European stocks bounced back slightly on Monday after three consecutive losing sessions, with the STOXX 600 climbing 0.5% by 08:30 GMT. However, Swiss equities dragged down the broader market, hitting their lowest levels in over three months after the U.S. imposed a steep 39% tariff on Swiss goods. The Swiss SMI index dropped 0.8% as trading resumed following a holiday, with Swiss companies making up all ten of the day’s biggest losers on the STOXX 600.
Switzerland’s key export sectors — including pharmaceuticals, watches, machinery, and chocolate — are now under pressure, with industry leaders warning the new tariff could threaten tens of thousands of jobs. The rate is significantly higher than the 15% tariff applied to the EU, Japan, and South Korea.
Pharma giants Novartis and Roche dipped 0.6% and 1.4%, respectively, following President Donald Trump’s letters to 17 major drugmakers urging them to cut U.S. drug prices. Luxury brands Richemont and Swatch, which are heavily reliant on U.S. sales, both lost nearly 1%. Swatch CEO Nick Hayek urged Swiss President Karin Keller-Sutter to meet with Trump in Washington to renegotiate the terms.
“There was always some hope the 39% tariff wouldn’t stick, but it’s hard to predict with this kind of diplomacy,” said Swissquote Bank analyst Ipek Ozkardeskaya, adding, “Trump slaps tariffs whenever he’s unhappy — these are truly unpredictable times.”
Banks, however, outperformed. British lenders rallied after the UK Supreme Court reversed a ruling on motor finance commissions, easing fears of massive compensation payouts. Lloyds rose 7.4%, topping the STOXX 600, while Close Brothers soared 20% on the UK midcap index. Barclays, Bank of Ireland, and Santander also gained over 2%.
UBS fell 1.4% after announcing a $300 million settlement over U.S. mortgage-backed securities cases tied to mis-selling.
Worries over the U.S. economy intensified Friday, as weak July jobs data and Trump’s new wave of tariffs on multiple trade partners rattled both Wall Street and European markets.
