New York (AFP) – Global stocks rallied on Wednesday, buoyed by Germany’s plan to massively boost spending on defense and a move by the White House to pause tariffs on auto imports from Mexico and Canada. In European trading, Frankfurt surged 3.4 percent after the likely next chancellor, Friedrich Merz, announced the spending plans in the hope of also reviving Europe’s biggest economy. European defense and manufacturing stocks also climbed as bourses in Paris and Milan won solid gains.
“This is huge,” Kathleen Brooks, research director at XTB trading platform, said in reaction to the news out of Germany. “For years, economists have said that Germany needed to change its spending rules to get out of the economic hole. It’s taken a Conservative chancellor-in-waiting to pull the trigger,” she added.
Back in New York, Wall Street stocks got a positive jolt from President Donald Trump’s latest pivot on tariffs. US automakers have been among the most exposed to Trump’s trade policy, with 25 percent tariffs on Mexico and Canada, warning of devastating impacts from the levies. But following talks with the “Big Three” US automakers — Stellantis, Ford and General Motors — Trump decided to “give a one-month exemption on any autos coming through USMCA,” White House Press Secretary Karoline Leavitt said, referring to the North American free trade pact.
Shares of each of the three automakers rose about six percent or more, while auto supply companies like Magna International and Lear also gained as the broader market picked up momentum. The three major US indices finished up by more than one percent. “It confirms what investors suspect, which is that Trump & Co are watching the markets and they don’t want to have a bear market named after them,” said Jack Ablin of Cresset Capital.
In Asia, investors welcomed China’s economic targets for the coming year and the prospect of tariff relief, with Hong Kong closing up almost three percent. China set an annual growth target of around five percent and vowed to make domestic demand its main economic driver, as lawmakers attended the annual meeting of the National People’s Congress. Beijing also announced a rare hike in fiscal funding, allowing its budget deficit to reach four percent of its GDP this year.
It comes alongside a pledge to create 12 million new jobs in China’s cities and a push for two percent inflation this year. The world’s second-largest economy is also planning to increase defense spending by 7.2 percent, the same as last year. But observers have tempered expectations for an expected stimulus given that China is facing strong economic headwinds, especially in light of US tariffs. These include a persistent property sector debt crisis, stubbornly low consumer demand, and stuttering employment for young people.
– Key figures around 2130 GMT –
New York – Dow: UP 1.1 percent at 43,006.59 (close)
New York – S&P 500: UP 1.1 percent at 5,842.63 (close)
New York – Nasdaq Composite: UP 1.5 percent at 18,552.73 (close)
London – FTSE 100: DOWN less than 0.1 percent at 8,755.84 (close)
Paris – CAC 40: UP 1.6 percent at 8,173.75 (close)
Frankfurt – DAX: UP 3.4 percent at 23,081.03 (close)
Tokyo – Nikkei 225: UP 0.2 percent at 37,418.24 (close)
Hong Kong – Hang Seng Index: UP 2.8 percent at 23,594.21 (close)
Shanghai – Composite: UP 0.5 percent at 3,341.96 (close)
Euro/dollar: UP at 1.0790 from 1.0626 on Tuesday
Pound/dollar: UP at $1.2896 from $1.2795
Dollar/yen: DOWN at 148.89 from 149.79 yen
Euro/pound: UP at 83.67 pence from 83.05 pence
West Texas Intermediate: DOWN 2.9 percent at $66.31 per barrel
Brent North Sea Crude: DOWN 2.5 percent at $69.30 per barrel
burs-jmb/bfm
© 2024 AFP
