Stocks across Europe fell Wednesday, as shares of metal producers were hit the hardest after the resignation of White House economic adviser Gary Cohn.
The former Goldman Sachs executive was widely seen as a markets-friendly and stabilizing force in the Trump administration and his departure further stokes worries about the likelihood of a global trade war.
How markets are moving
The Stoxx Europe 600 index SXXP, -0.49% lost 0.3% to 370.00, led lower by the basic materials and oil and gas groups. But the tech and utility groups posted modest gains. On Tuesday, the benchmark rose 0.1% to mark a second straight win.
Germany’s DAX 30 index DAX, -0.31% fell 0.3% to 12,080.10, and France’s CAC 40 index PX1, -0.52% gave up 0.4% at 5,148.89. But the U.K.’s FTSE 100 index UKX, -0.11% pared losses and was down less than 1 point at 7,146.13.
The euro GBPUSD, -0.2088% traded at $1.2422, up from $1.2404 late Tuesday in New York.
The pound GBPUSD, -0.2088% bought $1.3879, slightly lower than the $1.3888 from late Tuesday in New York.
What’s driving markets
Global equities declined as investors reacted to the news late Tuesday that Cohn is leaving his role as the head of President Donald Trump’s National Economic Council. Cohn is seen as the driving force behind U.S. corporate tax cuts that were signed into law last year.
The news comes after Trump said he’ll impose tariffs on steel and aluminum imports, a move Cohn had opposed. The president is expected to sign an order for across-the-board tariffs of 25% for steel and 10% for aluminium.
A global trade war sparked by the tariffs could sap demand for metals and weigh on economic growth worldwide. The Stoxx Europe 600 Basic Resources Index SXPP, -2.11% slumped 2% on Wednesday. U.S. stocks were setting up for a sharp drop at the open Wednesday. Futures for the Dow Jones Industrial Average YMH8, -1.22% slid more than 300 points, or 1.3%, but were recovering from a drop of more than 400 points soon after the Cohn news.
The European Union is seen as likely to release a formal response to the planned tariffs on Wednesday. European Central Bank President Mario Draghi will likely be asked about his view about the potential tariffs and its impact on the eurozone, when Draghi on Thursday hold a press conference after the release of the central bank’s latest monetary policy decision.
Read: How a tariff-rattled stock market is reacting to Cohn’s resignation
What strategists are saying
“Markets viewed Cohn as a voice of reason on trade policy. The departure signals the defeat of anti-protectionism, or reduces the influence of anti-protectionism. The Trump Twitter feed has denied ‘chaos’ in the administration, but senior staff turnover has been unusually high,” said Paul Donovan, global chief economist at UBS in his daily commentary.
“This undermines the policy continuity that markets crave. Any tax on trade, in any country, means consumers are going to be purchasing goods they would not choose to buy, at prices that are higher than they should have to pay, to subsidize less efficient companies,” Donovan said.
Stock movers
Rolls-Royce Holdings PLC shares RR., +12.83% leapt 13%. The aircraft engine maker swung to a 2017 pretax profit of £4.9 billion ($6.79 million) and said it expects mid-single-digit revenue growth in 2018.
With tariffs in the U.S. in sight, shares of miner Anglo American PLC AAL, -2.24% fell 1.9%, while iron ore producers BHP Billiton PLC BLT, -2.40% BHP, +2.12% BHP, -1.01% and Rio Tinto PLC RIO, -1.89% RIO, +1.86% RIO, -0.99% gave up 1.3% and 1.4%, respectively
Smurfit Kappa Group PLC SK3, +3.31% rose 3.7% after International Paper Co. IP, -2.10% said it remains ready to discuss its rejected takeover bid for the Irish packaging company as it set out details of its €8.6 billion euro ($10.7 billion) offer.
Paddy Power Betfair PLC PPB, -4.43% fell 4.7% as the company warned that sustained bookmaker-friendly sporting results had hurt customer activity in early 2018.