European market updates: July 4, 2025

European equities turned red as investors began taking on board the risk of U.S. tariffs being snapped back on again.

The Stoxx Europe 600 index fell by 0.5%. Regionally, while the U.K.’s FTSE 100 was flat, France’s CAC 40 and Germany’s DAX ended 0.8% and 0.6% lower, respectively.

The British pound also gave up some of the gains from earlier in the session as one Bank of England official called for a more aggressive schedule of interest rate cuts this year.

The head of pan-Scandinavian airline SAS told CNBC that European airline consolidation “needed a second phase,” after Air France-KLM confirmed it plans to increase its stake in the business to 60.5% from just under 20%.

“Scale still matters, consolidation still matters in this industry… this is a capital intense and low margin business, so consolidation is always the name of the game,” Anko van der Werff told CNBC’s “Squawk Box Europe,” adding that it was a “very good day” for the airline.

“We have a growth path ourselves… I think we’re also well positioned within the Air France-KLM group,” Van der Werff continued.

SAS has struggled financially in recent years, exiting U.S. Chapter 11 bankruptcy proceedings last year after restructuring its debt and business operations and delisting. The European aviation industry more broadly is seen increasing consolidation as it grapples with higher costs, supply chain challenges and competition from the U.S. and the Middle East.

Air France-KLM said in a statement that its increased stake reflected the “successful turnaround of SAS” and that the businesses had “synergy potential.” Air France-KLM shares were 0.18% lower Friday morning.

After a negative open, French spirits names are choppy as investors assess what China’s ruling in its anti-dumping investigation mean for the sector.

Pernod Ricard has been moving between losses and gains, last 0.9% lower at 9:40 a.m. in London, while Remy Cointreau is down 1.7%. The Chinese ministry of commerce said Friday it had concluded EU producers had engaged in “dumping” activity which had harmed the Chinese brandy industry and said it would impose retaliatory duties of up to 34.9% for a five-year period from July 5.

However, it also noted that any company which met the minimum price commitments submitted to China by EU industry associations would not be subject to the tariffs.

“On the face of it, the tariffs appear hefty, but the effect will be highly minimised due to the price undertaking agreement big producers like Remy Cointreau have reached with Chinese authorities,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, told CNBC.

“Although it’s clear it’ll still be a harder market, given they will have to adhere to a minimum import price in China, the agreement still appears to be a more favourable outcome than had been feared. It’s why there hasn’t been a significant drop in share prices. However, there is still pessimism floating around, given that tariffs are becoming more deeply embedded in the global economy,’ Streeter added.

CNBC has contacted Remy Cointreau for comment.

China is a key market for European cognac, a form of brandy. Beijing launched its investigation after the EU voted in favor of tariffs on Chinese-made electric vehicles.

— Jenni Reid

Europe’s stock markets are in the red across the board at the open, with the regional Stoxx 600 index down 0.4%, the U.K.’s FTSE 100 down 0.32%, Germany’s DAX down 0.29% and France’s CAC 40 down 0.72%.

French drinks sellers are taking an early hit, with Pernod Ricard down 3.3%, Remy Cointreau down 4.5% and luxury giant LVMH down 2.1%, as news breaks that China’s commerce ministry has issued a final ruling on its probe into European Union brandy.

The investigation ruled that the bloc has engaged in dumping of the spirit, according to a Google translation of a ministry relief. According to Reuters, a tariff rate on EU brandy will be set at up to 34.9% for five years from July 5. The ministry statement notes that no anti-dumping duties will be imposed on products that meet EU industry association price commitments.

— Jenni Reid

Manufacturing orders in Germany tumbled 1.4% month on month in May, statistics office Destatis said Friday, well below the expectations of a 0.1% decline forecast in a Reuters poll of analysts. Orders were up 5.3% year on year.

The monthly fall was primarily due to a 17.7% drop in computer, electronic and optical products, an area that received several big orders in April.

— Jenni Reid

Airline group Air France-KLM says it is initiating proceedings to take a majority stake in Scandinavia’s SAS, upping its holdings in the company to 60.5% from just under 20%.

Air France-KLM hopes to close the deal in the second half of next year.

The move “brings not just stability but will also allow for deeper industrial integration,” SAS CEO Anko van der Werff said in a statement.

Good morning from London.

European markets across the U.K., France and Germany are heading for a negative start on Friday, according to IG data.

That follows a higher close on Thursday, with global equities boosted by a much stronger than expected U.S. jobs report. Officially, Wall Street is on a break for the 4 July holiday today.

However, investors are sure to be checking their phones for updates after U.S. President Donald Trump’s flagship megabill passed in Congress. A host of changes lie ahead, including to taxes, social spending and energy policy.

We’re meanwhile nearing Trump’s July 9 deadline for tariff negotiations, which could see duties on key trading partners such as the European Union spike unless a deal is reached. Trump has said the U.S. will begin sending letters to countries setting out their tariff rates on exports to the U.S., with 10 to 12 nations set to receive theirs today.

Treasury Secretary Scott Bessent told Bloomberg he expects around 100 countries will face a 10% levy, the baseline of the so-called ‘reciprocal’ tariffs.

The EU meanwhile says it is closing in on a “framework” trade deal, but that a full agreement will be impossible to reach by July 9.

— Jenni Reid, Matt Ward-Perkins