Europe close: Markets slip on fresh Trump tariff fears

23rd Feb 2026 16:22

(Sharecast News) - European shares closed lower on Monday after US president Donald Trump imposed a blanket 15% tariff on imports, escalating trade tensions just days after the Supreme Court ruled most of his previous global levies illegal, prompting investors to retreat into defensive assets.

The pan-European Stoxx 600 fell 0.49% to 627.48.

Germany's DAX dropped 1.09% to 24,986.58, France's CAC 40 declined 0.22% to 8,497.17 and the FTSE 100 edged 0.02% lower to 10,684.74.

"Investors looking for a safe haven from tariff madness and worries about Iran could do a lot worse than the FTSE 100 right now," said Chris Beauchamp, chief market analyst at IG.

"The index seems impervious to worries about US trade policy and the potential for a US-Iran conflict, holding steady today while US stocks fall back."

Markets had hit record highs on Friday after the US Supreme Court voted 6-3 that most of Trump's so-called "reciprocal" tariffs were unlawful.

In response, Trump said he would use a different legal mechanism to impose a 10% across-the-board levy on imports, before later increasing the proposed rate to 15%, unsettling investors at the start of the week.

Beauchamp said Friday's initial bounce "has given way to caution, as the administration attempts to pivot seamlessly to new tariff weapons while also doing their best to panic investors about the rule of law in the US with some spicy Truth Social posts."

Safe-haven demand gathered pace as geopolitical concerns resurfaced.

"The panic-trade trinity of gold, oil and the VIX made a return to our screens today, all three rising as social media filled up with fresh updates on US deployments to the Middle East and reports emerging from all sides in the region," Beauchamp added, noting that with Nvidia's earnings this week only expected to see a 4% move in the stock, "it seems the geopolitical situation remains the chief driver for the time being."

Danni Hewson, head of financial analysis at AJ Bell, said investors were grappling with fresh uncertainty.

"Investors have come to expect chopping and changing from the current US president, but the present tariff turmoil makes charting the course ahead even more impossible than it already was, which makes it no surprise that the safe haven allure of gold has been back in play," she said.

"How will current trade deals fit into the new framework? Will 'Plan B' require a sign off from Congress or will Donald Trump's administration be able to keep reapplying the new tariffs every 150 days? What about the billions that have flowed into US coffers over the past months. Will that have to be paid back?"

Hewson added that "whilst bigger businesses have the capacity and cash flow to weather this fresh storm front, smaller companies will be feeling rather weary and some will struggle to come up with their own Plan B," and argued that "falling back on the TACO trade isn't going to work this time because these new tariffs simply replace those that the president already signed off, and he won't want to lose his key negotiating tool whilst his relations with the rest of the world remain so volatile."

She noted that "in the absence of any kind of clarity, investors are trying to crack on with business, but even London's blue-chip index couldn't quite manage to harness its current momentum and the strength of its mining components to end in positive territory."

German business sentiment improves more than expected

On the economic front, German business sentiment improved more than expected in February, according to the Ifo Institute.

The business climate index rose to 88.6 from 87.6 in January, beating expectations of 88.4.

The current situation index increased to 86.7 from 85.7, while the expectations index climbed to 90.5 from 89.6.

Ifo president Clemens Fuest said: "The German economy is showing first signs of recovery."

ING said the survey "paints a picture of what a nice and decent cyclical upswing could look like", but cautioned that German economic narratives had "hardly been fairy tales recently".

In the US, factory orders declined for the second time in three months in December, according to the Census Bureau.

New orders for manufactured goods fell 0.7% month on month to $617.5bn, missing forecasts for a 1.1% increase and following November's 2.7% surge to $621.9bn after a 1.2% drop in October.

Durable goods orders dropped 1.4% to $319.9bn, with transportation equipment down 5.4%, while non-durable goods orders were broadly unchanged at $297.6bn.

Shipments rose 0.5% to $609.2bn, unfilled orders increased 0.9% to $1.53bn and inventories edged up 0.1% to $949.6bn.

Looking ahead, Hewson said that "at the start of a week which is blissfully free from any major data releases, attention in the UK will undoubtedly turn to speculation about what the Chancellor will say about the path for the UK's economy during her Spring Statement next week."

She added that "having to reopen trade negotiations with the US will be an unwelcome pothole on an already uneven path ahead, but a bigger than expected borrowing surplus will at least provide a bit of a spring to jump off."

Johnson Matthey tumbles, JD Sports in the green

In equities, Johnson Matthey plunged 16.71% after the platinum refiner cut the sale price of its catalyst unit to Honeywell by almost £500m amid reports the US group was considering walking away from the deal due to the unit's performance.

Belimo fell 9.99% following annual results.

Rolls-Royce slipped 0.67% after reports it was preparing a new £1.5bn share buyback as part of its annual earnings statement due on Thursday, though a spokesperson declined to comment.

On the upside, JD Sports Fashion rose 3.38% after announcing a £200m share buyback.

Reporting by Josh White for Sharecast.com.