Bank chiefs called for calm on Tuesday as stocks plummeted after President Donald Trump’s threats of fresh tariffs.
The pan-European Stoxx 600 dropped about 1.2% in morning trade Tuesday — with the continent’s major bourses and most sectors heavily selling off — after Trump floated a potential 200% levy on French wine and champagne.
In the U.S., stock futures also retreated. The Dow Jones Industrial Average fell almost 1.5%, the S&P 500 slid 1.6%, the Nasdaq was last seen almost 2% lower, while, earlier, markets in Asia also closed in negative territory.
Stoxx 600 Europe.
With fears of a re-run of last April’s “Liberation Day” tariff turmoil looming over the World Economic Forum gathering in Davos, bank CEOs in Europe called for cool heads around the prospect of a renewed trade war.
“It’s important to stay calm,” Commerzbank CEO Bettina Orlopp told CNBC’s “Squawk Box Europe” on Tuesday. “If anything told us from last year’s [tariff] event, it’s best to stay calm and see what’s really happening.”
European banks were among the hardest hit in Tuesday’s reversal, with the Stoxx 600 Banks Index down 1.4% on Tuesday, while financial services slipped about 1.3%.
It came after markets were still reeling from the President’s plan to hit European countries with tariffs of 10% from Feb. 1, rising to 25% from June 1, if they continue to push back against his bid to annex Greenland.
‘The new normal’
Anthony Gutman, co-CEO of Goldman Sachs International, said that the current noise is creating volatility for investors, warning that “this is the new normal.”
Speaking with CNBC’s “Squawk Box Europe” in Davos, Gutman said that while the bank is optimistic on Europe this year, the risk of tariffs will “create complexity for our clients who are business leaders and have to make business decisions.”
Steven Van Rijswijk, CEO of ING Group, said that European markets had ultimately weathered last year’s “Liberation Day” tariff turmoil, but the growing use of trade policies as a geopolitical weapon had provided a “wake-up call” for the continent.
He said the current “back and forth” rhetoric over tariffs and territory could have a lasting impact on the global economy.
Stoxx 600 Banks.
“Clearly, things like geopolitics, trade disputes, supply chain challenges are not good for the stability of the economy,” Van Rijswijk told CNBC’s “Europe Early Edition” in Davos.
“In the end, for economies and societies, and for banks, stability and long-term policies are good.”
He added: “The question is: what will be the indirect impact? Do we see organizations change trade patterns or produce somewhere else?
“Do we see investment held back? It’s more the indirect effects that cause concern rather than the direct effect of an import tariff implementation.”
Follow CNBC International on Twitter and Facebook.