European stocks open on Wednesday as optimistic U.S. President Donald Trump’s 25% tariffs in Canada and Mexico It may be relaxed, and investors are also closely watching potential reforms in Germany’s controversial debt braking system.
this Stoxx 600 Shortly after opening, the index was 1.33% higher A huge downturn in global stocks on Tuesday About tariffs. In the last session, the STOXX Automobile Index fell to nearly 6%, rebounding by 2.7%. Utilities, food and beverages are the red industries.
Germany’s conservative coalition and Social Democrats on Tuesday – the two groups expect to form the next coalition government Last month’s election – Agree to try to reform the constitutional debt brake system to make defense spending exceed 1% of GDP. Friedrich Merz Say they will Seeking to create a 500 billion euro ($529 billion) special infrastructure fund in credit funds within a decade.
Changes or exemptions to the debt brake system have been seen as crucial and a way to relax the finances Promote Germany’s struggle economy and increase military spending. This step is still politically controversial.
The yield on Germany’s 10-year bonds was considered the euro zone benchmark, up more than 21 basis points at 7:59 am London time to 2.697%. The yield in 2 years increased by 14 basis points.
The euro extended it against the dollar by 0.48% late Tuesday.
Euro/USD.
“At this stage, it seems Germany will comfortably cut its GDP by more than 3% in the coming years, rather than keeping the deficit around 2.5% as we previously assumed,” Andrew Kenningham, chief economist at Capital Economics, said on a Tuesday.
He said the German announcement showed Merz was “ready to take decisive economic action”, but the additional borrowing needed to fund additional spending would put pressure on the Bund yield.
Elsewhere, the introduction of fresh U.S. tariffs has been raising global market sentiment due to concerns that they will restart inflation and escalate the global trade war.
Wall Street has seen a two-day decline 25% tariffs in Canada and Mexico Effective Tuesday An additional 10% tariff About Chinese products. The three countries announced retaliation measures.
