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Yahoo
an hour ago
- Business
- Yahoo
German economic sentiment tumbles as EU–US trade deal underwhelms
Germany's economic sentiment fell sharply in August, snapping a three-month recovery and casting renewed doubts over the country's growth outlook. The decline follows a controversial EU–US trade deal that has disappointed financial experts and left key industrial sectors exposed to steeper tariff burdens. The ZEW Indicator of Economic Sentiment dropped by 18 points to 34.7 in August, falling well short of expectations for a more modest retreat to 40. This reverses part of the strong recovery seen in July, when sentiment had climbed to its highest since February 2022. The gauge for current conditions also deteriorated, slipping to -68.6 from -59.5 a month earlier, missing forecasts of -60. The downturn reflects concerns over Germany's weak second-quarter performance and the perceived asymmetry of the newly signed transatlantic trade pact. 'Financial market experts are disappointed by the announced EU–US trade deal,' said ZEW president, professor Achim Wambach. 'In August 2025, the ZEW indicator experiences a substantial decline, also due to the poor performance of the German economy in the second quarter. The outlook has worsened in particular for the chemical and pharmaceutical industries. The mechanical engineering and metal sectors as well as the automotive industry are also severely affected.' Sentiment across the eurozone mirrored Germany's decline. The ZEW expectations index for the bloc dropped 11 points to 25.1, while the gauge of current conditions fell by 7 points to minus 31.2. Initial hopes of relative resilience in the eurozone have been tempered as economists revise down growth expectations for the second half of the year. Unequal trade deal weighs on sentiment On 27 July, just days before a 30% US tariff on EU goods was set to take effect, European Commission President Ursula von der Leyen and US President Donald Trump reached a last-minute agreement. The accord included a basic 15% tariff on EU exports, with steeper levies of 50% on steel, aluminium and copper. Aircraft and aircraft parts were exempted. As part of the deal, the EU also pledged to purchase $750 billion (€685 billion) in US energy exports over three years. The political optics were widely seen as favourable to Washington. Related Which European economy stands to suffer the most from US tariffs? Who got the best trade deal with the US - the EU or UK? 'A one-sided trade deal to reduce the US trade deficit with the EU,' remarked Oliver Rakau, chief Germany economist at Oxford Economics. "Politically, this agreement looks like a clear win for the US," he added. The deal 'is at the better end of the spectrum of what could realistically be achieved,' Isabelle Mateos y Lago, economist at BNP Paribas, noted. She highlighted that the effective tariff rate has been multiplied tenfold compared to the start of the year, though she sees the shock as manageable given exports to the US account for under 3% of EU GDP. Bill Diviney, economist at ABN Amro, described the agreement as a product of Europe's weak bargaining position, highlighting economic stagnation and rising inflation pressures. 'Berlin and France were unwilling to suffer economic pain to risk a better outcome,' he said. 'The EU remains dependent on the US for its security, both in terms of military support as for military imports and remains a net importer of energy,' he added. Markets cautious as US inflation data looms Market reaction to the ZEW release was muted. Germany's DAX index remained broadly steady at 24,050 points. The euro dipped slightly, down 0.1% to $1.1600. Investor focus now turns to the upcoming US inflation report for July, with the Consumer Price Index expected to have risen 2.9% year-on-year, up from 2.7% in June. Markets are watching closely for any signs that higher tariffs are beginning to filter through to consumer prices. Money markets continue to price in an 85% probability of a 25-basis-point rate cut by the Federal Reserve at its next meeting, as signs of cooling labour market strengthen the case for easing. Sign in to access your portfolio
Qatar Tribune
a day ago
- Business
- Qatar Tribune
Global markets pick up amid data, geopolitics and volatile trade trends
Agencies This week saw increased global market activity amidst key economic data releases, central bank signals, trade developments and geopolitical events. In the United States, July data highlighted mixed macroeconomic trends as retail sales rose 0.5 percent MoM following an upwardly revised 0.9 percent gain in June, with nine of 13 categories posting gains, whilst unemployment claims came in at 224K. Inflation remained elevated, with core CPI at 3.1 percent YoY and headline CPI at 2.7 percent YoY, whilst the Producer Price Index jumped 0.9 percent MoM (+3.3 percent YoY), led by services and goods prices. The dollar Index was last seen at 97.839. Markets focused on the September FOMC meeting, with a 25bps cut expected in swaps data. In Europe and the United Kingdom, geopolitical developments dominated as the Alaska summit concluded without a ceasefire pact. UK GDP rose 0.3 percent in Q2, unemployment held at 4.7 percent, and earnings growth remained at 5 percent, whilst German ZEW sentiment fell sharply to 34.7 and eurozone sentiment declined to 25.1; EUR/USD and GBP/USD both edged up on the week. In Asia-Pacific, China's growth softened with industrial output at 5.7 percent YoY, retail sales at 3.7 percent, and new yuan loans contracting for the first time in two decades, as USD/CNY reached 7.1845, whilst Japan's Q2 GDP expanded 1 percent annualized on robust business investment and moderated PPI at 2.6 percent YoY. The Reserve Bank of Australia cut the cash rate by 25 bps to 3.6 percent, with unemployment at 4.2 percent and wage growth at 3.4 percent; AUD/USD ended the week at 0.6507. Equity markets were mixed, Treasury yields experienced volatility amidst inflation numbers, and Brent and WTI crude fell modestly ahead of the Trump-Putin Alaska summit and weaker Chinese data. Spot gold closed the week at $3,336.19 per ounce, easing after President Trump stated that gold imports would be excluded from US tariffs. President Donald Trump confirmed his shortlist for the next Federal Reserve chair has narrowed to 'three or four' candidates, with Kevin Hassett, Kevin Warsh, and Christopher Waller emerging as frontrunners. The US Treasury will interview 11 individuals, including long-shot candidates such as David Zervos, Larry Lindsey and Rick Rieder. Trump has criticized current Chair Jerome Powell, whose term ends in May 2026, for resisting deeper rate cuts, reiterating his preference to lower the federal funds rate from 4.25 percent-4.50 percent to 1 percent. Market focus has shifted to the September meeting, with swaps data now assigning an 85 percent probability of a 25 bps cut following softer jobs and inflation data, whilst some officials advocate a 50 bps move. DXY was last seen at 97.839. Following the US-Russia summit in Alaska, President Donald Trump is redirecting his diplomatic focus toward Ukraine, with President Volodymyr Zelensky set for an Oval Office meeting on Monday. The Alaska talks, held in secrecy with President Vladimir Putin, did not yield an immediate ceasefire, with Moscow insisting Kyiv cede the Donbas region. Trump signaled Zelensky should consider broader peace negotiations, increasing political pressure on Ukraine amidst ongoing European calls for territorial integrity. European officials emphasized that international borders cannot be altered by force and reiterated the need for a trilateral discussion involving Trump, Putin, and Zelensky. The Alaska summit outcome is seen as advancing Russia's diplomatic leverage, whilst Zelensky's forthcoming engagement in Washington will test Ukraine's willingness to negotiate under intensified US pressure. US inflation strengthened in July, with Core CPI rising 0.3 percent MoM (+3.1 percent YoY) and headline CPI up 0.2 percent MoM (+2.7 percent YoY), driven by the largest services cost increase since early 2024. Preliminary UoM consumer sentiment eased to 58.6, whilst one-year inflation expectations rose to 4.9 percent. Producer prices rose 0.9 percent MoM (+3.3 percent YoY), the strongest in three years, led by a 1.1 percent jump in services and 0.7 percent rise in goods. Labour market indicators showed initial jobless claims at 224K and continuing claims at 1.95M, remaining near their highest since 2021, signaling softer hiring and slower re-employment. Treasury Secretary Scott Bessent has called for cumulative Fed easing of 150-175 bps, citing labour market revisions and moderating growth. The Federal Reserve, holding rates at 4.25 percent-4.50 percent, faces balancing persistent price pressures with growing calls for accelerated policy accommodation. The UK economy expanded 0.3 percent in Q2, exceeding the 0.1 percent forecast from both private-sector economists and the Bank of England, with June output up 0.4 percent following minor contractions in prior months. Payrolls fell by just 8,353 in July - the smallest monthly decline since January - bringing total employment losses since October to 165K, notably below earlier estimates. The unemployment rate held steady at 4.7 percent, whilst total earning growth excluding bonuses remained at 5 percent, well above levels compatible with BOE's 2 percent inflation target. Labour market inactivity fell by 156K to 21 percent. These trends complicate the BOE's decision on further rate cuts from 4 percent, with markets now pricing a 3.5 percent terminal rate for 2026, reflecting a moderate but resilient economic environment. GBP/USD was last seen at 1.3554. The German ZEW Economic Sentiment Index declined sharply to 34.7 in August 2025, down from 52.7 in July and below market expectations of 40. The Current Situation Index also deteriorated, falling to -68.6 from -59.5, against an anticipated -65. In the eurozone, sentiment weakened to 25.1 from 36.1, missing forecasts of 28.1, whilst the Current Situation Index dropped to -31.2 from -24.2. According to the ZEW, the decline reflects disappointment over the recently announced EU-US trade deal, coupled with weaker Q2 performance in Germany. Outlooks for the chemical, pharmaceutical, mechanical engineering, metals, and automotive sectors have worsened. The data signals a broad cooling in investor sentiment, with downward revisions in growth expectations extending beyond Germany to the wider monetary union. EUR/USD was last seen at 1.1706. China's economy lost momentum in July, with broad-based weakness across production, consumption, and investment. Industrial output grew 5.7 percent YoY, down from June's 6.8 percent and the slowest pace since November 2023, whilst retail sales rose 3.7 percent, the weakest this year and below the prior month's 4.8 percent. Fixed-asset investment in January-July slowed to 1.6 percent, reflecting deeper contraction in the property sector. The urban unemployment rate climbed to 5.2 percent. Credit conditions deteriorated sharply, with yuan-denominated new loans declining by CNY 49.9B (USD 7B), the first contraction since July 2005, as households and corporates focused on debt repayment over new borrowing. Medium- and long-term loans fell, with corporate borrowing down for the first time since 2016. The data signals heightened downside risks, potentially prompting further targeted policy support in coming months. USD/CNY was last seen at 7.1845. Japan's economy grew at an annualized 1 percent in the April-June quarter, exceeding the 0.4 percent market forecast and following an upwardly revised 0.6 percent expansion in Q1. Growth was driven by a 1.3 percent QoQ rise in business investment, above the 0.7 percent consensus, and a 0.2 percent gain in private consumption, supported by solid wage growth. Net exports added 0.3 percent to GDP, with export volumes rising 2 percent despite higher US tariffs, aided by resilient tourism spending, which increased 18 percent YoY. The data bolsters the case for a potential Bank of Japan rate hike later in 2025, with swap markets currently discounting 17 bps worth of hikes by year end. in October. Producer price index inflation eased to 2.6 percent YoY in July, its slowest in 11 months, signaling moderated upstream cost pressures despite ongoing trade headwinds. USD/JPY was last seen at 147.19.
Kuwait Times
a day ago
- Business
- Kuwait Times
Global markets pick up amid data, geopolitics and volatile trade trends
Trump narrows Fed chair shortlist; markets focus on Sept rate decision KUWAIT: This week saw increased global market activity amidst key economic data releases, central bank signals, trade developments and geopolitical events. In the United States, July data highlighted mixed macroeconomic trends as retail sales rose 0.5 percent MoM following an upwardly revised 0.9 percent gain in June, with nine of 13 categories posting gains, whilst unemployment claims came in at 224K. Inflation remained elevated, with core CPI at 3.1 percent YoY and headline CPI at 2.7 percent YoY, whilst the Producer Price Index jumped 0.9 percent MoM (+3.3 percent YoY), led by services and goods prices. The dollar Index was last seen at 97.839. Markets focused on the September FOMC meeting, with a 25bps cut expected in swaps data. In Europe and the United Kingdom, geopolitical developments dominated as the Alaska summit concluded without a ceasefire pact. UK GDP rose 0.3 percent in Q2, unemployment held at 4.7 percent, and earnings growth remained at 5 percent, whilst German ZEW sentiment fell sharply to 34.7 and eurozone sentiment declined to 25.1; EUR/USD and GBP/USD both edged up on the week. In Asia-Pacific, China's growth softened with industrial output at 5.7 percent YoY, retail sales at 3.7 percent, and new yuan loans contracting for the first time in two decades, as USD/CNY reached 7.1845, whilst Japan's Q2 GDP expanded 1 percent annualized on robust business investment and moderated PPI at 2.6 percent YoY. The Reserve Bank of Australia cut the cash rate by 25 bps to 3.6 percent, with unemployment at 4.2 percent and wage growth at 3.4 percent; AUD/USD ended the week at 0.6507. Equity markets were mixed, Treasury yields experienced volatility amidst inflation numbers, and Brent and WTI crude fell modestly ahead of the Trump-Putin Alaska summit and weaker Chinese data. Spot gold closed the week at $3,336.19 per ounce, easing after President Trump stated that gold imports would be excluded from US tariffs. United States and Canada President Donald Trump confirmed his shortlist for the next Federal Reserve chair has narrowed to 'three or four' candidates, with Kevin Hassett, Kevin Warsh, and Christopher Waller emerging as frontrunners. The US Treasury will interview 11 individuals, including long-shot candidates such as David Zervos, Larry Lindsey and Rick Rieder. Trump has criticized current Chair Jerome Powell, whose term ends in May 2026, for resisting deeper rate cuts, reiterating his preference to lower the federal funds rate from 4.25 percent-4.50 percent to 1 percent. Market focus has shifted to the September meeting, with swaps data now assigning an 85 percent probability of a 25 bps cut following softer jobs and inflation data, whilst some officials advocate a 50 bps move. DXY was last seen at 97.839. Alaska summit Following the US-Russia summit in Alaska, President Donald Trump is redirecting his diplomatic focus toward Ukraine, with President Volodymyr Zelensky set for an Oval Office meeting on Monday. The Alaska talks, held in secrecy with President Vladimir Putin, did not yield an immediate ceasefire, with Moscow insisting Kyiv cede the Donbas region. Trump signaled Zelensky should consider broader peace negotiations, increasing political pressure on Ukraine amidst ongoing European calls for territorial integrity. European officials emphasized that international borders cannot be altered by force and reiterated the need for a trilateral discussion involving Trump, Putin, and Zelensky. The Alaska summit outcome is seen as advancing Russia's diplomatic leverage, whilst Zelensky's forthcoming engagement in Washington will test Ukraine's willingness to negotiate under intensified US pressure. US Core CPI at 3.1% YoY US inflation strengthened in July, with Core CPI rising 0.3 percent MoM (+3.1 percent YoY) and headline CPI up 0.2 percent MoM (+2.7 percent YoY), driven by the largest services cost increase since early 2024. Preliminary UoM consumer sentiment eased to 58.6, whilst one-year inflation expectations rose to 4.9 percent. Producer prices rose 0.9 percent MoM (+3.3 percent YoY), the strongest in three years, led by a 1.1 percent jump in services and 0.7 percent rise in goods. Labour market indicators showed initial jobless claims at 224K and continuing claims at 1.95M, remaining near their highest since 2021, signaling softer hiring and slower re-employment. Treasury Secretary Scott Bessent has called for cumulative Fed easing of 150-175 bps, citing labour market revisions and moderating growth. The Federal Reserve, holding rates at 4.25 percent-4.50 percent, faces balancing persistent price pressures with growing calls for accelerated policy accommodation. Europe and the UK The UK economy expanded 0.3 percent in Q2, exceeding the 0.1 percent forecast from both private-sector economists and the Bank of England, with June output up 0.4 percent following minor contractions in prior months. Payrolls fell by just 8,353 in July - the smallest monthly decline since January - bringing total employment losses since October to 165K, notably below earlier estimates. The unemployment rate held steady at 4.7 percent, whilst total earning growth excluding bonuses remained at 5 percent, well above levels compatible with BOE's 2 percent inflation target. Labour market inactivity fell by 156K to 21 percent. These trends complicate the BOE's decision on further rate cuts from 4 percent, with markets now pricing a 3.5 percent terminal rate for 2026, reflecting a moderate but resilient economic environment. GBP/USD was last seen at 1.3554. German economic sentiment falls The German ZEW Economic Sentiment Index declined sharply to 34.7 in August 2025, down from 52.7 in July and below market expectations of 40. The Current Situation Index also deteriorated, falling to -68.6 from -59.5, against an anticipated -65. In the eurozone, sentiment weakened to 25.1 from 36.1, missing forecasts of 28.1, whilst the Current Situation Index dropped to -31.2 from -24.2. According to the ZEW, the decline reflects disappointment over the recently announced EU-US trade deal, coupled with weaker Q2 performance in Germany. Outlooks for the chemical, pharmaceutical, mechanical engineering, metals, and automotive sectors have worsened. The data signals a broad cooling in investor sentiment, with downward revisions in growth expectations extending beyond Germany to the wider monetary union. EUR/USD was last seen at 1.1706. Asia-Pacific China's economy lost momentum in July, with broad-based weakness across production, consumption, and investment. Industrial output grew 5.7 percent YoY, down from June's 6.8 percent and the slowest pace since November 2023, whilst retail sales rose 3.7 percent, the weakest this year and below the prior month's 4.8 percent. Fixed-asset investment in January-July slowed to 1.6 percent, reflecting deeper contraction in the property sector. The urban unemployment rate climbed to 5.2 percent. Credit conditions deteriorated sharply, with yuan-denominated new loans declining by CNY 49.9B (USD 7B), the first contraction since July 2005, as households and corporates focused on debt repayment over new borrowing. Medium- and long-term loans fell, with corporate borrowing down for the first time since 2016. The data signals heightened downside risks, potentially prompting further targeted policy support in coming months. USD/CNY was last seen at 7.1845. Japan Q2 GDP Japan's economy grew at an annualized 1 percent in the April-June quarter, exceeding the 0.4 percent market forecast and following an upwardly revised 0.6 percent expansion in Q1. Growth was driven by a 1.3 percent QoQ rise in business investment, above the 0.7 percent consensus, and a 0.2 percent gain in private consumption, supported by solid wage growth. Net exports added 0.3 percent to GDP, with export volumes rising 2 percent despite higher US tariffs, aided by resilient tourism spending, which increased 18 percent YoY. The data bolsters the case for a potential Bank of Japan rate hike later in 2025, with swap markets currently discounting 17 bps worth of hikes by year end. in October. Producer price index inflation eased to 2.6 percent YoY in July, its slowest in 11 months, signaling moderated upstream cost pressures despite ongoing trade headwinds. USD/JPY was last seen at 147.19. Kuwait USD/KWD closed last week at 0.30520.
Fibre2Fashion
4 days ago
- Business
- Fibre2Fashion
Germany's ZEW economic sentiment falls sharply in August
Germany's ZEW Indicator of Economic Sentiment has dropped significantly in August 2025 to plus 34.7 points, down 18 points from July. The assessment of the current economic situation also weakened, with the situation indicator falling 9.1 points to minus 68.6 points. For the eurozone, expectations slipped to plus 25.1 points, an 11-point decline from the previous month, as growth outlooks were revised down despite earlier stronger estimates compared to Germany. The eurozone's current situation indicator also deteriorated, dropping 7 points to minus 31.2 points, ZEW said on its website. 'Financial market experts are disappointed from the announced EU–US trade deal. In August 2025, the ZEW indicator experiences a substantial decline, also due to the poor performance of the German economy in the second quarter of 2025. The outlook has worsened in particular for the chemical and pharmaceutical industries,' commented ZEW president professor Achim Wambach, PhD on the survey results. Germany's ZEW Economic Sentiment fell sharply in August 2025 to 34.7 points, down 18 from July, with the current situation at minus 68.6. Eurozone sentiment slid to 25.1, down 11, and its situation index to minus 31.2. ZEW's Achim Wambach cited disappointment over the EUâ€'US trade deal and weak Q2 performance, especially in chemicals and pharmaceuticals. Fibre2Fashion News Desk (HU)
Yahoo
5 days ago
- Business
- Yahoo
German economic sentiment tumbles as EU–US trade deal underwhelms
Germany's economic sentiment fell sharply in August, snapping a three-month recovery and casting renewed doubts over the country's growth outlook. The decline follows a controversial EU–US trade deal that has disappointed financial experts and left key industrial sectors exposed to steeper tariff burdens. The ZEW Indicator of Economic Sentiment dropped by 18 points to 34.7 in August, falling well short of expectations for a more modest retreat to 40. This reverses part of the strong recovery seen in July, when sentiment had climbed to its highest since February 2022. The gauge for current conditions also deteriorated, slipping to -68.6 from -59.5 a month earlier, missing forecasts of -60. The downturn reflects concerns over Germany's weak second-quarter performance and the perceived asymmetry of the newly signed transatlantic trade pact. 'Financial market experts are disappointed by the announced EU–US trade deal,' said ZEW president, professor Achim Wambach. 'In August 2025, the ZEW indicator experiences a substantial decline, also due to the poor performance of the German economy in the second quarter. The outlook has worsened in particular for the chemical and pharmaceutical industries. The mechanical engineering and metal sectors as well as the automotive industry are also severely affected.' Sentiment across the eurozone mirrored Germany's decline. The ZEW expectations index for the bloc dropped 11 points to 25.1, while the gauge of current conditions fell by 7 points to minus 31.2. Initial hopes of relative resilience in the eurozone have been tempered as economists revise down growth expectations for the second half of the year. Unequal trade deal weighs on sentiment On 27 July, just days before a 30% US tariff on EU goods was set to take effect, European Commission President Ursula von der Leyen and US President Donald Trump reached a last-minute agreement. The accord included a basic 15% tariff on EU exports, with steeper levies of 50% on steel, aluminium and copper. Aircraft and aircraft parts were exempted. As part of the deal, the EU also pledged to purchase $750 billion (€685 billion) in US energy exports over three years. The political optics were widely seen as favourable to Washington. Related Which European economy stands to suffer the most from US tariffs? Who got the best trade deal with the US - the EU or UK? 'A one-sided trade deal to reduce the US trade deficit with the EU,' remarked Oliver Rakau, chief Germany economist at Oxford Economics. "Politically, this agreement looks like a clear win for the US," he added. The deal 'is at the better end of the spectrum of what could realistically be achieved,' Isabelle Mateos y Lago, economist at BNP Paribas, noted. She highlighted that the effective tariff rate has been multiplied tenfold compared to the start of the year, though she sees the shock as manageable given exports to the US account for under 3% of EU GDP. Bill Diviney, economist at ABN Amro, described the agreement as a product of Europe's weak bargaining position, highlighting economic stagnation and rising inflation pressures. 'Berlin and France were unwilling to suffer economic pain to risk a better outcome,' he said. 'The EU remains dependent on the US for its security, both in terms of military support as for military imports and remains a net importer of energy,' he added. Markets cautious as US inflation data looms Market reaction to the ZEW release was muted. Germany's DAX index remained broadly steady at 24,050 points. The euro dipped slightly, down 0.1% to $1.1600. Investor focus now turns to the upcoming US inflation report for July, with the Consumer Price Index expected to have risen 2.9% year-on-year, up from 2.7% in June. Markets are watching closely for any signs that higher tariffs are beginning to filter through to consumer prices. Money markets continue to price in an 85% probability of a 25-basis-point rate cut by the Federal Reserve at its next meeting, as signs of cooling labour market strengthen the case for easing.
