European Markets Reel Under Trump's Tariff Threats: What's Next?

The European STOXX 600 index fell 0.2% due to concerns over Trump's proposed tariffs on major trading partners. Automobile stocks were particularly affected, with French banks like Societe Generale and BNP Paribas also experiencing declines. France's CAC 40 index dropped 1% amid market uncertainty.

On Wednesday, Europe's STOXX 600 opened lower, down by 0.2%, as automobile stocks took another hit from U.S. President-elect Donald Trump's proposed trade tariffs. French banks also suffered sharp declines, dragging down the country's benchmark CAC 40 index.

Investors remain anxious about potential tariff targets after Trump's pledges against major trading partners such as Mexico and China. This concern has particularly impacted European auto stocks, which faced steep declines for the second consecutive day.

Meanwhile, French lenders like Societe Generale and BNP Paribas each fell around 2%. This has led to an increased risk premium demanded by investors to hold French debt, marking its highest point since 2012. Additional market tension is fueled by anticipated U.S. inflation data and recent cautious signals from the Federal Reserve.

(With inputs from agencies.)