China jitters, earnings drag Europe’s STOXX 600 down 2% to three-month low

Europe’s main index plunged 2% to a near three-month low on Tuesday, as concerns over the fate of U.S.-China relations cast a shadow over stocks with significant exposure to the world’s No. 2 economy, while some downbeat earnings also weighed.

The STOXX 600 also notched its steepest one-day decline since early August after Monday’s 1% jump.

European equities have been under stress as investors assessed the likelihood of tariff increases after Trump’s sweeping U.S. presidential victory last week.

China-related assets struggled globally as Trump is expected to tap U.S. Senator Marco Rubio to be his secretary of state, who has in past years advocated for a muscular foreign policy with respect to America’s geopolitical foes, including China.

“As he’s forming his teams and the names are coming through, the market is having a realization of what could be coming,” said Fiona Cincotta, senior market analyst at City Index.

“China’s economic position is quite fragile and if you’re having huge tariffs being placed on China when it’s already weak, that’s going to impact its imports and that will naturally affect Europe.” Basic resources slumped 3.7% as most metal prices fell, with Polish miner KGHM dropping 9.2% and one of the worst-hit on the STOXX 600. Personal and household goods, which houses heavyweight China-exposed luxury firms, dropped 2.4%. The broader luxury index was also down nearly 4%.

However, the technology sector was largely flat in the face of deep sectoral losses, driven by a 4% jump in Temenos following the Swiss banking-software company’s strategic plan to accelerate growth over four years.

Among earnings-driven losses, German group Bayer slumped 14.5% after warning weak agricultural markets could dent its earnings further next year.

Brenntag eased 5% after the German chemicals distributor reported a third-quarter core profit miss, dragging the chemicals sector 3% lower.

Italy’s Mediobanca dropped 8.2% after cutting its full-year net interest income forecast.

UK’s Convatec Group jumped 22% after the medical products and technologies firm raised its FY24 organic sales growth forecast.

Infineon reversed course to rise 4% after falling initially, as the German chipmaker forecast lower 2025 revenue due to weak demand in its end markets aside from AI.

Meanwhile, German inflation rose to 2.4% in October, confirming preliminary reading, with investor morale clouded this month amid Trump’s win and collapse of the Berlin government.

A U.S. inflation reading and minutes from the European Central Bank’s last policy meeting are due later in the week.