Latest news with #Europhoria
Yahoo
28-03-2025
- Business
- Yahoo
Analysis-Trump's erratic tariff policy shakes confidence in Europe's market bull run
By Naomi Rovnick and Yoruk Bahceli LONDON (Reuters) - Investors are calling time on a rally in European stocks and the euro after a blistering first quarter that many fear has exaggerated how fast a planned public spending boom can revive the region's still sluggish economy and shore it up against trade war risks. Big asset managers including Amundi, Europe's largest, said they had held back or reduced bets on the euro or trimmed bullish European equity trades, as U.S. President Donald Trump prepares to announce reciprocal trade tariffs on April 2. Many said that the so-called Europhoria trade that propelled German shares to their best quarter since 2022 and the euro to a five-month high earlier in March had already factored in most foreseeable economic stimulus gains. "If the Trump administration decides to push trade partners towards a trade war it will be bearish for European equities," Edmond de Rothschild Asset Management CIO Benjamin Melman said, adding he did not expect outsized gains for European stocks from here. Global markets were roiled on Thursday following Trump's announcement of a 25% levy on car imports, with European equities down as much as 2% as billions of euros were wiped off German automakers' shares. Pictet Asset Management's chief strategist, Luca Paolini, said more bad news on tariffs would probably hit European assets that had boomed on stimulus hopes harder than U.S. markets already depressed by the White House's erratic trade policy. "I think it makes sense not to reverse out of Europe but to take some profits," he said. "The easy wins are over." LOSE-LOSE As the market view of tariff winners and losers switched around, the euro dropped close to $1.01 in February before rebounding as high as $1.095 on March 18. Amundi's head of global FX Andreas Koenig said the group would refrain from building positions favouring the euro in case markets reverted to an expectation of tariffs supporting the dollar. "What we all have in front of us still is April 2," Koenig said, in reference to what Trump has dubbed "Liberation Day". Chris Jeffery, head of macro strategy at Britain's biggest asset manager Legal & General Investment Management, said the group had reduced a bet on the euro strengthening while Eren Osman, head of investment management at London bank Arbuthnot Latham, said he had scaled back a bet on European stocks but retained a slightly positive tilt. Although Osman called an all-out trade war a "lose-lose" situation for global equities, he said stimulus spending might help European assets to do better than others in such a scenario. "I don't think defence spending in Europe keeps it above water," he said. "But the fiscal boost is a separate narrative that provides a bit of support." 'SLOW AGONY' Former European Central Bank chief Mario Draghi said in a widely read report last year that Europe faced "slow agony" and needed a more coordinated industrial policy, speedier decision making and an innovation boost on top of massive investment. "For this rally to have a second leg, markets will need a new trigger. Hints that parts of the Draghi reports would be implemented would be key," said Rothschild's Melman, who is neutral on European stocks. Europe's economic recovery is just starting to build, with business activity in mild growth territory and Germany predicting a two-year downturn will end. Citi's euro area economic surprise index, which records whether data is surpassing market expectations, has been positive since early February. But its separate gauge of whether actual euro zone data is trending above its one-year average remains below zero, showing there is no broad-based upswing. Royal London Asset Management head of multi-asset Trevor Greetham said the UK group was considering a reduction in its U.S. equity holdings and favoured Europe. "It's not that you can see a boom coming in Europe," he said, but he favoured the region "in relative terms". Meanwhile, Russell Investments chief investment strategist Andrew Pease said the group's main global equity fund had a small positive bias to European stocks because the region's long-term prospects had improved, but was not adding more. "The big question mark around all this is April 2," he said. "If this causes a global downturn then Europe can't escape it." Sign in to access your portfolio
Reuters
28-03-2025
- Business
- Reuters
Trump's erratic tariff policy shakes confidence in Europe's market bull run
LONDON, March 28 (Reuters) - Investors are calling time on a rally in European stocks and the euro after a blistering first quarter that many fear has exaggerated how fast a planned public spending boom can revive the region's still sluggish economy and shore it up against trade war risks. Big asset managers including Amundi, Europe's largest, said they had held back or reduced bets on the euro or trimmed bullish European equity trades, as U.S. President Donald Trump prepares to announce reciprocal trade tariffs on April 2. Many said that the so-called Europhoria trade that propelled German shares (.GDAXI), opens new tab to their best quarter since 2022 and the euro to a five-month high earlier in March had already factored in most foreseeable economic stimulus gains. "If the Trump administration decides to push trade partners towards a trade war it will be bearish for European equities," Edmond de Rothschild Asset Management CIO Benjamin Melman said, adding he did not expect outsized gains for European stocks from here. Global markets were roiled on Thursday following Trump's announcement of a 25% levy on car imports, with European equities (.STOXX), opens new tab down as much as 2% as billions of euros were wiped off German automakers' shares. Pictet Asset Management's chief strategist, Luca Paolini, said more bad news on tariffs would probably hit European assets that had boomed on stimulus hopes harder than U.S. markets already depressed by the White House's erratic trade policy. "I think it makes sense not to reverse out of Europe but to take some profits," he said. "The easy wins are over." LOSE-LOSE As the market view of tariff winners and losers switched around, the euro dropped close to $1.01 in February before rebounding as high as $1.095 on March 18. Amundi's head of global FX Andreas Koenig said the group would refrain from building positions favouring the euro in case markets reverted to an expectation of tariffs supporting the dollar. "What we all have in front of us still is April 2," Koenig said, in reference to what Trump has dubbed "Liberation Day". Chris Jeffery, head of macro strategy at Britain's biggest asset manager Legal & General Investment Management, said the group had reduced a bet on the euro strengthening while Eren Osman, head of investment management at London bank Arbuthnot Latham, said he had scaled back a bet on European stocks but retained a slightly positive tilt. Although Osman called an all-out trade war a "lose-lose" situation for global equities, he said stimulus spending might help European assets to do better than others in such a scenario. "I don't think defence spending in Europe keeps it above water," he said. "But the fiscal boost is a separate narrative that provides a bit of support." 'SLOW AGONY' Former European Central Bank chief Mario Draghi said in a widely read report last year that Europe faced "slow agony" and needed a more coordinated industrial policy, speedier decision making and an innovation boost on top of massive investment. "For this rally to have a second leg, markets will need a new trigger. Hints that parts of the Draghi reports would be implemented would be key," said Rothschild's Melman, who is neutral on European stocks. Europe's economic recovery is just starting to build, with business activity in mild growth territory and Germany predicting a two-year downturn will end. Citi's euro area economic surprise index, which records whether data is surpassing market expectations, has been positive since early February. But its separate gauge of whether actual euro zone data is trending above its one-year average remains below zero, showing there is no broad-based upswing. Royal London Asset Management head of multi-asset Trevor Greetham said the UK group was considering a reduction in its U.S. equity holdings and favoured Europe. "It's not that you can see a boom coming in Europe," he said, but he favoured the region "in relative terms". Meanwhile, Russell Investments chief investment strategist Andrew Pease said the group's main global equity fund had a small positive bias to European stocks because the region's long-term prospects had improved, but was not adding more. "The big question mark around all this is April 2," he said. "If this causes a global downturn then Europe can't escape it."
Gulf Today
26-03-2025
- Business
- Gulf Today
Trump's threats have jolted Europe
US President Donald Trump's erratic policymaking has given Europe an unexpected spur to action, but any sense of 'Europhoria' about the region's chances of turning this moment into a longer-lasting revival is likely premature. Trump's threats on tariffs and questioning of America's future security role in Europe have drawn an energetic response, perhaps best symbolised by Germany's plans to spend hundreds of billions of euros on defence and infrastructure. Some European companies are becoming more optimistic about sales, while growth projections for the euro zone economy have been upgraded. The euro has risen and investors are ditching US stocks for their long-neglected European counterparts, according to Reuters. Yet while some analyst notes now include the phrase 'Make Europe Great Again' – a play on Trump's MAGA slogan – the surge in optimism ignores Europe's unresolved problems: high energy costs, a fragmented internal market, and looming tariffs from its biggest customer, the United States. 'Is the Europhoria justified?,' asked Holger Schmieding, an economist at German bank Berenberg. 'The more positive outlook for Europe makes sense. But as usual, the sudden swing may be a little overdone in some cases.' Euro zone shares have risen 12% since Trump's inauguration on January 20, while US stocks have fallen by 6.7%. US consumers and investors have also turned much more pessimistic than their European counterparts. Economists polled by Reuters have upgraded their 2026 growth forecasts for the euro zone for the first time in nearly a year, to 1.3% from 1.2%. While that is still less than the 2% predicted for the United States, there was further positive news on Monday as closely watched factory gate data showed euro zone business growth expanding at its fastest pace in seven months. Some European officials have pointed out that the region's widely deprecated fondness for rules looks like a virtue compared with unpredictable policymaking elsewhere. Angelique Renkhoff-Muecke of Bavaria's metal and electrical industry association was even blunter about the growing doubts over legal certainty for business in the US. 'Anyone who is not already there is thinking about whether they should go,' she said. A potential trade war with the United States, starting with tariffs due to take effect on April 2, is the biggest risk for an export-oriented economy like Europe's. The European Central Bank estimates a 25% US tariff on imports from Europe would dent euro zone output by about 0.3 percentage points in the first year. Retaliatory measures by Europe could increase the damage to about half a percentage point. Any sustained investment gains in Europe are unlikely until the fog surrounding Trump's plans clears. Indexes that measure trade and broader economic policy uncertainty using sources such as newspaper articles, disagreements among forecasters and filings have shot to all-time highs. 'Businesses are not in a good position to plan for their investments,' said Atanas Kolev, co-author of one paper on the economic drag created by uncertainty. To be sure, Europe's new-found spending courage can help the region insulate itself from trade headwinds – especially those sectors that benefit directly from Germany's spending plans, such as defence and construction. Rheinmetall, Europe's top ammunition maker, expects significant sales growth in 2025, and missile maker MBDA will invest in its Italian unit to boost production in expectation of more orders. Peter Huebner, president of Germany's construction industry association HDB and a board member of Strabag's German division, expected both orders and sales at his unit to rise this year. 'Every euro invested in infrastructure increases gross domestic product by two and a half times (that amount),' he said. But executives elsewhere, including the beaten-down steel sector, are concerned funds may take years to find their way into the economy and fail to tackle other pressing issues, most notably red tape and energy costs.
Yahoo
25-03-2025
- Business
- Yahoo
Analysis-Trump policy swerves spur Europe into action, but any 'Europhoria' may be premature
By Francesco Canepa and Christoph Steitz FRANKFURT (Reuters) - U.S. President Donald Trump's erratic policymaking has given Europe an unexpected spur to action, but any sense of "Europhoria" about the region's chances of turning this moment into a longer-lasting revival is likely premature. Trump's threats on tariffs and questioning of America's future security role in Europe have drawn an energetic response, perhaps best symbolised by Germany's plans to spend hundreds of billions of euros on defence and infrastructure. Some European companies are becoming more optimistic about sales, while growth projections for the euro zone economy have been upgraded. The euro has risen and investors are ditching U.S. stocks for their long-neglected European counterparts. Yet while some analyst notes now include the phrase "Make Europe Great Again" - a play on Trump's MAGA slogan - the surge in optimism ignores Europe's unresolved problems: high energy costs, a fragmented internal market, and looming tariffs from its biggest customer, the United States. "Is the Europhoria justified?," asked Holger Schmieding, an economist at German bank Berenberg. "The more positive outlook for Europe makes sense. But as usual, the sudden swing may be a little overdone in some cases." Euro zone shares have risen 12% since Trump's inauguration on January 20, while U.S. stocks have fallen by 6.7%. U.S. consumers and investors have also turned much more pessimistic than their European counterparts. Economists polled by Reuters have upgraded their 2026 growth forecasts for the euro zone for the first time in nearly a year, to 1.3% from 1.2%. While that is still less than the 2% predicted for the United States, there was further positive news on Monday as closely watched factory gate data showed euro zone business growth expanding at its fastest pace in seven months. Some European officials have pointed out that the region's widely deprecated fondness for rules looks like a virtue compared with unpredictable policymaking elsewhere. Angelique Renkhoff-Muecke of Bavaria's metal and electrical industry association, was even blunter about the growing doubts over legal certainty for business in the U.S. "Anyone who is not already there is thinking about whether they should go," she said. TRADE RISK A potential trade war with the United States, starting with tariffs due to take effect on April 2, is the biggest risk for an export-oriented economy like Europe's. The European Central Bank estimates a 25% U.S. tariff on imports from Europe would dent euro zone output by about 0.3 percentage points in the first year. Retaliatory measures by Europe could increase the damage to about half a percentage point. Any sustained investment gains in Europe are unlikely until the fog surrounding Trump's plans clears. Indexes that measure trade and broader economic policy uncertainty using sources such as newspaper articles, disagreements among forecasters and filings have shot to all-time highs. "Businesses are not in a good position to plan for their investments," said Atanas Kolev, co-author of one paper on the economic drag created by uncertainty. To be sure, Europe's new-found spending courage can help the region insulate itself from trade headwinds - especially those sectors that benefit directly from Germany's spending plans, such as defence and construction. Rheinmetall, Europe's top ammunition maker, expects significant sales growth in 2025, and missile maker MBDA will invest in its Italian unit to boost production in expectation of more orders. Infrastructure companies from Germany's Heidelberg Materials and Austria's Strabag to Swiss Geberit and France's SPIE expect the German spending programme to have a short-term impact. Peter Huebner, president of Germany's construction industry association HDB and a board member of Strabag's German division, expected both orders and sales at his unit to rise this year. "Every euro invested in infrastructure increases gross domestic product by two and a half times (that amount)," he said. HDB told Reuters it reckons sales will likely rise in 2025 for the first time in five years. In January, it saw sales declining by 1.4% this year. But executives elsewhere, including the beaten-down steel sector, are concerned funds may take years to find their way into the economy and fail to tackle other pressing issues, most notably red tape and energy costs. "Money alone won't do the trick," said Stefan Rauber, CEO of German steelmaker Saarstahl. Klaus Adam, a professor at University College London, echoed that, noting that no moves had yet been taken to address snags in the free flow of labour, capital and goods in the bloc's 32-year-old single market. "Stability and rule of law is all good and people probably appreciate it more than in the past now that others have become erratic," he said. "But of course it is also a bit of a drag because ... we could move a little faster on some fronts." ($1 = 0.9225 euros) (Reporting By Francesco Canepa and Christoph Steitz. Additional reporting by Alexander Huebner. Editing by Mark John, Josephine Mason and Hugh Lawson) Sign in to access your portfolio
Zawya
25-03-2025
- Business
- Zawya
Trump policy swerves spur Europe into action, but any 'Europhoria' may be premature
FRANKFURT - U.S. President Donald Trump's erratic policymaking has given Europe an unexpected spur to action, but any sense of "Europhoria" about the region's chances of turning this moment into a longer-lasting revival is likely premature. Trump's threats on tariffs and questioning of America's future security role in Europe have drawn an energetic response, perhaps best symbolised by Germany's plans to spend hundreds of billions of euros on defence and infrastructure. Some European companies are becoming more optimistic about sales, while growth projections for the euro zone economy have been upgraded. The euro has risen and investors are ditching U.S. stocks for their long-neglected European counterparts. Yet while some analyst notes now include the phrase "Make Europe Great Again" - a play on Trump's MAGA slogan - the surge in optimism ignores Europe's unresolved problems: high energy costs, a fragmented internal market, and looming tariffs from its biggest customer, the United States. "Is the Europhoria justified?," asked Holger Schmieding, an economist at German bank Berenberg. "The more positive outlook for Europe makes sense. But as usual, the sudden swing may be a little overdone in some cases." Euro zone shares have risen 12% since Trump's inauguration on January 20, while U.S. stocks have fallen by 6.7%. U.S. consumers and investors have also turned much more pessimistic than their European counterparts. Economists polled by Reuters have upgraded their 2026 growth forecasts for the euro zone for the first time in nearly a year, to 1.3% from 1.2%. While that is still less than the 2% predicted for the United States, there was further positive news on Monday as closely watched factory gate data showed euro zone business growth expanding at its fastest pace in seven months. Some European officials have pointed out that the region's widely deprecated fondness for rules looks like a virtue compared with unpredictable policymaking elsewhere. Angelique Renkhoff-Muecke of Bavaria's metal and electrical industry association, was even blunter about the growing doubts over legal certainty for business in the U.S. "Anyone who is not already there is thinking about whether they should go," she said. TRADE RISK A potential trade war with the United States, starting with tariffs due to take effect on April 2, is the biggest risk for an export-oriented economy like Europe's. The European Central Bank estimates a 25% U.S. tariff on imports from Europe would dent euro zone output by about 0.3 percentage points in the first year. Retaliatory measures by Europe could increase the damage to about half a percentage point. Any sustained investment gains in Europe are unlikely until the fog surrounding Trump's plans clears. Indexes that measure trade and broader economic policy uncertainty using sources such as newspaper articles, disagreements among forecasters and filings have shot to all-time highs. "Businesses are not in a good position to plan for their investments," said Atanas Kolev, co-author of one paper on the economic drag created by uncertainty. To be sure, Europe's new-found spending courage can help the region insulate itself from trade headwinds - especially those sectors that benefit directly from Germany's spending plans, such as defence and construction. Rheinmetall, Europe's top ammunition maker, expects significant sales growth in 2025, and missile maker MBDA will invest in its Italian unit to boost production in expectation of more orders. Infrastructure companies from Germany's Heidelberg Materials and Austria's Strabag to Swiss Geberit and France's SPIE expect the German spending programme to have a short-term impact. Peter Huebner, president of Germany's construction industry association HDB and a board member of Strabag's German division, expected both orders and sales at his unit to rise this year. "Every euro invested in infrastructure increases gross domestic product by two and a half times (that amount)," he said. HDB told Reuters it reckons sales will likely rise in 2025 for the first time in five years. In January, it saw sales declining by 1.4% this year. But executives elsewhere, including the beaten-down steel sector, are concerned funds may take years to find their way into the economy and fail to tackle other pressing issues, most notably red tape and energy costs. "Money alone won't do the trick," said Stefan Rauber, CEO of German steelmaker Saarstahl. Klaus Adam, a professor at University College London, echoed that, noting that no moves had yet been taken to address snags in the free flow of labour, capital and goods in the bloc's 32-year-old single market. "Stability and rule of law is all good and people probably appreciate it more than in the past now that others have become erratic," he said. "But of course it is also a bit of a drag because ... we could move a little faster on some fronts." ($1 = 0.9225 euros)
