The Stoxx 50 index has pulled back from its all-time high ahead of Donald Trump’s Liberation Day tariffs. The index, which tracks the biggest European companies, retreated to €5,375 this week, down by 3.5% from its highest level this month. So, what is the outlook of the Stoxx 50 index ahead of the Liberation Day?
Donald Trump’s Liberation Day is coming
Trump, the US president, has maintained a highly aggressive trade policy this year as he warned to impose severe tariffs on allies and foes.
His most important trade policy will be announced on April 2, when he will deliver his so-called Liberation Day speech. This speech will illustrate how the US will impose fresh tariffs on its top trading partners, including those in Europe.
His goal is to implement reciprocal tariffs, where the US charges the same tariffs that its exports are charged. On theory, this would not be a big deal for European companies since it has low tariffs on US goods.
However, Trump is not merely looking at the taxes collected at the ports of entry. Instead, he is also focusing on other taxes charged on American goods like the value-added taxes, which all European countries charge. The issue is that these taxes also apply to European-made products.
Trump’s Liberation Day came earlier after he announced levies on auto imports, including those from Europe. This is notable since European automakers have a big share in the Stoxx 50 index. They include names like Ferrari, Mercedes-Benz, BMW, and Volkswagen.
Next week’s Liberation Day tariffs will have a big impact on the Stoxx 50 index because many of its constituent companies do a lot of business in the US. This includes companies like LVMH, Hermes, ASML, L’Oreal, Inditex, Airbus, and EssilorLuxottica.
Therefore, trade barriers to the US at a time when the Chinese economy is not doing very well will have an impact on these companies.
ECB to the rescue?
The Stoxx 50 index may also be impacted by the strong euro, which, in addition to tariffs, will make European goods more expensive. The EUR/USD exchange rate has jumped from 1.0182 in January to 1.0800 today.
Further, the Stoxx 50 index has also maintained its resilience because of the willingness of European governments to spend. Germany recently passed a 500 billion euro spending package to boost its security and infrastructure.
The index has also done well because the European Central Bank has become highly dovish. It has delivered several rate cuts, and analysts anticipate that more cuts are coming in the coming months if the economic growth stalls.
Top Stoxx gainers and laggards in 2025
Most companies in the index have done well this year. The best performers are banks, whose stocks have continued their uptrend. Banco Santander’s stock price has surged by 45% this year, while Unicredit, BBVA, BNP Paribas, Intensa Sanpaolo, and ING have been the top gainers.
The other top gainers in the Stoxx 50 index this year are Deutsche Boerse, Allianz, Vinci, AB InBev, and Bayer. On the other hand, the top laggards are firms like Pernod Ricard, Kering, Stellantis, and LVMH.
Euro Stoxx 50 index analysis
Stoxx chart by TradingView
The weekly chart shows that the Euro Stoxx 50 index has remained under pressure in the past few days. It has remained above the important key support at €5,118, the highest swing in 2024.
The index has remained above all moving averages. It has also formed a bullish flag pattern, a popular bullish sign in the market. Therefore, the index will likely continue rising as bulls target the key resistance point at €6,000. A move below the support at €5,000 will invalidate the bullish view.
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