European Stocks Slip as Investors Weigh EU-U.S. Trade Deal Details and German GDP Decline

European stocks edged lower on Friday as investors digested fresh details of the trade agreement between the European Union and the United States. The pan-European Stoxx 600 slipped 0.1% in early trading, with most sectors posting losses. London’s FTSE 100 led declines among major regional indexes, falling 0.2%, while Germany’s DAX was down 0.24%. France’s CAC 40 remained largely unchanged, signaling cautious sentiment across the continent.

Officials confirmed on Thursday that the EU committed to spending $750 billion on U.S. energy and investing at least $600 billion in America. In return, tariffs on EU goods were capped at 15%, averting the 30% rate previously threatened by U.S. President Donald Trump. Additionally, the pharmaceutical sector received some relief as exports to the U.S. will face a 15% tariff limit instead of the potential 250% rate hinted at earlier.

Despite the significant concessions, investor reactions were muted. The Stoxx Europe Pharmaceuticals and Biotechnology index rose 0.6% by Thursday’s close, buoyed by the tariff cap news. However, automotive stocks lagged as officials revealed that tariff reductions on European cars exported to the U.S. remain conditional on Brussels lowering its own industrial duties. This uncertainty kept sentiment negative in the auto sector.

Adding to market jitters, revised GDP data showed that Germany’s economy contracted by 0.3% in the second quarter, a steeper decline than initial estimates. The data underscores lingering economic weakness in Europe’s largest economy and amplifies concerns about the region’s recovery trajectory amid slowing global trade and persistent inflationary pressures.

While the EU-U.S. trade deal marks progress toward easing transatlantic tensions, markets remain cautious. Conditional tariff agreements and weak economic data from Germany have raised questions about the near-term outlook for European equities. Analysts expect volatility to persist as investors monitor additional policy developments and economic indicators in the coming weeks.

Source: cnbc