By Medha Singh and Sukriti Gupta
(Reuters) – European shares hit a two-month low in early trade on Monday, as cautious investors fled risky bets after U.S. President Donald Trump said that tariffs would target all countries, fuelling fears of a global economic slowdown.
The pan-European STOXX 600 index fell 0.8%, as of 0802 GMT, extending losses to a fourth straight session, with the volatility index in the region touching a more than two-week high.
Wall Street futures also pointed to a sharply lower opening, as Trump’s comments over the weekend prompted a rush to the safety of gold and Japanese yen. [MKTS/GLOB]
Investors are bracing for reciprocal tariffs on U.S. trading partners on April 2, after Trump has already imposed tariffs on aluminum, steel and autos, along with increased tariffs on all goods from China.
The aggressive tariff scenario prompted Goldman Sachs to lower its U.S. and euro area GDP forecast and add an additional quarter-point rate cut to its forecasts for both, the Federal Reserve and the European Central Bank (ECB) on Monday.
“He has obviously gone for a stronger, more severe tone than he was aiming for this time last week. Any optimism that he was going to take a slightly softer approach seems to have been completely wiped out,” said Fiona Cincotta, senior market analyst at City Index.
The likely implementation of U.S. tariffs on April 2 should mark the beginning of a march towards independence for Europe, ECB head Christine Lagarde said.
Traders added to their ECB rate cut bets, now expecting rates will ease by 65 basis points by 2025-end, from 61 bps on Friday.
The STOXX 600 index is set to round off the first quarter with 5.6% gain, widely outperforming a 5.1% drop in its U.S. counterpart, helped by German fiscal boost and prospects of slowing U.S. growth due to tariff impact.
Most major European sectors were trading lower, barring a 0.6% rise in the defensive utilities’.
Fortnox jumped 35% after the Swedish accounting software firm said its largest owner First Kraft and private equity group EQT had made a joint cash offer for it.
Aston Martin rose 7.5% after the carmaker said it would raise over 125 million pounds ($161.9 million) through funding from Chairman Lawrence Stroll’s investment vehicle and the sale of its minority stake in the Formula One team he owns.
Investors will also assess Germany’s consumer price index data later in the day.
(Reporting by Medha Singh in Bengaluru; Editing by Rashmi Aich)
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