2025-03-14 11:45
German parties agree deal to massively boost spending European stocks rally, euro gains German 10-year Bund yields eye 3% LONDON, March 14 (Reuters) - European stock markets rallied on Friday as news of an agreement between German political parties on a historic debt deal added to optimism that has swept across the region, but analysts warned of the challenges ahead. Germany's benchmark DAX (.GDAXI) , opens new tab index was up almost 2%, while mid- (.MDAXI) , opens new tab and small-caps (.SDAXI) , opens new tab rose over 3% each, The euro gained 0.5% to $1.0907 - taking its gains so far this month to 5%. Sign up here. The trigger for the latest euphoria was a source-based report that German chancellor-in-waiting Friedrich Merz had reached an agreement with the Greens on a massive increase in state borrowing in Europe's largest economy. It is the latest sign of fast-moving developments to ramp up defence and infrastructure spending that economists expect will boost Germany's long-term growth profile and in turn that of the broader euro bloc. "They’ve managed to get over the first hurdle. There are a lot of challenges still to come," said Nicholas Rees, head of macro research at Monex Europe in London. "In Germany it takes a long time to spend money. So, despite the fact markets are very optimistic right now, we think they’re going to be disappointed." Others analysts too noted that the speed of the rally across European markets as well as the selloff in the German bonds -- as investors anticipate increased bond supply to fund spending -- was likely to be tempered as caution sets in. Germany's benchmark stock index is set for its best quarter since 2020, with gains of over 15%, while benchmark 10-year Bund yields are set for the biggest quarterly jump since 2022. The 10-year Bund yield was last trading at 2.9%, up 8 basis points on the day . "This is positive for Germany but there are questions marks on how quickly the plans can be delivered," said Rabobank head of rates strategy Richard McGuire. "The speed at which the funds can be deployed is questionable." Merz wants the outgoing German parliament to approve a 500 billion euro fund for infrastructure and sweeping changes to borrowing rules to revive growth and ramp up military spending in the continent's largest economy. Analysts said Bund yields would likely struggle to push significantly above the 3% mark for now. The euro meanwhile rallied 0.5% to $1.0903, and was up 1.3% against the yen and 0.5% against the pound . Further euro gains were also likely to be limited, analysts said, with worries about U.S. tariffs likely to temper sentiment. U.S. President Donald Trump on Thursday threatened to slap a 200% tariff on wine, cognac and other alcohol imports from Europe, opening a new front in a global trade war that has roiled financial markets and raised recession fears. "We certainly expect euro-dollar to retrace lows, we’re looking for euro-dollar to hit $1.03, as the market starts to price out some of these easing expectations in the U.S., as it becomes apparent these recession fears are overblown… and we’ve still got tariffs coming (on Europe)," said Rees at Monex Europe https://www.reuters.com/markets/europe/euro-zone-markets-rally-reports-that-german-parties-agree-fiscal-deal-2025-03-14/
2025-03-14 11:32
LONDON, March 14 (Reuters) - British police said on Friday they have charged the Russian captain of a container ship that crashed into a U.S. tanker earlier this week with manslaughter and gross negligence. The 59-year-old Vladimir Motin was captain of the Portuguese-flagged Solong that hit the Stena Immaculate tanker, carrying military jet fuel, at close to full speed on Monday. Sign up here. Motin has been remanded in police custody, and will appear at Hull Magistrates Court on Saturday, the police said. One crew member, 38-year old Filipino national Mark Angelo Pernia, died, Britain's Crown Prosecution Service said, while 36 other crew members survived and were brought to shore. The collision caused huge fires and explosions, and spilled jet fuel into the sea. Initial concerns of an environmental disaster subsided as assessments showed the jet fuel had mostly burned off and there was no sign of other leaks from either ship. Salvage companies boarded the two vessels on Thursday and were carrying out initial damage assessments, the coastguard said. In an update on Friday, it said there were only small periodic pockets of fire, which were not causing "undue concern". Police said extensive lines of inquiry were continuing but it was taking time given the vessels were still at sea and there were a large number of witnesses involved. Russia's embassy in London said in a statement shared on messaging platform Telegram that it had a "detailed telephone conversation" with the captain on Thursday, and that he was feeling well. The embassy said it was also in close contact with British authorities. The incident comes at a time of fraught relations between London and Moscow. Five Russian citizens were on board the container vessel, TASS has said, citing the embassy. https://www.reuters.com/world/uk/uk-police-given-more-time-question-ship-crash-captain-2025-03-14/
2025-03-14 11:31
FRANKFURT, March 14 (Reuters) - European Central Bank policymaker Robert Holzmann backs keeping interest rates unchanged next month as higher trade tariffs and more government spending raise the risk of a new surge in inflation, he said in an interview published on Friday. The ECB cut rates for a sixth time last week and sources told Reuters the chances of a pause next month were rising along with uncertainty about the economic outlook in Europe and abroad. Sign up here. Holzmann, who alone refused to back the rate reduction last week, hopes more of his colleagues on the Governing Council will join him at the April 17 meeting. "I am in favour of a possible interest rate pause in April," the Austrian central bank governor told Der Platow Brief, a German financial newsletter. "The next meeting will be about how many Council members who have so far supported the cut but have expressed concerns can then decide against a further interest rate cut," he added. He said the ECB could still resume lowering borrowing costs in the summer, perhaps as early as the June meeting when it publishes new economic projections. Equally, he said rates might need to rise if tariffs, greater spending on defence or a relaxation of Germany's "debt brake" result in higher inflation. "In that case, monetary policy would likely have to go in the other direction," said Holzmann, whose term of office runs out in August. https://www.reuters.com/markets/europe/ecbs-holzmann-backs-holding-rates-april-inflation-risks-2025-03-14/
2025-03-14 11:27
What matters in U.S. and global markets today By Mike Dolan , opens new tab, Editor-At-Large, Financial Industry and Financial Markets Sign up here. It's Friday, so today I'll provide a quick overview of what's happening in global markets and then offer you some weekend reading suggestions away from the headlines. Today's Market Minute * U.S. President Donald Trump on Thursday threatened to slap a 200% tariff on wine, cognac and other alcohol imports from Europe, opening a new front in a global trade war that has roiled financial markets and raised recession fears. * Top U.S. Senate Democrat Chuck Schumer on Thursday said he would vote to advance a Republican stopgap funding bill, signaling that his party would provide the votes to avert a government shutdown. *The European Central Bank has given UniCredit approval to buy up to 29.9% of Commerzbank, the Italian bank said on Friday, adding it would likely wait until next year before deciding whether to pursue an acquisition. * Germany's Chancellor-in-waiting Friedrich Merz urged sceptical lawmakers on Thursday to back his proposals for a massive increase in state borrowing, framing them as a test for Germany to stand tall on the world stage and safeguard European security. * China's Hong Kong and Macau Affairs Office reposted a commentary criticising CK Hutchison's port deal with U.S. firm BlackRock as a betrayal of China, sending shares of the Hong Kong-based conglomerate sharply lower on Friday. Shutdown reprieve The S&P 500 (.SPX) , opens new tab on Thursday clocked a technical 10% correction from recent highs for the first time since 2023, but it may get some relief at the end of a torrid week from signs that a partial U.S. government shutdown may be averted. With losses of more than 4% for the week through Thursday's close, the S&P 500 was on course for its worst week in two years, but futures bounced overnight as one of the multiple clouds hanging over the market appeared to pass after the bell. Top U.S. Senate Democrat Chuck Schumer said he would vote to advance a Republican stopgap funding bill, signaling that his party would provide the votes needed to avert a government shutdown before the midnight deadline on Friday. But risk of a partial government shutdown was just one of the uncertainties weighing on stocks, which include an escalating global trade war and fears that it may sow a rare downturn in the economy. With few major economic updates this week and the Federal Reserve's latest policy meeting coming next week, markets will likely focus today on the University of Michigan's latest survey on consumer confidence. Economic jitters appear to be undermining investment confidence beyond stocks, as high yield bond risk premiums (.MERH0A0) , opens new tab have widened off recent lows without further drops in benchmark Treasury yields. So called junk spreads on the sub-investment grade corporate bond index expanded to their widest in more than six months to 340 basis points on Thursday, with high-yield volatility gauges (.VIXHY) , opens new tab hitting their highest since November 2023. Overseas, stocks indexes caught a break on Friday as Wall Street futures stabilized, despite ongoing losses in some sectors in Europe wary of upcoming U.S. tariffs. Chinese mainland shares (.CSI300) , opens new tab jumped more than 2% on fresh domestic stimulus hopes. China's financial regulators urged institutions to boost support for consumption, promising in a statement on Friday to relax consumer credit quotas and loan terms. Meanwhile, the dollar (.DXY) , opens new tab ticked higher, and gold surged to a another record high. Weekend reading suggestions Here are some articles away from the day-to-day headlines that you may find interesting. * Former Reserve Bank of India boss and ex-IMF chief economist Raghuram Rajan takes "Trumponomics' to task , opens new tab in a post on Project Syndicate and asks if Trump's agenda is worth it if the price is America's 'exorbitant privilege'. * Washington's Institute of International Finance , opens new tab takes a look at Trump policies today and frets about the sustainability of America's debt trajectory, with its models showing tax hikes or spending cuts of over 2.5% of GDP needed to steady the ship. * Voter regret? Reuters shows how DOGE job cuts are bringing pain to Trump supporters. * The Bank for International Settlements , opens new tab' quarterly review this week talked of the risks that markets and economies face because of "tariffs wrapped in uncertainty" and "the race between the growth trajectory and the debt trajectory". * This year's Central Banking magazine prize for economic research at central banks goes to Adrian, Boyarchenko and Giannone , opens new tab for their work on 'growth at risk' models and the use of financial conditions gauges to predict downturns. * As European defence and fiscal policies have been transformed this year and defence stocks have soared, Reuters reporters show how many of Europe's money managers are reviewing ESG policies to find ways to take part in the shift. * In the meantime, former Airbus boss Tom Enders is urging Europe to prepare for the worst by leading the race to build armed robots. * The messy world of sovereign debt restructuring and 'odious debt' turns to Syria, as explains Peterson Institute for International Economics's Adnan Mazarei , opens new tab. * Speaking of 'odious debt', some financiers are examining what may happen if those on a thrift drive at the U.S. Treasury look into the long-dormant unpaid British debts to America , opens new tab from World War One. * As the world looks back at five years since the pandemic, many are still being impacted by it directly, as ThomsonReuters Foundation's Emma Batha , opens new tab explains with her feature on "UK parents quit jobs to care for children with long COVID". Chart of the day: Next week brings a sweep of major central bank meetings that would normally hold world markets in thrall. But the scale of U.S. policy uncertainty and an unfolding global trade war mean the monetary easing of the past year will likely come to a halt as central bankers move to the sidelines and consider the fallout. Today's events to watch: * University of Michigan March consumer sentiment survey; Canada January manufacturing sales * European Central Bank board member Piero Cipollone speaks * US corporate earnings: Hudson Global, Drilling Tools, WeRide, GoGo * NATO Secretary General Mark Rutte in Washington https://www.reuters.com/markets/us/global-markets-view-usa-2025-03-14/
2025-03-14 11:17
LONDON, March 14 (Reuters) - Raw coffee price shocks take about a year to feed through to consumers while the residual impact lasts at least four years, according to a report published on Friday by the United Nation's Food and Agriculture Organisation (FAO). Thanks to persistent adverse weather crimping supplies and eating into global stockpiles, raw coffee prices have been on a tear, with arabica gaining 70% on the ICE exchange last year and more than 20% so far this year. Sign up here. According to the FAO, about 80% of these price rises will feed through to consumers over the course of 11 months in the European Union, while in the United States 80% of the rises will feed through over 8 months. The U.S. and the European Union are by far the world's largest coffee consuming regions. Price rises for consumers are likely to be much lower than the rise in the cost of raw beans as there are other factors that contribute to retail coffee prices, such as transport, roasting, packaging, certification and retail mark ups. According to the FAO report, a 1% increase in the cost of raw beans in the EU translates into a 0.24% increase in the retail price after 19 months, "with the shock persisting for several years". In terms of producing countries, the UN body said prices for coffee bean growers rose 17.8% in Ethiopia, 12.3% in Kenya, 13.6% in Brazil, and 11.9% in Colombia - a far cry from gains seen on internationally traded markets like ICE. https://www.reuters.com/markets/commodities/coffee-price-shocks-take-about-year-feed-through-consumers-un-report-says-2025-03-14/
2025-03-14 10:58
LONDON, March 14 (Reuters) - Britain's energy minister is visiting Beijing on Friday to discuss climate and energy issues, hoping that re-engaging with China - both the world's largest carbon emitter and supplier of renewable energy infrastructure - will bring economic benefits. Ed Miliband will meet Chinese energy and environment ministers during his March 14-17 visit and launch a framework for climate talks that would see his counterparts from Beijing visit London later this year, the government said in a statement. Sign up here. Miliband will seek to update a decade-old clean energy partnership with China, outlining areas where Britain wants to collaborate, including carbon capture and storage technology and hydrogen power generation. Britain is hoping its target to shift almost entirely to clean energy sources by the end of the decade will benefit from closer ties with China, which is the largest global supplier of, and investor in, renewable energy infrastructure. At the same time, Miliband wants his ambitious decarbonisation target to rub off on Chinese policy, with the government promising to share its expertise on phasing out the use of coal, which China still heavily relies upon. "We can only keep future generations safe from climate change if all major emitters act," Miliband said. "It is simply an act of negligence to today’s and future generations not to engage China on how it can play its part in taking action on climate." The visit is the latest by a senior British minister - following in the footsteps of foreign and finance ministers in recent months - as Prime Minister Keir Starmer seeks to reset relations with Beijing after a fractious decline under the previous British government. The Starmer government's approach to China is based around the mantra often repeated by ministers: "cooperating where we can, competing where we need to, and challenging where we must." Miliband will "engage frankly" on Britain's concerns about forced labour, human rights and freedoms in Hong Kong and China's support for Russia's war in Ukraine, the British government said. https://www.reuters.com/sustainability/climate-energy/britains-energy-minister-visits-china-discuss-climate-energy-cooperation-2025-03-14/
