Market Wrap: Reshuffling in European Markets After Trade Turmoil

Date: February 23, 2026

Overview

European stock exchanges experienced a downward trend on Monday following the announcement of a new 15% global tariff by US President Donald Trump. This decision came after a Supreme Court ruling that blocked a significant portion of the previous tariff system, which had briefly improved market sentiment at the end of the previous week. The renewed trade tensions have heightened uncertainty and diminished risk appetite among investors, raising concerns about potential impacts on global growth and inflation expectations.

Market Performance

Major European indices are under pressure, with the Euro Stoxx 50 (EU50) down approximately 0.20% and Germany’s DAX falling about 0.44%. France’s FRE40 index, which had reached a new all-time high, is currently down 0.25%. The UK100 index is also down by 0.25%. The broad Stoxx 600 index is declining around 0.30%, with most sectors showing negative performance, particularly industrial companies sensitive to foreign trade.

Sector and Stock Movements

Sector performance is mixed. Luxury companies such as Kering (KER.FR) and LVMH (MC.FR) initially supported the French market with gains of 3.30% and 1.50%, respectively. However, aerospace and defense firms, including Airbus and Thales, are experiencing declines. Notably, Novo Nordisk (NOVOB.DK) has seen a significant drop of over 12% after its obesity drug CagriSema failed to meet primary endpoints in a clinical trial, raising competition concerns. Johnson Matthey (JMAT.UK) is down over 16% following a reduction in the sale price of its Catalyst Technologies division. Conversely, JD Sports (JD.UK) is gaining 5.00% after announcing a £200 million share buyback program, while Rolls-Royce (RR.UK) is down 1.20% ahead of its earnings report later this week.

Macroeconomic Indicators

Despite the market volatility, some macroeconomic data provided a glimmer of support for the European outlook. Germany’s Ifo business climate index rose to 88.6 points in February, slightly above expectations and marking the highest level since August, indicating cautious signs of recovery. Additionally, recent euro area PMI data released at the end of last week showed manufacturing returning to expansion territory after several months of contraction.

Outlook

European Central Bank (ECB) President Christine Lagarde has warned that unpredictable trade policies could disrupt investment and economic stability. Investors are advised to keep an eye on upcoming corporate earnings releases in Europe, which may provide further insights into market trends.

Additional Market News

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