Stock Markets May 4, 2026 03:15 AM

European stocks hold steady as Middle East talks loom; carmakers feel pressure from U.S. tariff threat

Autos slump after Washington signals tariff increase; broader European market largely unchanged amid energy concerns

By Caleb Monroe
European stocks hold steady as Middle East talks loom; carmakers feel pressure from U.S. tariff threat

European equities were mostly unchanged on Monday as investors awaited developments in Middle East negotiations. Shares of European automakers fell after U.S. President Donald Trump said he would raise tariffs on cars and trucks from the European Union to 25% this week from 15%. The STOXX 600 remained flat, while German carmakers led losses and select industrial names moved higher.

Key Points

  • U.S. tariff announcement on EU autos prompted pressure on European car manufacturers, notably German automakers.
  • The STOXX 600 remained flat at 611.98 as of 0704 GMT, with most regional bourses muted and London closed for a public holiday.
  • Energy dependence and geopolitical concerns continue to weigh on European equities, which are about 4% below pre-war levels, while Wall Street has rebounded on AI-driven optimism.

May 4 - European share prices were subdued on Monday as market participants monitored any progress in talks related to the Middle East and digested fresh tariff rhetoric from the United States. President Donald Trump said on Friday he would increase tariffs on cars and trucks imported from the European Union to 25% this week, up from the previous 15%, citing non-compliance with a trade deal.

The potential tariff rise weighed on automotive stocks, with German manufacturers among the largest decliners. BMW and Mercedes each fell by more than 2%, while Porsche and Volkswagen slipped about 1.5% apiece. Truckmakers Daimler Truck and Traton registered marginal declines. The automaker segment, as measured by the automobiles index, was down 1.6%.

Across the wider market, the pan-European STOXX 600 was essentially flat at 611.98 points at 0704 GMT, after having recorded a modest gain in the prior week. Most regional exchanges showed little movement, and Germany's DAX was largely unchanged. Trading in London was not in session due to a public holiday.

European equities remain roughly 4% below their pre-war trading levels. By contrast, Wall Street and global equity markets have recovered, supported by optimism around artificial intelligence. Market participants continue to weigh the continent's energy dependence as a drag on regional share performance.

There were some pockets of strength among individual names. Thyssenkrupp rose 1.2% after the German industrial group paused talks to sell its steel unit to India’s Jindal Steel.


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Risks

  • Uncertainty over the implementation of higher U.S. tariffs on EU cars and trucks, which directly impacts the automotive sector.
  • Geopolitical developments in the Middle East could influence investor sentiment and market direction across regional equities.
  • Europe's energy reliance presents a persistent headwind for regional markets, affecting broader market performance and energy-sensitive sectors.

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