Technology stocks pushed European equities to a one-week low on Monday as investors fled from riskier assets after U.S. President, Donald Trump hit back at a new round of Chinese tariffs last Friday.
The U.S heaped an additional 5% duty on some $550 billion in targeted Chinese goods and demanded that U.S. companies move their operations out of China.
Losses in Europe were not as dramatic as those in Asia overnight, after Trump on Monday said China had contacted U.S. trade officials overnight to say they wanted to return to the negotiating table.
But after falling half a percent at opening to hit its lowest level since Aug 16, the pan-European STOXX 600 index was down 0.33% by 0755 GMT.
“It’s exactly according to our base case scenario which is that trade war will continue to escalate, that’s also the reason why we don’t put too much value to the latest comments,”
“We don’t see a solution in the short term,” said Teeuwe Mevissen, a senior market economist at Rabobank.
Trading volumes were thinned out by a UK holiday .FTSE, but the declines were broad-based, with the technology index .SX8P, the most exposed to tariffs, the biggest loser with a 0.59% fall.
European stocks have been volatile throughout August and worries the U.S.-China conflict will force the economy into recession currently have the STOXX on course to lose around 4%.
On the other hand, investors continue to expect major central banks to step in to counter the impact.