European stock markets experienced a downturn following Donald Trump’s second change in tariff policy, which led to significant investor uncertainty. In contrast, the euro is on track to record its largest weekly gain since the financial crisis. This shift was largely influenced by weak factory data in Germany, coupled with ongoing economic uncertainties in the country. France’s Cac 40 also dropped by 1.2%, while London’s FTSE 100 saw a slight decrease of 0.5% on Friday morning. The S&P 500 index fell by 1.8% overnight, marking its lowest level since early November. Additionally, concerns about a possible trade war with the US have contributed to widespread investor anxiety.

The uncertainty surrounding Trump’s economic policies has been a major concern for investors worldwide. This follows a cycle of tariff impositions and reversals. Despite this, the euro has seen a surge, with investors anticipating higher interest rates and a potential decline in US economic growth due to Trump’s trade policies. European countries, especially Germany, have announced plans to increase defence spending, which has also helped strengthen the euro. However, experts warn that the macroeconomic news points towards weaker global growth. US tariffs could slow down the Chinese economy, while the short-term benefits of Germany’s increased spending are uncertain. Tech stocks have also been affected, with the Nasdaq index falling into a correction. In contrast, oil prices had their biggest weekly drop since October due to concerns over slower growth, although they rallied by 1.6% on Friday. Lastly, Bitcoin prices experienced a 2.7% decline on Friday, despite a 11% increase over the last week following Trump’s announcement of a strategic crypto reserve in the US.

Source: https://www.theguardian.com/business/2025/mar/07/european-markets-euro-trump-tariff-ftse-100-dax