Equities lower as US-China trade tariffs take effect

European equity benchmarks were lower on Monday as investors eyed the introduction of US tariffs on Chinese imports against a backdrop of merger news and a drop in business sentiment in Germany.

The Trump administration said last week that it would slap tariffs on around $200 billion of Chinese imports starting today. The rate is initially being set at 10% but could be raised to 25% in January. Trump added that if China were to take retaliatory action against US farmers or other industries, the government would “immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports”.

In other economic news, fresh data from the Muenich-based ifo Business Institute indicated that sentiment among German firms had weakened in September with the research company’s benchmark index measuring firms’ assessments of their business situation, edging slightly lower when compared to August.

In equities, British Pay-TV broadcaster Sky was leading the gainers on the pan-European Stoxx 600 Index, up by 8.8% after recommending to its shareholders US cable giant Comcast’s $40 billion takeover offer, knocking rival 21st Century Fox out of an auction process which had been going for almost two years.

The pan-European Stoxx 600 Index was 0.24% lower, London’s FTSE 100 Index was down by 0.14%, Frankfurt’s DAX was 0.37% and Paris’ CAC-40 was down by 0.17%.

Hong Kong stocks tumbled, as trade tensions returned at the start of the week for Asia, which was dulled by the closure of several markets for holidays. Last week marked a strong one for Asia, with the Shanghai Composite logging its best week in over two years, in a rally that extended across global markets. Those gains were led by the U.S. amid optimism over the economy and a calmer view of the trade situation.