Investor confidence in the European Union has dropped sharply following Donald Trump's trade agreement with Brussels, amid growing fears over the economic impact of the US president's tariff war. The Sentix index, a key measure of investor sentiment, fell significantly at the start of August after the deal between Trump and European Commission President Ursula von der Leyen.
The data provider described the pact as a 'deal that dampens the mood', with the US viewed as the winner at the expense of the eurozone. Manfred Hübner, managing director of the Sentix economic index, said: 'The result is devastating for the eurozone. The current situation and expectations are both declining. The wrinkles of concern in the economy are deepening again.'
Financial markets are bracing for Washington to introduce sweeping 'reciprocal' tariffs on imports from dozens of countries from mid-week, including Brazil on Wednesday and most other nations from Thursday. Share prices in Switzerland, facing a 39% export tariff from Thursday, plunged on Monday. Meanwhile, markets in London, Frankfurt and Paris rallied after a tariff-related sell-off at the end of last week.
The Sentix survey, conducted between 31 July and 2 August, showed the headline index fell from 4.5 in July to -3.7 in August, with sharp declines in investor confidence in Germany and Switzerland. The US-EU trade deal drew swift condemnation from some European leaders, including French Prime Minister François Bayrou, who called it a 'dark day' for the EU.
