European Stocks Drop to Two-Week Low as Trade Tensions and Michelin Weigh on Sentiment

European equities fell to their lowest levels in two weeks as renewed U.S.–China trade tensions triggered a risk-off mood and a sharp decline in Michelin shares added company-specific pressure. The STOXX 600 weakened broadly, with export-sensitive sectors such as autos, industrials, and technology leading the decline as investors reassessed earnings prospects in a more uncertain global environment.

Michelin’s stock slide followed weaker guidance and soft sales, raising concerns about slowing demand and shrinking margins across Europe’s industrial supply chain. The warning was seen as a potential signal that cyclical momentum may be fading just as global trade risks re-emerge.

Investor confidence was further strained by policy uncertainty, with the U.S. government shutdown limiting economic data and the Federal Reserve offering little clarity on future rate moves. This lack of visibility pushed investors toward defensive sectors and safe-haven government bonds.

The selloff reflects growing anxiety that Europe—highly exposed to global trade and already facing sluggish growth—may struggle if geopolitical tensions persist or corporate earnings begin to soften. The market’s reaction shows that external shocks and weakening fundamentals are starting to converge, putting pressure on valuations across the region.