Bloodbath for European markets as stocks see worst fall since March 2020

Risk aversion dominates the currency market,

said Luca Cigognini, market analyst at Intesa Sanpaolo

The collapse of US equities after President Donald Trump announced his new tariffs will be remembered in the history books, as it prompted the fourth-largest two-day drop in the S&P 500 since its inception in 1957,

BBVA said in a note to clients on Monday

Carlos Cuerpoeconomy Minister

We have the necessary tools to respond,

Spain’s Economy Minister Carlos Cuerpo stated, reflecting a growing consensus for retaliation

Ultimately, our take is market uncertainly and volatility are likely to persist for some time,

Nathan Thooft, chief investment officer and senior portfolio manager at Manulife Investment Management, told the Associated Press

Companies like BAE Systems, Rheinmetall, Thales, Saab, and Leonardo have already established — and in many cases expanded — their industrial footprint in the U.S., in anticipation of a potential Trump re-election. This local presence not only supports their access to U.S. defense contracts but also provides a hedge against tariffs,

Muharremi said

What we've seen in Europe right now is that we've seen just this change in mindset, and that we now have visibility. We now have five to 10 years runway of growth as we move toward 3% of GDP,

Heelan told CNBC's "Squawk Box Europe" on Monday

While it's still early to assess the full impact of the new tariffs on the defense sector, it's worth noting that Europe remains a net importer of U.S. military defense equipment,

Muharremi told CNBC via email

The next big datapoint is going to be Q1 results, where I think we will get a lot of commentary from companies about capabilities and capability reviews,

he added

What you're seeing today is just the de-grossing impact of a sector that has been very, very loved from clients, particularly over the last three to six months."

Asked for his reaction to Rheinmetall's stock price plunge on Monday, Bank of America's Heelan said

The question is will there be enough time for them to actually get those numbers in in time? Because we don't know what the retaliation measures are going to be from some of the European partners ... or even from other countries, in that sort of scenario exact numbers might be lacking in some cases,

said Chandrasekaran

The higher than expected tariff rates ... were not factored into many investors' or companies' calculations,

said Magesh Kumar Chandrasekaran, equity strategist at Barclays, ... adding that

For these companies, our initial, and rough, math would suggest material double-digit negative impacts at EBIT level,

it wrote, referring to earnings before interest and tax

Vietnam's growing role in footwear manufacturing, and given its substantial contribution to U.S. footwear imports, means the tariffs present a material headwind to sector profitability as the companies may not be able to fully offset them,

they wrote

The comments one company makes could have ramifications on others,

he said

Companies will ... probably be honest and say look, the world is a very uncertain place, they may do some kind of scenario analysis and they may lay that out for investors,

he said

So let's be prepared for surprises like a stock that reports poorly but then rises,

he said

We think global equities are unlikely to go back to recent highs anytime soon, as much damage has been done,

said Barclays strategists led by Emmanuel Cau

I don't want anything to go down. But sometimes you have to take medicine to fix something."

He said