies including 3i Group, Informa, St. James's Place, RightMove, Fresnillo, Convatec Group, and Glencore closed down by 1.3 to 3%. In the German market, Puma tanked nearly 16% due to weak demand for its products and concerns about U.S. tariffs. On the other hand, Kering, Eurofins Scientific, LVMH, Pernod Ricard, Stellantis, Edenred, Renault, Teleperformance, Hermes International, Dassault Systemes, EssilorLuxottica, and Accor closed higher by 1 to 4.5%.
Retail sales in the U.K. showed a less than expected increase, with a rise of 0.9% on a monthly basis, while consumer sentiment dropped, weakening U.K. stocks. Excluding auto fuel, retail sales advanced 0.6%, but was also weaker than economists' forecast of 1.2%.
Meanwhile, the Ifo Business Climate Index for Germany edged up to 88.6 in July, marking the highest reading since May 2024. This positive development was offset by the GfK Consumer Confidence Index for the UK, which edged down to -19 in July 2025 from -18 in June.
In the French market, Michelin closed down 3.3%, while Switzerland's SMI settled 0.75% down. Among other European markets, Belgium, Greece, Netherlands, Norway, Poland, Portugal, Russia, and Turkiye closed weak.
Notably, Publicis Groupe, Airbus, STMicroElectronics, and Schneider Electric also ended notably lower. On a positive note, Natwest Group closed stronger by about 3.5% after upgrading its full-year outlook and launching a share buyback program.
Carrefour reported a modest increase in net sales for the second quarter of 2025, with a 2.8% rise in net sales for the first half of 2025. The French consumer confidence improved marginally in July, with the consumer sentiment index rising to 89.
In conclusion, European stocks closed lower on Friday due to concerns about trade negotiations and disappointing earnings updates. The EU-US trade negotiations, while providing a level of clarity, have also caused apprehension among investors, contributing to the negative market performance. The impact of these developments on the long-term market trends remains to be seen.
Investors are concerned about the potential impact of the EU-US trade deal on businesses, leading to a dip in stock market performance. This agreement could influence the future of investment and business operations within both regions.
Despite the negative overall performance of European stock markets on Friday, individual companies such as Natwest Group have shown positive growth due to strong financial outlooks and strategic initiatives.
