Market Overview - U.S. stock futures indicate a potential selloff as the Stoxx Europe 600 index fell by 1.2%, particularly affecting export-sensitive stocks [1] - Investors are increasingly turning to gold and silver amid market uncertainties [1] Automotive Sector - Shares of German automakers Mercedes-Benz and Volkswagen declined by over 2%, while Daimler Truck Holding's stock fell approximately 3% [2] - French luxury brand LVMH and German sportswear company Adidas both saw declines of around 4% [2] Defense Sector - Defense stocks have shown resilience, with Saab shares rising over 4%, and Rheinmetall and BAE Systems increasing by 3% and over 1% respectively [3] - The European defense sector has attracted significant investment due to ongoing geopolitical tensions, with Saab shares up 36% in January and a remarkable 248% increase over the past year [4] Analyst Insights - Morgan Stanley analysts maintain an overweight position on the European defense sector, citing the need for enhanced security and strategic autonomy in light of recent tariff threats [5] - Analysts predict limited tactical downside for EU equities and expect continued diversification flows into the region [6] Currency and Tariff Developments - The euro has appreciated by 0.4% against the dollar, which has struggled since early 2025 [7] - President Trump's announcement of a 10% import tariff on several European countries starting February 1, escalating to 25% by June 1, has raised concerns [7] - The E.U. is contemplating a $93 billion tariff package on U.S. goods, with France advocating for the activation of the Anti Coercion Instrument to counter U.S. economic pressure [8]