European shares ended solidly lower on Friday, with major regional equity markets erasing their gains for the week as uncertainty surrounding U.S. trade policy once again weighed on sentiment and seemed to cloud the economic outlook.
Where are the major benchmarks trading?
The Stoxx Europe 600 Index /zigman2/quotes/210599654/delayed XX:SXXP -0.73% fell 0.8% to 382.26 in its second straight daily drop. The day’s decline turned the pan-European index 0.3% lower for the week. For the month, it declined by 2.4% in its weakest monthly performance since March.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.3452% fell sharply against the dollar, trading at $1.1599, compared with $1.1670 late Thursday. The dollar was supported by ongoing turmoil in emerging markets, as well as being seen as a safe-haven trade amid the political uncertainty.
Germany’s DAX /zigman2/quotes/210597999/delayed DX:DAX -0.54% dropped 1% to 12,364.06. For the week, it fell 0.3%, bringing its August decline to 3.5%.
France’s CAC 40 Index /zigman2/quotes/210597958/delayed FR:PX1 -0.98% fell 1.3% to 5,406.85. It lost 0.5% for the week and 1.9% for August.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -1.27% fell 1.1% to 7,432.42, its third straight daily drop. The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.1902% traded at $1.2975, compared with $1.3009 late Thursday.
For the week, the FTSE fell 1.9%, a decline that took it to its lowest close since April. For August, it fell 4.1%, its biggest drop since August 2015.
Italy’s FTSE MIB stock index /zigman2/quotes/210598024/delayed IT:I945 -1.34% shed 1.1%. As has recently been the case, the country’s banks were among the biggest drags as investors fretted over the state of the country’s finances. Unione di Banche Italiane SpA /zigman2/quotes/200732627/delayed IT:UBI -3.86% fell 0.5% and UniCredit SpA /zigman2/quotes/200769686/delayed IT:UCG -3.87% was off 1.3%.
What drove trading?
Bloomberg on Thursday reported that U.S. President Donald Trump wants to move ahead with his plan to place tariffs on $200 billion in additional Chinese imports as early as next week. Companies have until Sept. 6 to comment on the proposed duties and Trump wants to impose the tariffs once that deadline passes.
In the same interview, Trump threatened to withdraw the U.S. from the World Trade Organization.
Separately, Trump rejected a recent offer from the EU to eliminate car tariffs if the U.S. did the same, calling it “not good enough.” In addition, U.S. and Canada officials remained apart on key points of contention in talks over a revised North American Free Trade Agreement, as they gathered for a fourth straight day to meet a White House-imposed deadline.
The tensions added to the geopolitical risk in the market, which is also fretting over Italy and the country’s high debt levels as it prepares a budget that could conflict with EU deficit rules.
The U.K.’s Brexit negotiations also remained in focus following a meeting between EU negotiator Michel Barnier and U.K. Brexit Secretary Dominic Raab, where they claimed progress , but found no agreement on the issue of the Irish border.