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Investing.com - European stocks slipped lower Friday on concerns the uncertainty surrounding tariffs may be already causing damage to corporate bottom lines, even amid talk of a potential trade agreement between the U.S. and the European Union.
At 04:00 ET (08:00 GMT), the DAX index in Germany dropped 0.9%, the CAC 40 in France slipped 0.4% and the FTSE 100 in the U.K. fell 0.4%.
EU-U.S. trade deal “within reach”
A European Commission spokesman said on Thursday that a deal between the European Union and the U.S. on trade tariffs is "within reach", ahead of the August 1 deadline when U.S. President Donald Trump has threatened to impose a sweeping 30% levy on EU imports.
Such a deal is likely to result in a broad tariff of 15% applying to EU goods imported into the United States, Reuters reported, citing two diplomats.
While talk of such agreements, backed up by the news of an actual trade deal between the U.S. and Japan earlier in the week, has prompted some enthusiasm this week, it has to be acknowledged that such a result would still negatively impact many of the bloc’s largest companies.
Volkswagen details hefty tariffs hit
In the corporate sector, Volkswagen (ETR:VOWG_p) stock fell after the German auto giant cut its financial forecasts for the year, with Europe’s largest carmaker revealing a €1.3 billion tariff hit.
Michelin (EPA:MICP) stock fell after the French car parts maker posted a 27.8% slide in net income in the first half of the year, with the threat of higher tariffs leading to a sharp contraction in North and Central America.
Puma (ETR:PUMG) shares slumped after the German sportswear brand posted disappointing second-quarter sales and cut its full-year guidance, flagging the impact of U.S. trade tariffs.
Traton (ETR:8TRA) shares fell sharply after the German truck maker cut its full year outlook, warning of a challenging trading environment.
It wasn’t all bad news though, with Remy Cointreau (EPA:RCOP) shares rising after the French spirits maker raised its full-year profit guidance and posted stronger-than-expected first-quarter sales, helped by a reduced tariff impact in China.
NatWest Group (LON:NWG) stock rose after the British lender reported a 18% surge in first-half profits as interest income boosted its operating results.
U.K. consumer confidence slips
On the economic front, U.K. consumer confidence fell in July as the country grapples with weak economic growth and persistent inflation, according to data released Friday.
The consumer confidence index, compiled by research group GfK with the Nuremberg Institute for Market Decisions, declined to minus 19 in July from minus 18 in June, reversing the slight improvement seen last month.
The German Ifo business climate show a small deterioration in sentiment in July, as growth in the wider European economy remains hard to find.
The European Central Bank left interest rates unchanged on Thursday after cutting eight times in a year, biding its time while Brussels and Washington try to negotiate a trade deal that could ease persistent uncertainty over tariffs.
Crude rises on trade optimism
Oil prices rose Friday, adding to the previous session’s sharp gains, supported by hopes of more U.S. trade deals ahead of President Donald Trump’s nearing deadline.
At 04:00 ET, Brent futures climbed 0.5% to $69.54 a barrel, and U.S. West Texas Intermediate crude futures rose 0.5% to $66.37 a barrel.
Both contracts jumped more than 1% on Thursday after data showed a sharp decline in U.S. crude inventories.
The crude markets have gained support from the prospect of more trade deals between the United States and trading partners ahead of an August 1 deadline for new tariffs on goods from an array of countries.
Easing trade tensions boosts economic activity and cross-border commerce, which in turn drives up oil demand through increased transportation and industrial energy use.