The pan-European STOXX 600 was down 0.5%, with all regional equity markets closing in the red and Spain’s IBEX logging most losses, down 2.9%
European shares closed lower on Wednesday, following a broad rally earlier in the session, hurt by a drop in utilities shares on concerns that U.S. President-elect Donald Trump could halt fresh approvals for offshore wind projects.
Trump, who won the presidential election by securing more than the 270 Electoral College votes needed to win the presidency, had vowed during his election campaign to scrap offshore wind projects by executive order on his first day in office.
Shares of Oersted and Vestas declined 12.8% each, while the broader utilities sector was down 2.6%.
The pan-European STOXX 600 was down 0.5%, with all regional equity markets closing in the red and Spain’s IBEX logging most losses, down 2.9%.
We see less upside for European equities under a Trump presidency, equity strategists at UBS said in a note.
Within European equities, we expect the market to focus on three key areas of policy from the new president-elect: potential trade tariffs, potential rollback of some green energy initiatives, and implications for Russia-Ukraine and European defence spending, the note stated.
German automakers such as Mercedes-Benz Group and BMW dropped nearly 6.5% each on fears of potential import tariffs under Trump’s presidency. However, BMW later downplayed such fears.
The broader auto sector was 2.3% lower.
Trump also vowed to impose a 10% tariff on imports from all countries if he won, and said the EU would have to “pay a big price” for not buying enough American exports.
Most companies listed on the STOXX 600 garner only 40% of their revenues domestically, while a large chunk of them comes from the US.
Popular “Trump Trades” – stocks which could benefit or come under pressure from a Trump presidency – were on the move on Wednesday, with the Wall Street’s main indexes surging to record highs on anticipation of lower corporate taxes.
