European equities retreated on Thursday, reflecting renewed investor anxiety over U.S. trade policy and its potential spillover effects on the region’s industrial and healthcare sectors. The pan-European Stoxx 600 provisionally closed down 0.71%, with declines seen across all major bourses. The move underscores the sensitivity of European markets to geopolitical developments and global trade tensions, particularly as sectors tied to industrial machinery and medical technology confront regulatory scrutiny from Washington.

Medtech Stocks Bear the Brunt

Shares of medical technology leaders were among the hardest hit. Siemens Healthineers declined 3.5%, Philips dropped 3%, and Convatec fell 5.6%, following the Trump administration’s announcement of a national security probe into U.S. imports of medical devices, robotics, and industrial machinery. Analysts warn that such investigations could signal the next wave of U.S. tariffs, adding risk for European exporters and prompting heightened caution among investors.

The probe highlights the intersection of trade policy and national security concerns, creating uncertainty for companies heavily reliant on U.S. markets. For European medtech firms, the potential for disrupted supply chains or added import costs may weigh on earnings projections and valuations, at least in the near term.

Mixed Corporate Signals

Not all sectors experienced declines. Retail emerged as a relative bright spot, led by H&M, whose shares surged 9.8% after a strong third-quarter earnings beat. Similarly, British investment firm Petershill Partners jumped more than 33% after announcing plans to delist from the London Stock Exchange, a move that investors interpreted as value-accretive.

In contrast, software giant SAP closed 1.2% lower after the European Commission opened an antitrust probe into the company’s practices. While SAP maintains that its operations comply with competition rules, ongoing regulatory scrutiny introduces uncertainty and may influence investor sentiment.

Broader Economic Backdrop

Beyond sector-specific pressures, European investors remain attentive to macroeconomic signals. Consumer confidence in Germany showed tentative improvement, according to GfK and the Nuremberg Institute for Market Decisions, largely due to rising income expectations. Nevertheless, experts caution that the overall climate remains weak, with geopolitical instability, labor market concerns, and inflationary pressures likely to restrain a robust recovery.

Across the Atlantic, U.S. data offered a mixed backdrop. Weekly jobless claims fell to 218,000, signaling a resilient labor market, while Federal Reserve Chair Jerome Powell emphasized that the easing labor market is influencing monetary policy, prompting a rate cut earlier this week. Such developments have implications for European exporters and multinational corporations, particularly those sensitive to changes in global interest rates and consumer demand.

Looking Ahead

Investor attention will likely remain focused on the outcome of the U.S. medical device probe and its implications for European exports. Companies in affected sectors may face continued volatility, and regulatory developments—both in the U.S. and EU—will shape market dynamics. Positive corporate earnings, strategic moves, and stable consumer sentiment could provide pockets of resilience, but broader trade and geopolitical risks suggest that caution may remain warranted for European equities in the weeks ahead.