European stocks lacked a firm direction Tuesday morning, as market participants responded to a new tariff threat from the United States government.
The pan-European Euro Stoxx 600 index was around 0.1 percent higher in mid-morning trade with most sectors and bourses sitting around the flat-line. This after U.S. Trade Representative Robert Lighthizer on Monday proposed a list of European Union products on which to slap tariffs as retaliation for European aircraft subsidies, with Airbus down 1.9 percent in early deals.
The U.S. is considering tariffs on about $11 billion of EU products ranging from aircraft parts to wine. The move comes as the President Donald Trump administration looks to retaliate against EU subsidies for Airbus, which the World Trade Organization ruled had “adverse effects” on America.
Other European-listed stocks such as Rolls-Royce, Thales, Dassault Systemes, BAE and Leonardo were seen as among the most exposed to Lighthizer’s threat and these firms fell lower on Tuesday morning.
Drink maker stocks also went on a wild ride with Remy Cointreau, Pernod Ricard and Davide Campari all suffering losses, although initial selling at the open was reversed to some degree by mid-morning. Other items on the U.S. list included some European-produced cheese, passenger helicopters, as well as certain types of motorcycles and ski suits.
The announcement comes shortly after a World Trade Organization ruling said the U.S. was guilty of illegal subsidies in production of Boeing aircraft.
Market focus is also attuned to corporate results, with major U.S. banks set to get the ball rolling later in the week. J.P. Morgan Chase & Co and Wells Fargo are both poised to report their latest figures on Friday.
Concerns about U.S. earnings have dragged on global equities in recent sessions, though a robust jobs report last week helped to soothe frayed nerves.
Back in Europe, investors continue to monitor an upcoming Brexit summit. U.K. Prime Minister Theresa May is expected to meet with the leaders of Germany and France later in the session, with four days to go before the world’s fifth-largest economy is due to leave the European Union.
May will be at an emergency summit on Wednesday, when all 28 EU states will vote on whether to grant the U.K. an additional Brexit extension.
On the data front, Italy will publish month-on-month retail figures for February at around 9:00 a.m. London time. Elsewhere, Commerzbank is reportedly set to decide whether or not to continue merger talks with Deutsche Bank on Tuesday.
Shares of SocGen sunk 0.6 percent after the French bank announced plans to cut 1,600 jobs in a bid to buoy profits.
Randstad shares rose 2.3 percent after Morgan Stanley raised its outlook on the staffing firm to “overweight” from “equalweight.”
At the bottom of the benchmark, Bechtle shares slipped 4.2 percent after a ratings downgrade from Berenberg.