Maybe “crash” is a bit hyperbolic, but “plunge” is entirely fair.
European equities fell the most since early December on Friday as trade tensions reared their ugly head. The EuroStoxx 50 fell some 3% and was down more than that with half an hour to go before the close.
It was the largest one-day loss for the gauge since December 6, the day after news that Canada arrested Huawei CFO Meng Wanzhou helped trigger a flash crash in S&P futures on the reopen following a national day of mourning in the US for former President George HW Bush.
Basic resources and auto shares were mauled to close the week. In fact, Friday looks like the third-worst day for the Stoxx 600 Auto & Parts index since Brexit.
Obviously, European autos have been laboring under the threat of 232 tariffs from the Trump administration for a year and any sign of aggression from the White House on trade is a death knell for the space.
The VStoxx jumped nearly 40% on Friday (and forgive us for quoting that in percentage terms, but it just sounds better on days like today) to the highest since May, the last time Trump and Beijing were at one another’s throats.
As ever, the silver lining is that the more acute the market turmoil, the stronger the case for more monetary accommodation. And when it comes to Europe, that case was already pretty strong.
Earlier, 10-year German yields fell to -50bp. Around the same time, 30-year bund yields dropped below zero, meaning the entire German curve was negative.