European markets struggled on Wednesday, April 16, 2025, with the pan-European Stoxx 600 index falling 0.7% at 11:10 a.m. U.K. time. The decline came after two consecutive strong sessions as trade uncertainties surrounding U.S. tariffs continued to erode investor sentiment. Chip companies, particularly ASML, took a significant hit, with ASML shares plummeting 4.67% after the company missed expectations on its net bookings for the first quarter. The company also expressed concerns about the ongoing uncertainty around U.S. trade policies. This led to a decline in its sector peers, with ASM International falling 3.5%.

Meanwhile, UK inflation data for March 2025 was released, showing a slower-than-expected rate of 2.6%, compared to the 2.7% forecast. This data added some relief to the market but did little to offset the growing concerns about global trade tensions. The inflation figures were published by the Office for National Statistics, which noted that UK inflation had eased in comparison to earlier months.

Investors were also keenly focused on the latest data out of China. The Chinese economy grew at a better-than-expected rate of 5.4% in the first quarter of 2025, although tariff threats from the U.S. led major investment banks to cut their annual growth forecasts for China. These concerns were further reflected in Asia-Pacific markets, which mostly traded lower overnight, while U.S. stock futures also slipped as traders awaited the release of a critical retail sales report and more earnings from the first-quarter season.

ASML, which has a dominant position in the semiconductor equipment market, saw its disappointing net bookings result in a broad sell-off in its sector, with chip stocks under heavy pressure. The company’s woes were further compounded by trade uncertainty and U.S. tariffs, which have affected global supply chains. Meanwhile, Nvidia, another key player in the semiconductor sector, saw its shares drop by over 6% in extended trading after the company disclosed that it expects a $5.5 billion charge related to its export business to China and other countries.

The uncertainty surrounding U.S. tariffs has been a key factor impacting investor sentiment, as President Donald Trump’s policies continue to shape global trade dynamics. The potential for new tariffs on critical sectors like chip manufacturing has added to the volatility, with investors remaining cautious and closely monitoring any developments.

As European markets continue to face pressures from U.S. trade policies and global economic uncertainties, analysts are advising caution. While Chinese growth remains a positive factor, the overall outlook for global markets remains clouded by geopolitical tensions, particularly in the tech sector.

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