European Shares May Face Selling Pressure On Trade War Fears

(RTTNews) - European stocks may succumb to selling pressure on Tuesday after U.S. President Donald Trump paused all military aid for Ukraine to ensure that it will contribute to a solution.

Trump also confirmed tariffs on Mexico, Canada and China, stirring concerns about inflation and a possible global recession.

While Canada responded by imposing a 25 percent tax on $155 billion worth of American goods, Beijing has warned that it would take countermeasures.

Asian markets were mostly lower, with Japan's Nikkei seeing the biggest drop on fears the retaliatory tariffs could escalate into a full-blown trade war.

Trump said on Monday he told leaders of Japan and China they cannot continue to reduce the value of their currencies as doing so would be unfair to the United States.

The Canadian dollar and the Mexican peso hovered near their lowest in a month and gold held steady below $2,900 per ounce, while oil extended losses and hovered near the lowest in almost three months as OPEC+ said it will proceed with plans to revive halted production.

U.S. stocks tumbled overnight, the dollar rallied, and bond yields slumped as President Trump confirmed that 25 percent tariffs on goods from Mexico and Canada would come into effect on Tuesday and that he plans 20 percent tariffs on Chinese imports over fentanyl issues.

Further, Trump said reciprocal tariffs would take effect on April 2 on countries that impose duties on U.S. products, stoking fears of a global trade war. He also flagged new U.S. tariffs for imported farm products.

Recent disappointing data showing weaker housing, cooling manufacturing, rising unemployment claims and a drop in personal spending also spurred fears of an economic slowdown and higher inflation.

The tech-heavy Nasdaq Composite plunged 2.6 percent to a four-month closing low while the S&P 500 shed 1.8 percent and the Dow dipped 1.5 percent.

European markets closed at a record high on Monday as expectations of higher military spending in the region and the prospect of a Ukraine peace proposal lifted defense-related stocks.

The pan European STOXX 600 gained 1.1 percent. The German DAX jumped 2.6 percent, France's CAC 40 climbed 1.1 percent and the U.K.'s FTSE 100 added 0.7 percent.