European stocks advance before German spending vote ~ EconomyLens.com

London (AFP) – European stocks rose on Tuesday as investors prepared for Germany’s lawmakers to vote on a massive spending boost for defence and infrastructure, while escalating geopolitical fears supported commodities. Gold and oil prices climbed on fears of escalating tensions in the Middle East after Israel launched its most intense strikes on Gaza since a ceasefire with Hamas took effect.

A weaker US dollar and uncertainty ahead of a telephone call about Ukraine between US President Donald Trump and Russian leader Vladimir Putin also helped boost the safe-haven metal. The Frankfurt stocks index advanced more than one percent as concerns grow over the United States’ wavering commitment to European defence. “International investors, who have increasingly invested in German stocks over the past few months, are hopeful for a significant boost in fiscal policy,” said Jochen Stanzl, chief market analyst at trading group CMC Markets.

Paris and London stock markets also advanced, as did the euro. Investors are also eyeing this week’s policy decisions from the Federal Reserve, Bank of Japan and Bank of England, with all three forecast to stand pat on interest rates. “A ‘wait and see’ approach is expected as the Fed grapples with the tough task of evaluating the impact of Trump’s tariff chaos,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown. The US central bank’s announcement comes also with updates to its outlook for the economy and interest rates this year, in light of Trump’s trade measures as well as plans to slash taxes, immigration and federal jobs.

Asian markets rallied on Tuesday following another positive day on Wall Street stoked by US data that tempered concerns about a possible recession. Hong Kong led gains thanks to further buying of Chinese tech firms including Alibaba, Tencent and JD.com. Electric vehicle maker BYD was also a big winner, adding more than four percent — having jumped more than six percent to a record at one point — after unveiling battery technology it says can charge in five minutes. Shanghai also rose, along with Tokyo.

Trading in Jakarta was halted as the market tanked more than seven percent — its biggest intraday drop since 2011 — on worries about the Indonesian economy and weakening consumer spending heading into the Muslim Eid holiday period. It later resumed and pared its losses to four percent. The bourse has plunged more than 10 percent so far this year as the economy struggles, and eyes are now on the country’s central bank ahead of a policy decision due on Wednesday.