LIVE MARKETS-"Either way, the EU consumer pays"

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"EITHER WAY, THE EU CONSUMER PAYS"

Speculation is going wild about what U.S. President Donald Trump might unveil tonight after anticipating yesterday on social media that "TOMORROW NIGHT WILL BE BIG".

Traders are wondering whether it could be something new about tariffs, Ukraine or any new DOGE findings.

Clearly, against this backdrop, equities are pulling back. And in Europe, tariff-exposed autos .SXAP are getting particularly hit, down 4%, as new trade barriers mean their cross-border supply chains become more costly.

But there is also a twist in the defence sector to factor in.

Citi is wondering how long it will it take before European governments hike consumer taxes to pay for a significant increase in defence spending.

"That would obviously be less helpful for autos," Citi analyst Harald Hendrikse writes.

"In countries with less funding headroom (almost all West EU countries), it seems likely that large increases in defence spending will have to come from tax increases (or less likely social security spending cuts). Either way, the EU consumer pays."

(Danilo Masoni)

EARLIER ON LIVE MARKETS:

SWISS BULLS CHARGE ON DEFENSIVE PLAYS CLICK HERE

IS THE EURO STRENGTH A SIGN OF 'ASSERTIVENESS'? CLICK HERE

VOLATILITY POPS, STOXX DROPS CLICK HERE

BEFORE THE BELL: TARIFF WOES, DEFENCE POINTS HIGHER CLICK HERE

NEW TRUMP TARIFFS TAKE EFFECT, EU ALSO IN CROSSHAIRS CLICK HERE