Latest news with #EuropeEarlyEdition
CNBC
a day ago
- Business
- CNBC
Could the euro pose a threat to King Dollar?
U.S. President Donald Trump's tariffs regime has sparked volatility in American assets — and European officials are making no secret of wanting the euro to seize upon wavering confidence in the U.S. dollar. The dollar is the world's most commonly held reserve currency, accounting for almost 60% of global foreign exchange reserves and playing an important role in the trade of assets like oil and gold. It also acts as a peg for currencies including the Hong Kong dollar and the Saudi Riyal. In second place, trailing far behind the greenback, is the euro, which makes up around 20% of international FX reserves. The dollar index — which measures the greenback against a basket of major rivals — has fallen by more than 8% since the beginning of the year. This week, European Central Bank President Christine Lagarde said the shifting geopolitical landscape that was driving those moves gave European policymakers an opportunity to raise the euro's status. "Multilateral cooperation is being replaced by zero-sum thinking and bilateral power plays," she said on Monday in a speech at Hertie School in Berlin. "There is even uncertainty about the cornerstone of the system: the dominant role of the US dollar." This, she said, could "open the door for the euro to play a greater international role."Closing that gap was "far from guaranteed," Lagarde noted in her speech, while nevertheless suggesting that the European currency could "earn" greater global influence with the right policy mix. "First, Europe must ensure it has a solid and credible geopolitical foundation by maintaining a steadfast commitment to open trade and underpinning it with security capabilities," she said. "Second, we must reinforce our economic foundation to make Europe a top destination for global capital, enabled by deeper and more liquid capital markets. Third, we must bolster our legal foundation by defending the rule of law — and by uniting politically so that we can resist external pressures." A euro with a raised reserve currency status would bring a plethora of benefits to Europe, Lagarde added, including lower borrowing costs for regional governments, insulation from exchange rate volatility and protections for Europe from sanctions "or other coercive measures." "In short, it would allow Europe to better control its own destiny," Lagarde added. She isn't the only ECB official touting the possibilities for the euro, as confidence in the U.S. wavers. Last week, Isabel Schnabel, a member of the central bank's Executive Board, said the euro area could become a safe haven as Trump's tariffs policies take hold — giving the region "a historical opportunity to foster the international role of the euro." Market watchers who spoke to CNBC were divided on the euro's potential to seize some of the dollar's share of global FX holdings. Appearing on CNBC's "Europe Early Edition" on Friday, George Buckley, chief European economist at Nomura, said he could see upside ahead for the euro, as investors looked to diversify away from the greenback. Asked whether he agreed with Lagarde's assessment of the currency's potential, Buckley responded: "Certainly to some extent." "The dollar still is the biggest reserve currency in the world … the euro is still a distant second, but it's gaining in momentum quite significantly with all the things going on in the U.S.," he said. "I think, for sure there is going to be a lot more interest." Buckley said he was seeing suggestions that, in the current environment, investors might want to allocate their funds to assets other than the dollar. "If they're thinking of switching out of the dollar, the euro is an obvious choice," he told CNBC. "It's a huge trading bloc, and clearly the euro is benefiting from this. We think that the euro could be rising to around about $1.20 by the end of the year." The euro was trading at around $1.13 on Friday morning. Since the beginning of the year, the currency has gained more than 9% against the U.S. dollar — a move to $1.20 would mark an additional jump of around 6% from current Buckley was optimistic about the outlook for the euro, Aaron Hill, chief market analyst at FP Markets, told CNBC that the dollar's dominance "remains formidable." "The euro, while backed by the European Union's substantial economic weight, faces significant hurdles," he said. "Political fragmentation across member states and reliance on U.S. security frameworks limit its global influence." Hill added that the euro's limitations were unlikely to evaporate any time soon. "While rising U.S. debt and shifting global alliances warrant scrutiny, the euro lacks the cohesion and reach to challenge the dollar's supremacy in the near term," he told CNBC. "For now, the greenback's reign endures, unshaken." On Tuesday, John Plassard, senior investment specialist at Mirabaud Group, had told CNBC's "Europe Early Edition" that, with the U.S. dollar still accounting for almost 60% of global foreign exchange reserves, there was "no competition for the U.S. dollar" right now.
Time of India
3 days ago
- Business
- Time of India
How and why one of the Europe's biggest technology company has lost $130 billion-plus from its value in less than a year
ASML, a key player in the semiconductor supply chain , has seen its market value plummet by over $130 billion in less than a year, dropping from a peak of $429.5 billion in July 2024 to $297 billion by Tuesday's close, per S&P Capital IQ data. The decline reportedly stems from U.S. export restrictions to China and uncertainty over potential U.S. tariffs under President Donald Trump. ASML is one of the biggest technology companies in Europe. The Dutch company, the sole producer of extreme ultraviolet lithography (EUV) machines used by chipmakers like TSMC to manufacture advanced chips, has faced significant headwinds. 'All the equipment manufacturers in the space have come down because they are concentrating all the fears around … the U.S. restrictions to China,' Stephane Houri, head of equity research at ODDO BHF, told CNBC's 'Europe Early Edition' on Wednesday. Houri also pointed to tariff concerns and questions about over-investment in AI, noting uncertainty over whether 'demand is not at the level that many people expect.' What's hurting ASML ASML's inability to ship its most advanced EUV machines to China has limited its sales potential. CEO Christophe Fouquet told CNBC in January that the company's China business is expected to shrink in 2025 compared to 2023 and 2024. Recently, ASML began shipping its next-generation High NA machines, but global chip stocks continue to face pressure from trade uncertainties. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Zumbido e perda de audição? Médico revela técnica caseira de 1 real para aliviar! Zumbido no ouvido Undo Despite these challenges, a potential U.S.-Europe trade deal could ease market concerns. 'If there is an agreement in the end with President Trump and ... Europe and many other countries, they probably will benefit from the relief in the market, and notably in the sector,' Houri said. Analysts remain optimistic, with LSEG data showing an average price target of 779 euros for ASML, suggesting a 17% upside from Tuesday's close. A recent Wells Fargo note, following discussions with ASML's management, highlighted the company's positive outlook for 2025 and 2026, driven by demand from firms like Samsung and Intel for next-generation chipmaking tools.
CNBC
5 days ago
- Business
- CNBC
‘Buckle up, this ride's far from over': Trump's EU tariffs delay is no guarantee trade tensions won't escalate, market watchers say
Investors should "buckle up" for more volatility as the potential for a trade war has not completely dissipated despite U.S. President Donald Trump's delay of rolling out 50% tariffs on the European Union, analysts warn. Trump announced on Sunday that he had agreed to push the rollout of the punitive import duties back to July 9, following a call with EU Commission President Ursula von der Leyen. The president had initially called for a 50% tariff on EU goods to begin on June 1. He accused the bloc in a social media post of being "very difficult to deal with," and said trade negotiations with the EU were "going nowhere." European stocks rebounded Monday morning, moving into positive territory, after previously sinking on Friday in response to Trump's fresh tariffs threats. Von der Leyen said in a post on X over the weekend that the EU was "ready to advance talks swiftly and decisively." "The EU and US share the world's most consequential and close trade relationship," she said. "To reach a good deal, we would need the time until July 9." An EU official with knowledge of trade talks with the U.S. told CNBC that European Trade CommissionerMaros Sefcovic was due to speak with his U.S. counterparts on Monday. But while Trump's announcement of the delay has granted the two parties some more breathing space, market watchers warned Monday that a lot remains at stake. Berenberg Chief Economist Holger Schmieding told CNBC that the six-week window until tariffs kick in was probably not enough time to "settle all detailed questions" – but he argued it should be sufficient to put the framework of a trade agreement in place. "It should be enough to get an agreement like the one between the U.S. and the U.K.," he said on CNBC's "Europe Early Edition" on Monday. "[It] is basically a matter of political will, and that depends a bit on the U.S. side," he added. "If they do have the political will, we should really be able to have such an agreement with, probably in the end, a 10% tariff from the U.S. on all EU imports, hardly any EU retaliation, and [scaling back] a few sector-specific things … with some of the details to be finalized after July 9." However, Schmieding noted that if the end result were a 20% or 30% blanket tariff on EU goods, "the EU would have no choice" but to impose "significant countermeasures" against the United States. Labeling Trump "an interesting negotiator," Schmieding argued that the president often tries to shock those with whom he's negotiating into agreeing to concessions. But the EU, he said, was unlikely to capitulate to these tactics. "We just have to stay calm, and from the European side, we just have to negotiate – we have to remember from the European side that our market is big, that we do matter in economic terms to the U.S. quite a lot, not just vice versa," he added. "So these negotiations should be negotiations among equals. The European Union is not a region which can be scared into just throwing in the towel." Guntram Wolff, senior fellow at Bruegel, told CNBC that despite the extension of the tariffs deadline, "massive uncertainty" remained. "This uncertainty is bad for business, it's bad for consumers, and frankly it's an unnecessary step in the negotiations," he told CNBC's "Europe Early Edition." "It's very unclear what exactly the U.S. President wants," Wolff added. "That's the biggest obstacle at this stage, that in the negotiations the EU has made offers, has made proposals, but it doesn't really know what the president wants." According to Wolff, the EU is "playing it rather well." "The U.K. has given in on all kinds of demands, China is the other extreme, [it] has really escalated … to a point where the U.S. had to blink, had to give in," he explained. "Europe sort of tries to take a middle path." The EU does have capacity to retaliate should massive tariffs be levied on its exports by the Trump administration, Wolff added, pointing to the importance of its pharmaceutical products to the U.S., and the potential for retaliatory measures to be implemented in the services sector. "But the EU so far has decided not to do it, really to keep a climate of de-escalation," he said. "But at the end of the day, that might not be enough now." Naeem Aslam, chief investment officer at London's Zaye Capital Markets, told CNBC on Monday the tariffs delay had sparked a "tentative risk-on rally" – but like Wolff, he cautioned that much remained at stake. "Looking ahead, the EU-US trade dance is a high-stakes tango, with July 9 as the next flashpoint," he said in an email. "The EU's dangling phased tariff cuts and "mutual respect" talks, but Trump's America-first bravado could turn negotiations into a slugfest, rattling supply chains and fanning inflationary flames." Aslam added that sectors like tech and industrials were particularly "braced for whiplash." "Markets will hang on every tweet and trade talk whisper, with investors betting on whether this delay is a genuine olive branch or just Trump reloading for a bigger tariff showdown," he said. "Buckle up; this ride's far from over."
Business Mayor
7 days ago
- Business
- Business Mayor
Trump's 5% NATO spend target 'very, very difficult' to meet, Greek PM says
Global Economy May 23, 2025 Greek Prime Minister Kyriakos Mitsotakis and German Chancellor Friedrich Merz (not pictured) speak to the media following talks at the Chancellery on May 13, 2025 in Berlin, Germany. Sean Gallup | Getty Images News | Getty Images It would be challenging for NATO members to deliver on U.S. President's Donald Trump's defense spending demands, Greece's prime minister told CNBC. The White House leader has frequently called for NATO nations to increase their security contribution to 5% of their gross domestic product — a target Greece's Kyriakos Mitsotakis questions can be met. 'I think 5% frankly, is very, very difficult,' he said in an interview with CNBC's Silvia Amaro that was aired on 'Europe Early Edition' Friday. 'If we're talking about hard defense spending, I think 3.5% is probably the ceiling of … what could be sort of accepted,' Mitsotakis said. He nevertheless noted that the 5% mark could be a long-term target if broader expenses such as critical infrastructure were to fall under the spending umbrella. 'So it really depends on how we do the accounting,' he noted. NATO chief Mark Rutte has reportedly suggested that NATO members should increase defense spending to 3.5% of GDP, while committing an additional 1.5% to wider security-related matters. Many NATO countries have historically struggled to meet the alliance's currently lower 2% target, earning Trump's ire. NATO estimates suggest the U.S. spent around 3.4% of its GDP on defense in 2024, with only two other allies — Poland and Estonia — allocating a bigger share of their economic power to security matters over the period. Poland has also already committed to boosting its defense spending to a level as high as 5% in the coming years, while other countries have been more cautious, warning that such expenditures could be difficult for them to manage. German Foreign Minister Johann Wadephul last week also indicated that the country was backing Trump's target. The result of Rutte's suggestion was 'indeed the 5% demanded by President Trump, that he believes are necessary, and we are following him in this respect,' he said. A decision about new defense spending targets could be made at the next NATO summit in late June. Speaking to CNBC, Greece's Mitsotakis said Trump was right to demand more defense expenditures from NATO allies. 'Donald Trump was right when in 2017 he said you're not doing your fair share, because we didn't,' he said. 'We understand now that there is no free lunch and we cannot free ride.' Greece itself spent nearly 3.1% of its GDP on defense last year, NATO estimates. Athens has been consistently exceeding the 2% target for many years and began ramping up defense expenses further in 2020 amid long-running tensions with its neighbor Turkey over issues including maritime borders. 'We spend more than 3% for very specific reasons, and we were also advocating very much for a change in European rules to encourage us to be able to spend more,' Mitsotakis said, adding that there had been some progress in this area. European Union fiscal rules have for years restricted the extent of debt and budgetary deficits that a member country can incur. Recently, the European Commission has made moves toward easing fiscal constraints as part a wider security package. Read More Why merger mania is coming to the fore in the mining industry Speaking to CNBC, Mitsotakis — who has previously said the European Commission's plans could be more ambitious — noted it was also important to continue discussions about a potential European facility to support defense spending. READ SOURCE
CNBC
7 days ago
- Business
- CNBC
Starmer has delivered some key wins for the UK recently, so why is he so unpopular?
A year into the job, U.K. Prime Minister Keir Starmer has scored some key wins, including recently signing major trade deals with the U.S., India and European Union that will boost the British economy and wages. Opinion polls paint a different picture of his success. A survey by pollster YouGov, published in mid-May, showed that the British public's approval the prime minister has plummeted to a record low, with 69% of voters now having an unfavorable view of Starmer, while just 23% regard him enthusiastically. More worryingly for the Labour Party leader, the fall in popularity is concentrated among Labour voters, half of whom (50%) now have an unfavorable view of Starmer — a 17-point increase from the last poll in mid-April. The share of Labour voters with a favorable opinion of him has meanwhile fallen from 62% to 45% over the month. With things seeming to point in the right direction for the British economy, what's going wrong for its prime minister? The U.K.'s leadership might be touting their impressive record on trade deals recently, but cost-of-living pressures continue to worry ordinary British voters, and businesses are reckoning with Labour-led tax rises. The U.K.'s annual inflation rate hit a hotter-than-expected 3.5% in April, up sharply from 2.6% in March, according to data released by the Office for National Statistics (ONS) on Wednesday. The data highlighted increasing pressures on British households, as prices of electricity, gas and other fuels rose by 6.7% in the year to April. The prices of water and sewerage meanwhile added 26.1% in the month to April, marking the largest monthly hike since at least February 1988, the ONS said. British businesses now face a higher tax burden as a result of government policies introduced in the "Autumn Budget," as well as other measures deemed be many economists to be "anti-growth." These include limits on immigration set to affect foreign workers — who are key to a number of sectors — a rise in the national minimum wage and reforms to workers' rights, which put pressure on many small and medium-sized firms. As such, lofty trade deals promising economic growth and investment that will take time to feed through are cold comfort for many British consumers and businesses struggling right now. "On domestic policy, this government hasn't scored well so far; let's give it a C-minus," Kallum Pickering, chief U.K. economist at Peel Hunt, told CNBC's "Europe Early Edition" on Wednesday. "[We've seen] mostly anti- growth measures and that's the thing that disrupted bond markets over the past few months." On foreign and international policy, the government is "doing a fairly good job," with its latest trade deals a testament to that, Pickering said. "Starmer has contained the downside risk that the U.K. and the U.S. could really escalate on trade. It's not a good deal, but it contains downside risk. The U.K.-India deal is actually a strong signal that the U.K. is open for business. And if you read the press, people that are unhappy with the deal that the U.K. and the EU is striking but, actually, what's the alternative?" he asked. Big business leaders say they're happy with the British government's general direction of travel, with C.S. Venkatakrishnan, group chief executive of Barclays, telling CNBC Thursday that it was "absolutely on track." "If you look at if you look at what they've achieved over the last few weeks, they've had trade deals with the U.S., with India, with Europe, important trading partners. They continue to be repairing relationships with Europe, which they need to," he told CNBC's Steve Sedgwick. Inflationary pressures, he noted, were evident but were not yet leading to "consumer distress," the Barclays exec believed. "We're in fact seeing conduit continued consumer strength, but it's coming because of people managing their balances and their finances prudently. So [they're] economizing. The job market is still strong. But as you see ... people are worried about inflation. People are worried about cost, whether it's winter fuel bills or whether it's more generalized inflation from tariffs, and the only real answer to that is growth, which is what this government is focused on, and what we want to help them." Although some quarters welcome Keir Starmer's calmer and less bombastic approach to leadership than politicians like Reform UK leader Nigel Farage or former Prime Minister Boris Johnson, he continues to face criticism that his leadership style and personality hold him and the Labour Party back. CNBC has contacted the Labour Party for comment on Starmer's poll ratings and is awaiting a reply. "Starmer has great positives — [signing] the trade deals" for one, Bill Blain, strategist and founder of Wind Shift Capital, said that the prime minister's lack of charisma is a deficit. "But he is dull, boring and precise. He is competent, but he is not a personality and lacks political charisma ... Farage has it in spades. So did Boris Johnson," he told CNBC Tuesday. "A additional problem is Starmer lacks able cabinet colleagues able to create the illusion of a cabinet of smart, leaders. Some are settling into their roles but most look out their depth. This is particularly true of Rachel Reeves ... who is naturally not a risk taker," Blain added. "The bigger issue is the narrative — Labour present it as doing the right thing to control spending, but it's backfired as insensitivity to their voters. They are perceived as cruel," he said. Starmer is coming "under pressure," Blain noted, increasing the risk that rank and file Labour lawmakers "will revolt if the polls bite." "That may be happening — [meaning] mutiny!," he said.
