2025-03-04 20:35

LONDON, March 4 (Reuters) - The euro and European stock futures rallied on Tuesday, while German Bund futures fell after the parties hoping to form Germany's next government agreed to create a 500 billion euro ($529.80 billion) infrastructure fund and overhaul borrowing rules. The news, which came after the close of European markets, marks a tectonic spending shift to revamp the military and revive growth in Europe's largest economy. The euro rallied and was last trading at $1.0608 , more than 1% higher on the day and at its highest level in three months. Against Britain's pound, the euro traded 0.4% higher at 82.91 pence . German and European shares are expected to open higher on Wednesday, as futures, which had fallen earlier in the day on U.S. tariff worries, rose. German Dax futures were last down 1.5% on the day after the benchmark Dax index closed down 3.5% (.GDAXI) , opens new tab. "It sends a clear signal that Germany is serious about its defence, it sends a clear signal to Ukraine and at home it sends a clear signal that Germany is serious about infrastructure spending," said Berenberg chief economist Holger Schmieding. "This is an excellent start for the new German government. This strengthens Europe and should underpin euro gains although there are trade risks to consider." Deutsche Bank said on Tuesday it had turned more positive on the euro's outlook following the headlines from Germany. "The news flow is significant enough to now shift us into an outright EUR/USD bullish view," Deutsche analysts said, adding that the bank now targets euro/dollar at $1.10. European defence company shares (.SXPARO) , opens new tab have soared in recent days as momentum to ramp up defence spending across the region gathers pace. But for bond markets, signs that additional spending could create more government bond issuance were expected to add upward pressure on bond yields. Germany's Bund futures turned sharply lower on the news. They were last down 1%. "Details around the announcement will of course be key. But this is an important step to significantly ease German fiscal policy and to start reversing years of underinvestment into the domestic economy and on defence spending," said Marchel Alexandrovich, economist at consultancy Saltmarsh Economics. In addition, markets were processing a Reuters report that U.S. President Donald Trump's administration and Ukraine plan to sign a much-debated minerals deal. ($1 = 0.9438 euros) Sign up here. https://www.reuters.com/markets/europe/german-bund-futures-fall-stock-futures-rise-debt-brake-agreement-2025-03-04/

2025-03-04 20:28

Trump vows more tariffs, dividing Republicans Trump's tax cut agenda could add trillions to debt Reuters Live coverage WASHINGTON, March 4 (Reuters) - A triumphant President Donald Trump told Congress on Tuesday that "America is back" after he reshaped U.S. foreign policy, ignited a trade war and ousted tens of thousands of government workers in six tumultuous weeks since returning to power, drawing jeers from some Democrats who walked out in protest. The primetime speech, his first to Congress since taking office on January 20, followed a second day of market turmoil after he imposed sweeping new tariffs against Mexico, Canada and China. At 100 minutes, the speech was the longest presidential address to Congress in modern U.S. history, according to The American Presidency Project. World leaders were watching Trump's speech closely, a day after he paused all military aid to Ukraine in a stark reversal of U.S. policy. The suspension followed an Oval Office blowup in which Trump angrily upbraided Ukrainian President Volodymyr Zelenskiy in front of TV cameras. The pause in aid to Ukraine has threatened Kyiv's efforts to defend against Russia, which launched a full-scale invasion three years ago, and further rattled European leaders worried that Trump is moving the U.S. too far toward Moscow. Trump devoted only a few minutes of his speech to foreign policy. He signaled a willingness to press ahead with a minerals deal with Ukrainethat was set aside after last week's disastrous White House meeting. "Simultaneously, we've had serious discussions with Russia and have received strong signals that they are ready for peace," Trump said. "Wouldn't that be beautiful?" And he repeated his promises - though without adding detail - to bring peace to the Middle East and expand the Abraham Accords, deals signed during his first term that established relations between Israel and some of its Arab neighbors. While Trump has appeared to fault Ukraine for starting the war, a new Reuters/Ipsos poll found 70% of Americans - including two-thirds of Republicans - say Russia was more to blame. Trump vowed to balance the federal budget, even as he urged lawmakers to enact a sweeping tax cut agenda that analysts say could add more than $5 trillion to the federal government's $36 trillion debt load. Congress needs to raise the nation's debt ceiling later this year or risk a devastating default. The speech shared some of the hallmarks of Trump's campaign rallies. Trump repeatedly assailed his Democratic predecessor Joe Biden, attacked immigrant criminals as "savages" and promised to ban what he called "transgender ideology," all while peppering his remarks with exaggerated or false claims. DEMOCRATIC PROTESTS "To my fellow citizens, America is back," Trump began to a standing ovation from fellow Republicans. "Our country is on the verge of a comeback the likes of which the world has never witnessed, and perhaps will never witness again." Democrats held up signs with messages like "No King!" and "This Is NOT Normal," and about half the Democrats had walked out by the end of the speech. One Texas congressman, Al Green, was ordered removed after he refused to sit down. Trump, a political brawler by nature, reveled in the disagreements. "I look at the Democrats in front of me, and I realize there is absolutely nothing I can say to make them happy or to make them stand or smile or applaud," he said after Green's ejection. The speech took place in the House of Representatives, where lawmakers huddled in fear for their lives four years ago while a mob of Trump supporters ransacked the Capitol in an unsuccessful effort to overturn Biden's 2020 victory over the then-incumbent Trump. The lawmaker Democrats chose to give their rebuttal speech, moderate U.S. Senator Elissa Slotkin, invoked an iconic Republican president in criticizing Trump. "As a Cold War kid, I'm thankful it was Reagan and not Trump in office in the 1980s. Trump would have lost us the Cold War," Slotkin, a former CIA analyst who won election in Michigan in November even as Trump carried her state, said, referring to President Ronald Reagan. "Donald Trump's actions suggest that, in his heart, he doesn’t believe we are an exceptional nation." MORE TARIFFS COMING Trump praised billionaire businessman Elon Musk and his Department of Government Efficiency, which has downsized more than 100,000 federal workers, cut billions of dollars in foreign aid and shuttered entire agencies. The president credited Musk with identifying "hundreds of billions of dollars of fraud," a claim that far exceeds even what the administration has claimed so far. Musk, seated in the gallery, received ovations from Republicans. Trump reiterated his intention to impose additional reciprocal tariffs on April 2, a move that would likely roil financial markets even more. "Other countries have used tariffs against us for decades, and now it's our turn to start using them against those other countries," he said. On this point, many Republicans remained seated, a signal of how Trump's tariffs have divided his party. Trump's 25% tariffs on Mexico and Canada, two of the country's closest allies, and an additional 10% on Chinese imports deepened investor concerns about the economy. The Nasdaq Composite is down more than 9% from its record closing high on December 16. Trump, who has often taken credit for market increases, did not mention this week's downturn. He also barely addressed stubbornly high costs, blaming Biden for the price of eggs and saying he would bring down inflation via increased energy production. Just one in three Americans approve of Trump's handling of the cost of living, according to the Reuters/Ipsos poll, a potential danger sign amid worries his tariffs could increase inflation. Trump called on Congress to pass a sweeping $4.5 trillion plan that would extend his 2017 tax cuts, tighten border security and fund massive deportations. Trump noted that his administration had already launched a border crackdown, citing February's record-low total of 8,300 migrant arrests at the U.S.-Mexico border. Those arrests are often used as a proxy to estimate illegal crossings. The Republican tax proposal calls for $2 trillion in spending reductions over a decade, with possible cuts to education, healthcare and other social services. The nonpartisan Committee for a Responsible Federal Budget estimates that Trump's full tax agenda, including elimination of taxes on tips, overtime pay and Social Security benefits, could cost between $5 trillion and $11.2 trillion over a decade. Sign up here. https://www.reuters.com/world/us/trump-address-congress-after-upending-us-foreign-domestic-policies-2025-03-04/

2025-03-04 20:26

Trump wants to announce deal in address to Congress, sources tell Reuters Bessent denies any minerals deal signing planned Zelenskiy ready to sign, calls meeting 'regrettable' NEW YORK, March 4 (Reuters) - U.S. President Donald Trump's administration and Ukraine plan to sign a minerals deal that fell through after a disastrous Oval Office meeting Friday in which Ukrainian President Volodymyr Zelenskiy was dismissed from the building, four people familiar with the situation said on Tuesday. Trump had told his advisers that he wanted to announce the agreement in his address to Congress on Tuesday evening, three of the sources said, cautioning that the deal had yet to be signed and the situation could change. However, when asked on Tuesday about the minerals deal, U.S. Treasury Secretary Scott Bessent told Fox News, "There is no signing planned," according to a post on X by a Fox reporter. The White House did not respond to a request for comment. Ukraine’s presidential administration in Kyiv and the Ukrainian embassy in Washington did not respond to requests for comment. The deal was put on hold on Friday after a contentious Oval Office meeting between Trump and Zelenskiy that resulted in the Ukrainian leader's swift departure from the White House. Zelenskiy had traveled to Washington to sign the deal. In that meeting, Trump and Vice President JD Vance berated Zelenskiy, telling him he should thank the U.S. for its support rather than asking for additional aid in front of the U.S. media. "You're gambling with World War Three," Trump said. U.S. officials have in recent days spoken to officials in Kyiv about signing the minerals deal despite Friday's blow-up, and urged Zelenskiy's advisers to convince the Ukrainian president to apologize openly to Trump, according to one of the people familiar with the matter. On Tuesday, Zelenskiy posted on X that Ukraine was ready to sign the deal and called the Oval Office meeting "regrettable." “Our meeting in Washington, at the White House on Friday, did not go the way it was supposed to be,” Zelenskiy said in his post. "Ukraine is ready to come to the negotiating table as soon as possible to bring lasting peace closer." It was unclear if the deal has changed. The deal that was to be signed last week included no explicit security guarantees for Ukraine but gave the U.S. access to revenues from Ukraine's natural resources. It also envisaged the Ukrainian government contributing 50% of future monetization of any state-owned natural resources to a U.S.-Ukraine managed reconstruction investment fund. On Monday, Trump signaled that his administration remained open to signing the deal, telling reporters in a gaggle that Ukraine "should be more appreciative." "This country has stuck with them through thick and thin," Trump said. "We've given them much more than Europe, and Europe should have given more than us." France, Britain and possibly other European countries have offered to send peacekeeping troops to Ukraine in the event of a ceasefire but would want support from the U.S. or a "backstop." Moscow has rejected proposals for peacekeeping troops. Daniel Fried, a former senior White House official and ambassador to Poland, said the path to getting the minerals deal done has been messy, but it would deliver two solid wins for Trump - Zelenskiy's statement of regret and the agreement of Britain and France to provide security and boots on the ground. "Trump can and should take the win. He'd be able to say that he ... got the Europeans to stand up in front of an issue of European security, which they've never done before," said Fried, now a fellow at the Atlantic Council. Sign up here. https://www.reuters.com/world/us-ukraine-prepare-sign-minerals-deal-tuesday-sources-say-2025-03-04/

2025-03-04 19:45

LONDON/BERLIN March 4 (Reuters) - The conservatives and the Social Democrats agreed to seek a loosening of Germany's debt brake to allow higher defence spending, as well as proposing to create a 500 billion euro ($529 billion) infrastructure fund, their leaders said on Tuesday. "We are aware of the scale of the tasks ahead of us, and we want to take the first necessary steps and decisions," said Friedrich Merz, leader of the CDU/CSU conservatives and likely next German chancellor. The euro rallied on the news and was last trading at $1.0589 , 1% higher on the day, hitting its highest levels in three months. European defence company shares have soared in recent days as momentum to ramp up defence spending across the region gathers pace. CARSTEN BRZESKI, GLOBAL HEAD OF MACRO, ING: "At face value, these two policy announcements would clearly benefit the German economy ... However, we wouldn't rule out that the official coalition talks will still bring some expenditure cuts, which would lower the positive impact of the announced fiscal stimulus. "All in all, Europe is in the midst of historical changes. The developments of the last few days have pushed the likely next German government to make a historical move by announcing a fiscal package that could finally mark the start of better years for the economy." HOLGER SCHMIEDING, CHIEF ECONOMIST, BERENBERG, LONDON: "I'm positively surprised. Germany and its government are rising to the challenges and the size of the fund is bigger than expected." "It sends a clear signal that Germany is serious about its defence, it sends a clear signal to Ukraine and at home it sends a clear signal that Germany is serious about infrastructure spending." "This is an excellent start for the new German government. This strengthens Europe and should underpin euro gains although there are trade risks to consider." MARCHEL ALEXANDROVICH, EUROPEAN ECONOMIST, SALTMARSH ECONOMICS, LONDON: "Details around the announcement will of course be key. But this an important step to significantly ease German fiscal policy and to start reversing years of underinvestment into the domestic economy and on defence spending." "Germany, above almost every other European country, has the fiscal headroom to adjust to the new economic and political reality facing its economy, and the markets should welcome the news." JENS SUEDEKUM, PROFESSOR, DUESSELDORF INSTITUTE FOR COMPETITION ECONOMICS: "The agreement … is a gamechanger. Exempting defence spending from the debt brake will enable a sustainable build-up of military capabilities, and infrastructure investment via the large special fund comes on par alongside that. What is key now is that a lot of money must actually come down the pipeline and into the right projects.” SEBASTIAN DULLIEN, RESEARCH DIRECTOR AT THE MACROECONOMIC POLICY INSTITUTE: "The result of the discussions on the special infrastructure fund and the reform of the debt brake is a real game-changer. If they succeed, the German economy's stagnation could soon be over. Not just because urgently needed investments will come, but also because the mood should shift dramatically." ($1 = 0.9454 euros) Sign up here. https://www.reuters.com/markets/europe/view-german-parties-agree-debt-brake-reform-500-billion-euro-infrastructure-fund-2025-03-04/

2025-03-04 19:44

WASHINGTON, March 4 (Reuters) - The U.S. State Department on Tuesday said it was implementing the designation of Yemen's Iran-aligned Houthi movement as a "foreign terrorist organization" after President Donald Trump's call for the move earlier this year. "The Houthis' activities threaten the security of American civilians and personnel in the Middle East, the safety of our closest regional partners, and the stability of global maritime trade," Secretary of State Marco Rubio said in a statement. "The United States will not tolerate any country engaging with terrorist organizations like the Houthis in the name of practicing legitimate international business," he added. The move, however, triggered concerns it could impact regional security and worsen Yemen's humanitarian crisis because importers fear being hit with U.S. sanctions if supplies fall into Houthi hands. "A designation like this must be coupled with appropriate safeguards and reassurances, both humanitarian assistance and the ability of civilians to commercially access central goods and services," said U.N. spokesperson Stephane Dujarric. "For humanitarian goods a lot of it comes in through the private sector. If this is not possible, it will have a devastating humanitarian impact," added Dujarric, pointing out that some 19 million Yemenis require life-saving assistance. Jakob Larsen, chief safety and security officer with the BIMCO shipping association, warned that the designation "has the potential to deteriorate the security situation." A State Department spokesperson said Tuesday's action implements the January decision to re-designate the Houthis. In January, Trump re-designated the Houthi movement as a foreign terrorist organization, aiming to impose harsher economic penalties in response to its attacks on commercial shipping in the Red Sea and against U.S. warships defending the critical maritime area. The Houthis, who control most of Yemen, have staged more than 100 such attacks since November 2023, saying they were in solidarity with Palestinians over Israel's war against Hamas in Gaza. They have sunk two vessels, seized another and killed at least four seafarers. They also targeted Israel with missile and drone strikes. In January, the Houthis' leader said the militants would monitor implementation of an Israel-Hamas ceasefire and resume strikes on commercial vessels or Israel if the deal was breached. The attacks have disrupted global shipping, forcing firms to re-route to longer and more expensive journeys around southern Africa. Larsen said those traffic patterns "are largely unchanged" and that given the Gaza ceasefire's uncertain future and the potential for U.S. or Israeli strikes on the Houthis "the security threat is increasing." At the start of his term in 2021, former President Joe Biden dropped Trump's terrorist designations to address the humanitarian concerns in Yemen. Confronted with the Red Sea attacks, Biden last year designated the group as a "Specially Designated Global Terrorist" organization. But his administration held off on applying the harsher FTO designation. Sign up here. https://www.reuters.com/world/us/us-state-designates-yemens-houthis-foreign-terrorist-organization-2025-03-04/

2025-03-04 19:16

Canadian dollar falls 0.2% against the greenback Touches its weakest since February 3 at 1.4543 U.S. imposes 25% tariff on Canadian goods Two-year yield hits nearly three-year low TORONTO, March 4 (Reuters) - The Canadian dollar weakened to a one-month low against its U.S. counterpart on Tuesday as investors raised bets on further interest rate cuts from the Bank of Canada after the start of a trade war likely to badly hurt Canada's economy. The loonie was trading 0.2% lower at 1.4510 per U.S. dollar, or 68.92 U.S. cents, after touching its weakest intraday level since February 3 at 1.4543. Canadian Prime Minister Justin Trudeau told U.S. President Donald Trump that his new 25% tariffs on Canadian goods were "a very dumb thing to do" and said Ottawa was striking back immediately. Trump threatened to hike tariffs on Canadian goods even higher, in an apparent reference to a U.S. plan to impose "reciprocal tariffs" on global trading partners on April 2. "This is only the first shot of the tariffs. There is more pressure coming to bear," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. "This is going to force the Bank of Canada to cut rates next week." Investors see a roughly 90% chance that the BoC will reduce its benchmark rate by a further 25 basis points on March 12, after lowering the rate to 3% in January to support the economy. Oil, one of Canada's major exports, was trading 0.2% lower at $68.25 a barrel following reports that OPEC+ will proceed with a planned output increase in April. Canadian bond yields were mixed across a steeper curve. The 2-year was down 4.1 basis points at 2.436%, its lowest since April 2022. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-edges-higher-investors-weigh-tariff-sustainability-2025-03-04/