European automakers’ global stock markets and stocks collapsed on Tuesday as President Trump’s extensive tariffs on Canada, Mexico and China took effect on Tuesday.
European stocks quickly retaliated with their own tariffs as investors weighed the prospects of a global trade war after China and Canada. Futures in the U.S. show that the S&P 500 will be slightly lower after the S&P 500 fell 1.8% on its worst day of the year.
The Euro Stoxx 50 index, which consists of the largest companies in the euro zone, fell by as much as 2.4%, with the worst performance in about four months. Germany's benchmark index DAX fell by as much as 2.6%, and nearly all earnings have made promises of more European military spending since the previous day.
Stocks of German automakers and suppliers have been hit particularly hard, as many assembly plants that own vehicles sold in the United States in Mexico. Volkswagen shares fell about 4%, while BMW shares fell more than 5%. Daimler trucks that own buses built by Freightliner and Thomas are gliding over 6%. The mainland is also a manufacturer of auto parts produced in Mexico, down 9%.
The U.S. dollar index is lower than other major currencies, down 0.7%. The Canadian dollar rose nearly 0.5% and rebounded against the dollar's one-month low yesterday.
But the Mexican peso slightly weakened the dollar, the fourth consecutive day of decline.
Oil prices also fell after OPEC oil cartel and some of its allies said on Monday that it would increase production. Brent crude oil on international benchmark fell to 1.6% per barrel to $70.47.
As investors remain vigilant about the U.S. economic outlook, yields on U.S. Treasury bills paid for borrowing fees on mortgages, credit cards and other interest rates. Tuesday's yield slipped further.
On a huge loss morning, some European defense companies proposed additional military spending, including a measure that would provide EU countries with 150 billion euros ($158 billion) for defense investment. Shares of German weapons maker Rheinmetall rose 1%, extending earnings by 14% from the previous day. Shares of British defence contractor BAE Systems grew 1% after climbing 15% on Monday.
