(Bloomberg) -- European equities fell on Wednesday, pressured by rising bond yields and trepidation over how President-elect Donald Trump’s policies will impact global trade.
The Stoxx Europe 600 Index closed 0.2% lower, with retailers, real estate, travel and leisure shares among the sectors to slide the most.
Worries over the possible implementation of trade levies knocked sentiment, as CNN reported that Trump is considering a national economic emergency to provide legal ground for universal tariffs. France’s blue-chip CAC 40 Index, which is heavy in luxury names, dropped 0.5%.
Elsewhere, renewable energy stocks fell after Trump said that he would seek to prevent the construction of wind farms during his second term.
European equities underperformed the US in 2024 amid political instability in some of the region’s biggest economies and the prospect of tariffs as Donald Trump is set to enter the White House. Market watchers have noted that European equities are much cheaper than the lofty valuations in the US.
Mabrouk Chetouane, head of global market strategy at Natixis Investment Managers, said that while trading in European stocks could be volatile, its equity market also presented an opportunity for investors.
“The possibility to be disappointed could be extremely high in the US while the possibility to be disappointed from Europe is quite low, because no one is expecting anything from Europe,” Chetouane said by phone.
Among individual movers, TeamViewer SE shares surged after the German software firm’s 2024 preliminary revenue exceeded its guidance. Shell Plc slipped after saying it saw lower volumes of natural gas and weaker earnings from trading in the final three months of 2024.
Defense stocks were among the top gainers, rising after Trump called on NATO members to spend the equivalent of 5% of their economic output on defense, more than double the current target.
Traders will also be keeping an eye out later today for the minutes from the Federal Reserve’s latest policy meeting for clues on the trajectory of interest rates.
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--With assistance from Michael Msika.
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