The German stock market has been badly shaken as fears of a recession continue to mount. The German DAX opened with nearly a 10% loss on Monday morning before recovering 3% a few hours later.
27 EU trade Ministers met in Luxembourg on Monday to discuss the response.
EU Commission President Ursula Von der Leyen said the EU is ready for a “good deal” and underlined Europe’s readiness to negotiate with the US.
Deutsche Bank said in a strategy update seen by Euronews that, “the damage is undeniable, the degree of damage still unclear.”
It said it is difficult to assess the implications for markets moving forward “as this largely depends on if, when and by how much the US administration may de-escalate.”
Global stock prices have been falling for several days after US President Donald Trump announced sweeping tariffs across the world on 2 April that has seen trillions of euros wiped off stock markets.
“However, from an uncertainty perspective, we expect to have reached the point of maximum uncertainty today. We expect fewer new unknowns to emerge and the existing unknowns to be reflected in volatility levels,” Deutsche Bank’s statement continued.
The DAX has lost almost 20% in less than a week, and that all gains made since October have been erased.
German stock markets recently surged after the centre-right party Christian Democratic Union (CDU) and the centre-left Social Democratic Party (SPD) agreed a defence and infrastructure package worth hundreds of billions of euros, and to relax Germany’s so-called debt break.
According to government spokesperson Steffen Hebestreit at a press conference on Monday, incumbent Chancellor Olaf Scholz is in “close contact with both European heads of state and government and leading German companies. He has had many, many conversations about it in recent days.”
“We don’t want to bring about a trade war, but the goal should be to further reduce trade barriers. The second thing is that we must of course protect our domestic companies from what else is to come,” he said.
20% tariffs against the EU are to come into effect on Wednesday. The trading relationship between the US and EU is worth trillions. Both the European and Asian markets have been in freefall since last week.
CEOs of major firms including JPMorgan Chase have raised their expectations of a recession.
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