European Markets Tumble Amid Trade Tensions

European shares plummeted to a 16-month low due to impending recession fears after the U.S. imposed sweeping tariffs. President Trump remains firm on his tariff strategy, prompting market reactions and declines in European and Asian indices, with significant impacts on German banks and defense sectors.

On Monday, European stocks experienced a sharp decline, reaching a 16-month low as investors feared an impending recession influenced by the United States' announcement last week of extensive tariffs.

U.S. President Donald Trump remained steadfast in his plans despite retaliatory measures from China. This led investors to anticipate possible interest rate reductions by both the European Central Bank and the Federal Reserve. The pan-European STOXX 600 fell 5.8% at 0722 GMT, marking its most significant one-day percentage drop since the onset of the COVID-19 pandemic.

Germany, heavily reliant on trade, particularly suffered, with its benchmark index plummeting 6.6%. Commerzbank and Deutsche Bank bore severe hits, losing 10.7% and 10% respectively. Defense-related companies, which had previously gained from potential increases in defense spending, were also heavily impacted. Rheinmetall saw a 23.7% decrease, the most substantial on the STOXX 600, while companies like Hensoldt and Renk recorded declines between 17% and 21%.

(With inputs from agencies.)