Europe open: Shares slide as Trump tax cuts plan spooks investors
By Frank Prenesti
Date: Thursday 22 May 2025
(Sharecast News) - European markets opened lower on Thursday as worries increased about the growing US budget deficit amid President Donald Trump's plan for massive tax cuts.
The pan-regional Stoxx 600 index was down 0.7% at 550 in early deals with all major bourses in the red. US shares fell overnight after a lacklustre bond auction and surging yields. The Dow dropped 1.9%, while the S&P 500 fell 1.6% and the Nasdaq slumped 1.4%.
There was softer-than-expected demand in a $16bn auction of 20-year bonds on Wednesday at yields of 5.047%, up from 4.810% the last auction. This was the highest coupon rate for a 20-year bond since 2020 when the maturity was reintroduced.
Fears are mounting about the US government deficit with large tax cuts put forward by Trump unlikely to help matters. Meanwhile, last Friday's decision by Moody's to cut the US credit rating from the highest rating Aaa to Aa1 was also weighing on global sentiment.
"It took a day or two longer than I thought but it's now in progress - stocks are starting to wake up to the strife in bond markets. Trouble has been brewing in the bond market for weeks and now it's spread to the stock market," said Saxo Markets analyst Neil Wilson.
"Worries about the US fiscal position and economy, with Donald Trump's "big, beautiful" tax bill about to be signed that will raise debt and possibly inflation, as well as a weak 20 year auction, pushing bond yields higher. Stocks fell as investors realised this is not a drill - as heard on the floor earlier this week, they will break the equity market to save the bond market."
In equity news, budget airline easyJet flew lower after first-half losses widened, while BT Group was down after its annual results.
Johnson Matthey surged by a third after the British chemicals firm agreed to sell its unit to Honeywell International for £1.8bn including debt.
Freenet slumped by 13% after the German telecoms firm reported its first-quarter numbers.
Reporting by Frank Prenesti for Sharecast.com
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