ECB May Need to Hold Rates Amid ‘Two-Sided' Risks, Knot Tells FT
The European Central Bank may have to keep borrowing costs steady for the forseeable future as officials confront both upside and downside risks to consumer prices, Governing Council member Klaas Knot said.
Speaking to the Financial Times, the Dutch governor, whose term ends this month, said he couldn't rule out a further reduction but said that colleagues will need to judge how the trade war and energy prices impact the economy.
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UK vehicle production down by a third in May, as US tariffs hit
UK car and commercial vehicle production fell for the fifth consecutive month in May, down 32.8% to 49,810 units, according to the latest figures published by the Society of Motor Manufacturers and Traders (SMMT). Excluding 2020, when Covid lockdowns saw factories shuttered or running at greatly reduced capacity, it was the lowest performance for the month since 1949. Year to date, total output is down 12.9% on 2024, to 348,226, the lowest since 1953. Car production declined by 31.5% in the month. The SMMT said the result was 'due primarily to ongoing model changeovers, restructuring and the impact of US tariffs'. Commercial vehicle output was also down sharply, by 53.6% to 2,087 units, as the closure of one of the UK's CV plants continues to impact comparisons with last year. Car production for export fell by 27.8%, although a 42.1% fall in output for the smaller domestic market meant exports comprised a larger share of production, up to 78.5%. Shipments to the EU and US, the UK's two largest markets, fell by 22.5% and 55.4% respectively with the US share of exports declining from 18.2% to 11.3%. This was in large part due to the imposition by the US administration of supplementary 25% Section 232 tariffs on cars from March which depressed demand instantly, forcing many manufacturers to stop shipments. However, with the trade agreement negotiated by government due to come into effect before the end of June, this should 'hopefully be a short-lived constraint', the SMMT said. Declines were also recorded in exports to China and Turkey, down 11.5% and 51.0% respectively. Export volumes of vans, buses, coaches, taxis and trucks also declined in May, down by 71.7% year on year. The EU remained overwhelmingly the sector's biggest customer, accounting for 94.7% of exports, although volumes fell -72.1%. As a result, the export share of overall commercial vehicle production fell from 67.9% to 41.4%, with the domestic market now the primary destination for UK commercial vehicle output.3 Mike Hawes, SMMT Chief Executive, said: 'While 2025 has proved to be an incredibly challenging year for UK automotive production, there is the beginning of some optimism for the future. 'Confirmed trade deals with crucial markets, especially the US and a more positive relationship with the EU, as well as government strategies on industry and trade that recognise the critical role the sector plays in driving economic growth, should help recovery. With rapid implementation, particularly on the energy costs constraining our competitiveness, the UK can deliver the jobs, growth and decarbonisation that is desperately needed.' "UK vehicle production down by a third in May, as US tariffs hit " was originally created and published by Just Auto, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
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Stocks rise as US-China reach trade deal framework
European stocks rose Friday as the United States and China moved closer to a trade deal and as hopes of a further delay to reciprocal tariffs were boosted. With the Israel-Iran ceasefire holding, investors turned attention back to the wider economy and the US president's trade war. "The key theme for markets in the next week and a half will be US trade agreements," ahead of the July 9 deadline ending reciprocal tariff reprieves, said Kathleen Brooks, research director at trading group XTB. President Donald Trump on Thursday said the United States had signed a deal relating to trade with China, without providing further details. China said Friday that Washington would lift "restrictive measures", while Beijing would "review and approve" items under export controls. Adding to positive market sentiment, US Treasury Secretary Scott Bessent said a "revenge tax" on foreign-owned companies would be dropped from Trump's tax bill as he signalled a forthcoming agreement with G7 nations to exempt US firms from certain taxes. European stock markets rose Friday, with the Paris CAC 40 leading the way around midday, boosted by a rise in luxury stocks. Traders brushed off data showing that inflation edged up in France and Spain in June, even as it added to speculation that the European Central Bank may pause its interest rate-cut cycle. Investor also awaited the release of the US Federal Reserve's preferred inflation measure for May due Friday. In Asia, Tokyo rallied more than one percent to break 40,000 points for the first time since January, while Hong Kong and Shanghai equities closed lower. Separately on Thursday, the White House indicated that Washington could extend a July deadline when steeper tariffs affecting dozens of economies are due to kick in. The president imposed a 10-percent tariff on goods from nearly every country at start of April, but he put off higher rates on dozens of nations to allow for talks. - Weaker dollar - The dollar held around three-year lows Friday as traders ramp up bets on US interest rate cuts, especially after Trump hinted at replacing Fed chief Jerome Powell. The prospect of lower borrowing costs sent the Dollar Index, which compares the greenback to a basket of major currencies, to its lowest level since March 2022. Weak economic data on Thursday -- showing that the world's top economy contracted more than previous estimate in the first quarter and softer cosumer spending -- further fuelled rate cut expectations. All three main equity indices on Wall Street rallied Thursday, with the Nasdaq hitting a record high and the S&P 500 within a whisker of a new closing peak. In company news, shares in Chinese smartphone maker Xiaomi jumped more than three percent to a record high in Hong Kong as it enjoyed strong early orders for its YU7 sport utility vehicle, its second foray into the competitive electric vehicle market. - Key figures at around 1040 GMT - London - FTSE 100: UP 0.5 percent at 8,781.49 points Paris - CAC 40: UP 1.3 percent at 7,654.06 Frankfurt - DAX: UP 0.7 percent at 23,806.46 Tokyo - Nikkei 225: UP 1.4 percent at 40,150.79 (close) Hong Kong - Hang Seng Index: DOWN 0.2 percent at 24,284.15 (close) Shanghai - Composite: DOWN 0.7 percent at 3,424.23 (close) New York - Dow: UP 0.9 percent at 43,386.84 (close) Euro/dollar: UP at $1.1704 from $1.1701 on Thursday Pound/dollar: DOWN at $1.3724 from $1.3725 Dollar/yen: UP at 144.59 yen from 144.44 yen Euro/pound: UP at 85.29 pence from 85.22 pence West Texas Intermediate: UP 0.7 percent at $65.70 per barrel Brent North Sea Crude: UP 0.6 percent at $67.07 per barrel dan-ajb/bcp/lth Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
