Showing posts with label Europe. Show all posts
Showing posts with label Europe. Show all posts

Oct 29, 2020

Covid | Europe Second Wave: Lockdowns return as Europe confronts second wave


6-8 minutes - Source: BBC

Police patrol the streets of Lilleimage copyrightReuters

image captionFrance's President Macron warned the second wave "no doubt will be harder than the first"

Two of Europe's biggest economies are reinstating some form of national lockdown, as the continent confronts a surge in coronavirus cases and deaths.

From Friday people in France will only be allowed to leave home for essential work or medical reasons.

President Emmanuel Macron said the country risked being "overwhelmed by a second wave that no doubt will be harder than the first".

Germany, meanwhile, is imposing a "soft" national lockdown.

The measures coming into force on Monday are less severe than in France, but they include the closure of restaurants, bars, gyms and theatres, Chancellor Angela Merkel said.

Infections are rising sharply across Europe, including in the UK which on Wednesday announced 310 new deaths and 24,701 new cases.

In England, a new study shows almost 100,000 people are catching the virus every day, putting pressure on the government to change policy from a regional approach.

In France, Covid daily deaths are at the highest level since April. On Wednesday, 36,437 new cases and 244 deaths were confirmed.

German health officials said on Thursday another 89 people had died in the past 24 hours, with a record 16,774 infections.

News of the fresh restrictions being introduced in the European Union's biggest economies led to sharp falls in the financial markets on Wednesday.

"We are deep in the second wave," European Commission President Ursula von der Leyen said. "I think that this year's Christmas will be a different Christmas."

How did Europe get here?

The first wave of the virus earlier this year hit some parts of Europe incredibly hard, while other areas were able to escape the worst.

Italy, Spain, France and the UK were among the worst-hit nations, with all imposing strict national lockdowns that over time brought cases, hospital admissions and deaths down to a very low level but ravaged economies.

Restrictions started to be lifted in the early summer, with non-essential shops, bars and restaurants reopening, and travel restarting. In August, cases began to rise again too, with a major acceleration in recent weeks that has alarmed policymakers.

Line chart shows coronavirus cases rising in European countries

Short presentational transparent line

Countries that were not hit badly by the first wave - such as the Czech Republic and Poland - have not been spared this time, with experts warning of alarming infection rates across much of the continent.

What are France and Germany doing?

In a televised address on Wednesday, Mr Macron said that under the new rules, people would need to fill in a form to justify leaving their homes, as had been required in the initial lockdown in March. Social gatherings are banned.

But he made clear that public services and factories would remain open, adding that the economy "must not stop or collapse".

"Like all our neighbours, we are submerged by the sudden acceleration of the virus," said Mr Macron.

A barman closes his establishment at 9pm as part of a city-wide night time curfew during the coronavirus (COVID-19) pandemic on October 28, 2020 in Paris, France.image copyrightGetty Images

image captionFrench bars and restaurants will have to close their doors

Meanwhile in Germany, Chancellor Merkel said her country had to "act now" and called for a "major national effort" to fight the spread of coronavirus.

While Germany has a lower infection rate than many other parts of Europe, the speed with which the virus has been spreading in recent weeks has alarmed the government.

"Our health system can still cope with this challenge today, but at this speed of infection it will reach the limits of its capacity within weeks," Mrs Merkel said.

A partial lockdown will now begin in Germany on 2 November and last until 30 November under terms agreed by Mrs Merkel and the 16 state premiers.

Bars and restaurants will close except for takeaway, but schools and kindergartens will remain open. Social contacts will be limited to two households with a maximum of 10 people and tourism will be halted.

In terms of economic help, smaller companies and the self-employed badly hit by the lockdown will be reimbursed with up to 75% of their November 2019 takings.

What's the situation elsewhere in Europe?

Although cases are rising across Europe, not all countries are opting for national lockdowns.

Italy, which was the European epicentre at the start of the first wave of the virus, has already introduced new restrictions which will be in place for a month.

All bars and restaurants across the country have to close by 18:00, although they can provide takeaways later. Gyms, swimming pools, theatres and cinemas have to close, but museums can remain open. Gatherings for weddings, baptisms and funerals are banned.

Schools and workplaces are not closing but many secondary schools will switch to distance learning.

Spain began its nationwide curfew on 25 October after the government declared a new state of emergency. People in all regions, with the exception of the Canary Islands, have to stay at home between 23:00 and 06:00.

According to the European Centre for Disease Prevention and Control, the Czech Republic has the worst infection rate on the continent at 1,448 cases per 100,000 people over 14 days. It has imposed a partial lockdown.

Belgium, which has Europe's second-worst infection rate per capita, has reported its highest number of hospital admissions for Covid-19 since a peak on 6 April. There are 5,924 patients in hospital with the virus, 993 of whom are in intensive care. In a national address on Wednesday night, Prime Minister Alexander De Croo described the situations as "critical".

The Republic of Ireland went into a second national lockdown earlier this month for a six-week period.

How about the UK?

Cases, deaths and hospital admissions are all rising fast in the UK but the government has stated it is against imposing another nationwide lockdown on England.

Instead, earlier this month, officials announced a new Covid tier system, which enables regions to go into localised lockdowns.

A number of areas, including the city of Liverpool, are in the strictest category - tier three.

Wales has begun a 17-day "circuit breaker" lockdown, with all non-essential retailers in the nation ordered to close and people only allowed to leave home for certain reasons.

The UK nations' devolved administrations have the right to set their own policies around Covid restrictions.

Oct 15, 2020

Europe | Coronavirus Second Wave: 'Out of control': European leaders scramble to control the second wave, with a state of emergency and lockdowns


Holly Ellyatt

A nurse gets ready to enter a room to take care of a patient infected with Covid-19 at the intensive care unit of the Lariboisiere Hospital of the AP-HP (Assistance Publique - Hopitaux de Paris) in Paris, on October 14, 2020.

A nurse gets ready to enter a room to take care of a patient infected with Covid-19 at the intensive care unit of the Lariboisiere Hospital of the AP-HP (Assistance Publique - Hopitaux de Paris) in Paris, on October 14, 2020.


European leaders are scrambling to put a cap on surging infections in the region, with governments reimposing sweeping restrictions and shutdowns in an effort to curb the spread of the virus. 

The situation has got to a point now where, in the last 24 hours, France has declared a public health state of emergency, the U.K. is approaching a second national lockdown and Germany has introduced a raft of new rules in an effort to lower the infection rate.

Europe now has over 7.2 million confirmed cases of the virus, according to the World Health Organization (WHO), and hospitalizations are rising at a worrying rate.

Pantheon Macroeconomics’ Chief Economist Ian Shepherdson on Tuesday characterized rising cases in Europe as “out of control,” even when compared to the U.S., the nation with the highest number of cases, at 7.9 million, according to Johns Hopkins University’s data.

State of emergency

The French government declared a public health state of emergency on Wednesday as the country saw hospitalizations from Covid-19 jump above the 9,100 threshold for the first time since June 25, Reuters reported. New confirmed cases of coronavirus in France reached 22,591 on Wednesday, public health data showed, up from 12,993 cases the day before. The state of emergency gives officials more power to deal with the spread of Covid-19.

French President Emmanuel Macron announced later on Wednesday that nine of the country’s largest cities, including Paris, will have to abide by a curfew from 9 p.m. to 6 a.m.  This starts on Saturday, will last for four weeks and means that residents of those cities will not be allowed out between those hours except in exceptional circumstances. “We have to act. We need to put a brake on the spread of the virus,” Macron said.

Germany toughens rules

Germany has also announced new rules after Chancellor Angela Merkel met with regional leaders on Wednesday to discuss infection surges in parts of the country; German states can decide their own strategy to curb rising cases, which has led to variations of the rules from state to state.

Summing up the complex criteria of measures, economist Greg Fuzesi from JPMorgan said municipalities were now expected to tighten restrictions if new infections exceeded 35 per 100,000 inhabitants over seven days. In this case, private gatherings must be restricted to 25 in public spaces and 15 in private spaces, he said in a note Thursday, and states need to “apply additional mask-wearing requirements, to implement earlier closing times in bars/restaurants, and to impose limits on the number of participants at public events.”

If new infections exceed 50 per 100,000 inhabitants over seven days, a municipality is expected to limit social gatherings to 10 people, and impose a mandatory closing time of 11 p.m. for bars and restaurants. Germans are being discouraged from vacationing in virus hotspots and some states have banned tourists from parts of the country with high infection rates.

Infections are rising in Germany to such an extent that Shepherdson said the country had “lost control of Covid cases.” Daily new infections topped 5,000 earlier this week and the public health body, the Robert Koch Institute, reported 6,638 new cases Thursday.

UK considers second lockdown

The U.K. government introduced a new Covid-19 alert level system earlier this week, with the city of Liverpool and its suburban areas designated as “very high” risk and put under a strict local lockdown. Households in the area are not allowed to mix indoors or outdoors, and gyms, leisure centers, betting shops and casinos are closed. Pubs and bars have to close too, unless they serve food.

The strictest measures could now be expanded to other parts of northern England, including Manchester. The city’s mayor, Andy Burnham, said he is meeting Prime Minister Boris Johnson’s team on Thursday morning to discuss what to do next.

Johnson is under pressure to go further to curb the spread of the virus, with the government’s scientific advisors advocating for a second national lockdown, albeit it a shorter, two-week shutdown, to act as a “circuit breaker” to stop the spread. The leader of the opposition Labour party, Keir Starmer, on Tuesday added his support to the calls for a lockdown. The U.K. reported 19,724 new cases Wednesday, up from 17,234 Tuesday.

Sentiment deteriorates

Coronavirus concerns are weighing on market sentiment Thursday as investors react to the situation.

Deutsche Bank strategists led by Jim Reid said that Wednesday’s developments reflected “sadly yet another day of bad news out of Europe,” and warned that Italy was also seeing a sharp rise in cases, having lagged its neighbors in seeing a second wave.

“With Italy reporting a record number of cases at 7,332 (albeit with much higher levels of testing now than back in March) the rise in numbers there are bringing it more into line with the recent increase we’ve seen in the U.K. and France in recent weeks, though Italy’s numbers still remain at lower levels by comparison,” he said in a note on Thursday.

Sep 15, 2020

News | Business | Europe | Brexit: A no-deal Brexit would be more costly for the UK than coronavirus, Goldman says

Silvia Amaro

British Prime Minister Boris Johnson returns to Downing Street.

British Prime Minister Boris Johnson returns to Downing Street.

Leon Neal | Getty Images News | Getty Images

LONDON — The blow to the U.K. of failing to reach a trade deal with the European Union would be more costly than dealing with the coronavirus, Goldman Sachs economists have warned.

In fact, the investment bank said the fallout of a no-deal outcome was likely to be “two to three times larger” than that of “the worst pandemic witnessed in post-war history.”

The U.K. government has over the last week challenged previous commitments with the European Union, increasing the odds that both sides will not manage to put a trade agreement together before the end of the year. This “no-deal” outcome would result in higher costs for exporters on both sides.

Some analysts have suggested that these costs would blend in with the hit to the U.K. economy from the global pandemic, making it difficult to determine what will be the real source of economic pain in the years to come. However, Goldman Sachs economists disagree.

“We are sceptical of the argument that the sheer scale of the economic fallout from Covid-19 will obscure the economic impact from a breakdown in Brexit negotiations,” they said in a research note Monday.

The investment bank argued that the industries hit hardest by the coronavirus — such as recreational, food and drink, and wholesale businesses — are different from the sectors mostly likely to be punished by the U.K.’s departure from the European Union, which include chemicals, textiles and electrical equipment businesses.

I’m afraid that next year (the performance of the U.K. economy) is going to be even worse.

Anatole Kaletsky

founder and co-chairman of Gavekal Research

However, they added that when considered together, “from an aggregate perspective, the present value of the long-run impact of failing to reach an EU-U.K. free trade agreement is likely to be two to three times larger (on reasonable assumptions) than the present value of the cyclical damage wrought by the coronavirus crisis.”

The U.K. economy grew by 6.6% in July — the third consecutive monthly rise, according to data from the Office for National Statistics released last week. However, the public body warned that the U.K. “has still only recovered just over half of the lost output caused by the coronavirus.”

In addition, the unemployment rate increased to 4.1% in the three months to July — 0.3 percentage points above the rate seen a year ago, according to data out Tuesday.

“The world’s worst performing major currency, stock market and economy have all been located in Britain since Boris Johnson was re-elected last December,” Anatole Kaletsky, founder and co-chairman of Gavekal Research, said in a note Monday.

Speaking to CNBC on Tuesday, he added that he was “very worried about the performance of the U.K. economy going forward.

“I’m afraid that next year is going to be even worse because of this combination of Covid, which is still very much out of control, and this additional blow from actually almost anything that comes out of these Brexit negotiations,” he said.

The EU and the U.K. have said they remain in close contact and their plans to have another round of trade talks at the end of the month are still on the table.

However, the EU has made it clear that it cannot sign new trade arrangements if the U.K. violates previous already-legislated commitments. 

On Monday, U.K. legislators cleared the first legal hurdle in implementing the so-called Internal Market Bill — a set of new laws that, if cleared in both chambers of the U.K. parliament, would breach international law. The EU has asked the U.K. to amend the bill as soon as possible and no later than until the end of the month — if it fails to do so, the EU will likely challenge the U.K. government in court. 

Both sides have given themselves until October to put together an agreement that can then be ratified before the end of the year, but analysts are growing increasing skeptical that this is going to happen.

Aug 17, 2020

News | Politics | Europe | Belarus: Svetlana Tikhanovskaya ‘prepared to act as national leader’ in Belarus

Max Seddon 

Belarusian opposition leader Svetlana Tikhanovskaya has said she is ready to lead the country through a transition period after a wave of protests at the weekend left Alexander Lukashenko, the country’s strongman leader, fighting for his political future.
Ms Tikhanovskaya, who fled to Lithuania last week under pressure from the security services, said in a YouTube message on Monday she was “prepared to take responsibility and act as a national leader” after western countries said they would not recognise the results of Belarus’s presidential election.
“We all want to get out of this endless circle we found ourselves in 26 years ago,” Ms Tikhanovskaya said.
The 37-year-old former English teacher — who became an unlikely focal point for a groundswell of anger against Mr Lukashenko when she ran as a presidential candidate in place of her jailed husband and two other barred opposition candidates — said she would release the remaining 2,000 people arrested during the protests and hold “real, honest, and transparent elections that will be unconditionally accepted by the international community”.
Svetlana Tikhanovskaya casts her ballot at a polling station during the presidential election earlier this month
Svetlana Tikhanovskaya casts her ballot at a polling station during the presidential election earlier this month © AFP via Getty Images
As many as 200,000 people protested in Minsk, Belarus’s capital, as well as tens of thousands in other cities across the country on Sunday, to demand the ousting of Mr Lukashenko, a former collective farm boss who has ruled Belarus for the past 26 years.
The unprecedented protests have left Mr Lukashenko fighting for his political future after a brutal police crackdown backfired when many of the almost 7,000 people detained said they had been tortured by police in jail.
Ms Tikhanovskaya called on Belarus’s security apparatus to abandon Mr Lukashenko and help smooth the grounds for a transition of power.
“Belarusians are fair and generous people who don’t accept violence,” she said. “If you decide not to obey criminal orders and take the side of the people, they will forgive you, support you, and won’t say a word against you in the future.”
The UK joined the EU on Monday in condemning Belarus’ brutal crackdown after the election and said it would plan sanctions against those responsible.
“The world has watched with horror at the violence used by the Belarusian authorities to suppress the peaceful protests that followed this fraudulent presidential election,” foreign minister Dominic Raab said in a statement. “The UK will work with our international partners to sanction those responsible, and hold the Belarusian authorities to account.”
Mr Lukashenko refused all offers of mediation after Belarus’s election commission declared him the winner with 80 per cent of the vote and called on Russian president Vladimir Putin to provide security assistance.
The Kremlin, which recognised Mr Lukashenko’s declaration of victory, said it would uphold its treaty obligations to defend Belarus in the event of a foreign invasion but did not say if it would help Mr Lukashenko quell the protests.
Workers at Belarus’s state-owned enterprises, which form the backbone of its economy and Mr Lukashenko’s political base, continued strikes on Monday despite threats that they would be fired for not returning to work.
They were joined by employees at Belarus’s normally pliant state television company, which broadcast from an empty studio as pop music played while staff demonstrated outside the building.
As striking workers from other factories grouped outside to demand his resignation, Mr Lukashenko visited the Minsk Wheel Tractor Plant, whose director admitted last week that he believed Ms Tikhanovskaya had won the election.
Despite only speaking to a select group of workers and arriving by helicopter to avoid the crowds, Mr Lukashenko was still met with loud boos and chants of “Resign!”
He replied: “Are you saying the elections were unfair and you want fair ones? Here's your answer. We had an election. There won't be any other elections until you kill me.”

Jul 13, 2020

News | Europe | Poland: Polish president Duda squeaks a second term, electoral commission says

Loveday Morris

Poland’s populist president Andrzej Duda has won a second term, the country’s electoral commission said on Monday after counting the vast majority of votes in a tightly fought runoff against the liberal mayor of Warsaw Rafal Trzaskowski.

Duda — an ally of President Trump — had won 51.2 percent of the vote in Sunday’s election, the commission said after counting 99.97 percent of the ballots. The commission said the remainder of the votes were unlikely to change the outcome. The turnout was a record high of 68.1 percent.

The results will likely help Poland’s ruling right-wing Law and Justice party continue its hard-line policies, including efforts to force out independent judges, which have drawn rebukes from the European Union and human rights groups over the past five years.
It is a blow to liberals who had hoped a Trzaskowski victory could bring a stunning change in Polish politics, allowing the pro-European Trzaskowski to veto laws passed by the right-wing government, which holds a majority in the lower house of Parliament. Trzaskowski, the mayor of Warsaw, has vowed to return Poland to E.U. standards on the rule of law.

Both candidates expressed optimism Sunday that they had won the election.
“It shows that [Polish] democracy is vibrant,” Pawel Zerka, a policy fellow at the European Council on Foreign Relations noted after the exit polls on Sunday. “But it’s also bad news, because it shows to what extent the society is really divided into tribes or camps. It is neatly divided in half.”
Duda came in first during the initial round of voting last month, but he failed to secure the majority he needed to avoid a runoff with Trzaskowski, whose approval ratings have jumped since he entered the race in May.

Duda, who during the campaign suggested that efforts to advance LGBT rights were worse than communism, vowed Friday to strengthen the Polish state, which he said was “built on our inviolable and sacred tradition.” Duda’s campaign sought to highlight efforts by the ruling Law and Justice party to narrow inequality by expanding social benefits, which has mainly helped poorer voters in rural areas that are right-wing strongholds.

Jul 2, 2020

News | Europe | Unemployment: Euro zone unemployment rate climbed to 7.4% in May as economies unwound lockdown measures

Silvia Amaro

A protester at the picket line wears a helmet written on no layoffs during a demonstration in Spain.
A protester at the picket line wears a helmet written on no layoffs during a demonstration in Spain.
SOPA Images

The unemployment rate in the euro zone came in at 7.4% in May, as the region grapples with the economic shock from Covid-19.
It comes after a number of European economies took their first steps to reopen in May, which has allowed some workers to return to their jobs. However, the social-distancing measures that remain in place and ongoing travel restrictions are limiting the pace of the recovery.
The unemployment rate in the 19-member region rose to 7.4% — the worst reading since November last year. According to the European statistics office, the number means that 12.146 million people in the euro area were unemployed in May.
Youth unemployment, those aged between 15 and 24, also increased to 16% in May, from 15.7% in April. 
Some economists are expecting much worse unemployment figures going forward as governments reduce benefit schemes. At the height of the sovereign debt crisis during the last decade, the euro area experienced an unemployment rate of just above 12%.
Speaking on Friday, European Central Bank President Christine Lagarde said the world may be past the worst of the pandemic, though she cautioned that there is a risk of a second wave of infections.
The ECB has forecast a contraction of 8.7% in euro zone gross domestic product for the whole of 2020, followed by a rebound of 5.2% economic growth in 2021. 

Jun 23, 2020

News | Europe | Economic Recovery: Euro zone downturn slows significantly in June, spurring hopes of an economic recovery

Holly Ellyatt

Amsterdam's canals empty and deserted during the government imposed quarantine due to the coronavirus pandemic.
Amsterdam’s canals empty and deserted during the government imposed quarantine due to the coronavirus pandemic.
SOPA Images.

The downturn in the euro zone continued to recover in June, according to data Tuesday, giving the latest indication of the region’s economic health as it emerges from the coronavirus pandemic.
Flash purchasing manager’s index (PMI) data — measuring activity in both the services and manufacturing sector in the euro zone — came in at 47.5 in June, up from a final reading of 31.9 in May. The 50-point mark separates contraction from expansion. Economists polled by Reuters had expected the flash June PMI to come in at 42.4.
The 15.6-point rise was by far the largest in the survey history with the exception of May’s record increase, IHS Markit said in its data release.
“The latest gain took the PMI to its highest since February, though still indicated an overall decline in business output. Output fell again in both manufacturing and services, the latter showing the slightly steeper rate of decline. Both sectors nevertheless reported markedly reduced rates of contraction for a second month running,” it said.
IHS Markit added that the ongoing downturn in output was linked to a fourth consecutive monthly deterioration of inflows of new business, “which in turn contributed to a further steep decline in backlogs of orders for companies to work through.” These factors continued to moderate in June, however, signaling that further improvement could be seen in next month’s indices.
IHS Markit’s Chief Business Economist Chris Williamson said the data “indicated another substantial easing of the region’s downturn in June.”
“Output and demand are still falling but no longer collapsing,” he continued. “While second-quarter GDP is still likely to have dropped at an unprecedented rate, the rise in the PMI adds to expectations that the lifting of lockdown restrictions will help bring the downturn to an end as we head into the summer.”
The data gives markets another indication of the extent to which euro zone countries are recovering from lockdowns across the region that effectively saw whole industries shut down. 
Business activity in the single currency area had hit a three-month high in May, with the final composite PMI (which includes both manufacturing and services) coming in at 31.9, up from 13.6 in April.
The data Tuesday builds on other indications of the region’s economic wellbeing, or not. On Monday, flash consumer confidence data for the euro zone and wider European Union showed further improvement in June. Nonetheless, recent unemployment data painted a worrying picture, especially for young people.

Jun 2, 2020

News | Europe | Greece: Will Greece negotiate a new fiscal targets with Europe for 2021?

Silvia Amaro

Greek Finance minister Christos Staikouras presents the Bank of Greece numismatic programme for 2020.
Greek Finance minister Christos Staikouras presents the Bank of Greece numismatic programme for 2020.

Greece wants to negotiate new fiscal targets with its euro zone creditors as the coronavirus crisis pushes its debt pile to almost 200% of gross domestic product (GDP).
Greece, which has been through three bailout programs over the last decade, agreed in 2018 to reach a primary budget surplus — when a government’s revenues are higher than its spending — of 3.5% until 2022. Though this required level of surplus limits the government’s ability to spend, it came in exchange for softer debt repayment conditions.
However, as the coronavirus pandemic brought the Greek economy to a halt, the country’s finance minister told CNBC he will be discussing new targets with his euro zone counterparts.
“Taking into account what the Eurogroup (of euro zone finance ministers) decided recently, we don’t have these targets in 2020 and we will discuss as Europe, at the Eurogroup, the targets, the rules and the requirements for 2021 onwards taking into account the response to the coronavirus crisis,” Christos Staikouras, Greece’s finance minister, said Tuesday.
In the wake of the pandemic, European policymakers agreed in March to lift fiscal targets for each member country, giving them more leeway to tackle the unprecedented economic shock. However, this is meant to be a temporary measure in response to the economic crisis across the European Union.
The European Commission, the executive arm of the EU, forecast in May a debt-to-GDP ratio of 196.4% for Greece in 2020 and of 182.6% in 2021. In 2019, Greece’s debt pile stood at 176.6% of GDP.

May 26, 2020

News | Europe | ECB: ECB's coronavirus stimulus must remain flexible, Banque de France governor says

Silvia Amaro

Governor of the Central Bank of France, François Villeroy de Galhau, looks on as he attends the World Economic Forum (WEF) annual meeting on January 26, 2018 in Davos.
Governor of the Central Bank of France, François Villeroy de Galhau, looks on as he attends the World Economic Forum (WEF) annual meeting on January 26, 2018 in Davos.

The European Central Bank (ECB) should not need to take into account the size of a country’s economy when buying government bonds as part of its stimulus program, a member of the central bank has told CNBC.
The comments by Banque de France Governor François Villeroy de Galhau come after the German constitutional court said earlier this month that the ECB should keep that link to avoid the risk of distorting markets.
The ECB has been buying large amounts of government bonds as part of its wider effort to mitigate the economic fallout from the coronavirus crisis. Its Pandemic Emergency Purchase Program (PEPP), announced in March, will see it buy 750 billion euros ($818 billion) by the end of the year. However, the program is different from other bond-buying initiatives, where the central bank links its monthly purchases to the size of a country’s economy.
Speaking to CNBC Tuesday, de Galhau said the stimulus program should remain flexible.
“We are open on the volume, we are open on the end date — which is linked to the end date of the Covid crisis, and in any case not before the end of this year. But still more, if we want to guarantee the maximal efficiency of PEPP, we should not be bound to capital keys,” he said.
“Some central banks should be able to buy more; and others to buy less. If it’s needed to prevent unwarranted fragmentation, unwarranted market dynamics or liquidity gaps which we could have in the market.”
The German court ruling was on a separate ECB stimulus program.
De Galhau’s comments follow a speech Monday in which he said the ECB will probably have to do more to keep the euro zone afloat.
In addition to the ECB’s stimulus program, European governments are also working on additional plans to prop up the region as it faces the deepest crisis since the 1930s.

May 25, 2020

News | Europe | Tech Firms | Taxes: Europe could target Silicon Valley with taxes to help it rebound from the coronavirus-fueled recession

Silvia Amaro

The EU flags are seen in front of the Berlaymont, the EU Commission headquarter on May 19, 2020, in Brussels, Belgium.
The EU flags are seen in front of the Berlaymont, the EU Commission headquarter on May 19, 2020, in Brussels, Belgium.
Thierry Monasse

Tech giants could be forced to pay higher taxes in Europe as governments search for new revenue to deal with the ongoing coronavirus crisis, three experts told CNBC.
Taxing tech firms such as Google, Facebook or Amazon has been a thorny subject in Europe. Countries failed to come up with a joint digital tax in 2019 and deferred the negotiations to the OECD (the Organization for Economic Cooperation and Development). In addition, some nations, such as France, decided to implement their own digital taxes regardless, but their actions sparked a trade spat with the United States.
Different governments are now dealing with the greatest economic crisis since the Great Depression and they will need fresh cash to support their economies. They might look at tech firms for that extra revenue.
“We see digital goods/services tax conversations advancing most rapidly in Europe, where the scale of ambition to use the EU budget to finance economic recovery from coronavirus may see Brussels taking an increased interest in the attractive potential tax base of e-commerce and digital services,” David Livingston, an analyst at the research firm Eurasia Group, told CNBC Wednesday.
The European Commission, the executive arm of the EU, is due to unveil new spending plans this week. The institution is likely to look at additional taxes, such as a carbon duty, as new sources of revenue.
Speaking to CNBC Wednesday, Dexter Thillien, a senior industry analyst at Fitch Solutions, said there are two reasons why tech giants could be asked to pay more.
“The first is that they will be the companies making the most money during and after the pandemic, and the second is because there have been many moves towards digital taxation,” he said via email.

International plans for a digital tax

The OECD delayed a target to reach a digital tax plan to October from July. It also said earlier this month that the plan might be done in a staged process that lasts until 2021.
The European Commission has said that it will revive talks at the European level if there is no agreement at the OECD this year.
The same institution has previously said digital companies pay on average an effective tax rate of 9.5% in the EU — compared to 23.2% for traditional businesses. Tech giants have argued that they pay as much tax as they are legally obliged to.
The European Commission has taken a leading role in regulating the tech industry. For instance, in 2016, the institution ordered Ireland to recover 13 billion euros in unpaid taxes from Apple. The company and the Irish government contested that decision.
After an online discussion with Facebook’s CEO Mark Zuckerberg last week, European Commissioner Thierry Breton brought up the issue of taxation. He said on Twitter: “Being smart is good. But being too smart with taxes is never a right idea.” The European Commission declined to comment Friday when asked to clarify the tweet and whether the institution is looking at changes to taxation.
Taxing digital companies could move forward in other parts of the world too.
“Over a longer time-horizon, we see other countries beginning to explore digital goods and services taxes, particularly as the scale of the shift to digital commerce over the past several months of Covid-related dislocations becomes clear, and as a number of countries grasp to find new revenue,” Livingston also said via email.
“A key trend to watch is the degree to which large consumer bases in emerging markets, such as Brazil, India, and Indonesia, press ahead with new digital taxes. Indonesia, for example, is trying to collect taxes on a greater share of its e-commerce,” he said. 

VAT or income taxes could be an option too

Graham Samuel-Gibbon, an international tax law partner at law firm Taylor Wessing, said a digital tax doesn’t provide “huge revenues” for governments as only a few companies are above the necessary threshold that require them to pay the duty.
On the other hand, taxes on consumption and income provide higher sources of government revenue, Samuel-Gibson said.
However, he acknowledged that these two “would be less popular” among ordinary citizens.
France, Italy, Spain, Austria and the U.K. are some of the countries that have drafted plans for a digital tax.
In the case of France, which was the first major economy to legislate a digital tax, it agreed in January to postpone collecting the first payments until next year to allow time for the OECD to come up with a deal.

Apr 23, 2020

EU News: Why fractious EU still believes together is better

Katya Adler

A picture shows a screen of a video conference call between members of the European Council, seen at the Elysee Palace in Paris, on March 26, 2020 Image copyright Getty Images
Image caption EU leaders will meet by video for their summit on Thursday
"EU in disarray!" scream headlines since the start of the Covid-19 pandemic. Brussels is depicted as "weak"; EU member states as "feuding".
You find endless analyses online focusing on the "lack of solidarity" shown by the rich EU North: Germany, the Netherlands, Austria, Finland - the "frugals" as they've been dubbed - towards the suffering South - i.e. Italy and Spain.
In the UK, the EU's handling of coronavirus feeds into what's left of the Brexit debate.
The UK has already left the EU, of course, but Remainer/Leaver resentments linger. And the question of how close the UK remains to Brussels in the future is not yet enshrined in law.
Does EU behaviour during the pandemic mean we were right to leave or wrong? Twitter is not exactly short of thoughts on that subject.
But are media depictions of the EU and its members so far during this crisis entirely accurate?
"Are they ever?" huffed a key Brussels figure when I asked him. "We've had ugly moments but by now the achievements are stacking up. The massive ECB (European Central Bank) stimulus package was just the beginning. Thursday is a big day."

Agreeing on an emergency fund and common measures

EU leaders meet by video-conference for a summit on Thursday afternoon.
They're expected to sign off on a new €540bn (£470bn; $575bn) emergency fund to protect European workers, businesses and countries worst affected by the coronavirus outbreak.
The fund was difficult to agree between member states but they got there in the end. After considerable push and pull, plus a dramatic intervention by French President Emmanuel Macron, who threatened the end of the EU if agreement wasn't found.
"So much for us failing to show solidarity with Italy," snorted a Dutch colleague to me. "It's a generous package."
Angela Merkel's preferred wording was that solidarity had been shown towards Italy and the South. It would continue to be shown in the future, she said.
Brussels boasts that, in addition to the fund, EU members have been sharing protective medical equipment and specialist medical teams with one another.
In some cases, they've also been treating each other's patients. According to German newspaper Süddeutsche Zeitung, the cost of providing treatment to patients coming from abroad has cost the German taxpayer €20m so far.
On Thursday, EU leaders are also expected to approve common measures for gradually lifting coronavirus restrictions.
This does not mean coordinating an EU-wide End of Lockdown. Each country has its own health service, with different infection patterns, different lockdown measures in place.
Would the spread of coronavirus have been more easily contained if all EU countries and their neighbours had taken early and uniform precautions?
Indubitably, say medical experts. But that kind of agreed action hasn't been possible amongst the states of the United States of America. It was never going to happen between 27 independent EU countries, with their varying forms of government (federal, regional etc).

Can EU agree roadmap from here?

Brussels admits every member state will now "tailor-make" their exit strategy from lockdown but it wants them to at least inform one other in advance, to avoid complications for people working across national borders.
The Commission has also asked that no EU country lift its Covid-19 restrictions unless:
  1. The number of deaths/infections in that country has been reducing and stable for a sustained period of time
  2. The national health service could cope with a surge of new infections if necessary
  3. The EU country in question has enough testing capacity to identify and quarantine new infections plus people they have recently been in contact with, in order to keep those who have not yet had the virus safe.
EU leaders are broadly in agreement with all of this, but smiles could turn to gritted teeth when they then turn their attention to the future.
One of the summit priorities on Thursday is to discuss a Recovery Plan for Europe: aimed at getting European economies back on their feet after the health crisis is over.
The kind of figure that's being discussed is around €1-1.5 trillion.

Media playback is unsupported on your device
Media captionItaly’s lockdown puts restaurants out of business
The main recipients would be European countries with the weakest economies.
France's President Macron wants the programme to be time-limited to about five years. He hopes it will be "oven-ready", signed off by parliaments across the EU, by the end of the year.
But where the plan is still vague and contested is what form funds should take: loans or grants?
Should the money be raised as part of the next EU budget (which needs to be decided by the December) or alongside?
As always, national politics is key.
Apart from Germany's Angela Merkel - who will not want the EU to fall apart in her last term in office - the big players in this debate are all vying to be re-elected. They're keen to prove their credentials to a domestic audience.

Solidarity or self-interest?

With an eye on Eurosceptic politicians at home, the Dutch prime minister wants to be seen to be protecting Dutch taxpayers' money on the European stage.
Italy's prime minister also needs to show he's sticking up for his country in Brussels. Italy was one of the EU's most Eurosceptic nations even before the coronavirus crisis.
And France? Emmanuel Macron is always looking over his shoulder at arch-Eurosceptic and political rival Marine Le Pen.
He's trying to weave a delicate dance between giving the French the impression that he's leading the post-virus recovery charge in Europe, while trying to get extra cash for the countries of the Mediterranean (including France), yet trying hard not to alienate Berlin, which he hopes will foot the largest chunk of the bill.
Quite the juggling act.
The French (and Italian and Spanish) argument is now refocused, not on solidarity but self-interest.
Their message to the frugal North: we all benefit from the single market. It's worth spending a bit more in the wake of the Covid-19 crisis to rebalance inequalities between members to make the market more competitive and lucrative in the long term.
Otherwise you risk the market faltering altogether.

This message dovetails with the ambitions of the still relatively new presidents of the European Commission and the European Council.
They believe coronavirus has made the failings in the way China and the US function glaringly obvious.
They hope that will make way for a reborn and rebooted EU to play a bigger role on the world stage - economically, in terms of a Green revolution, and digitally - after the crisis is over.
This, anyway, is the cherished dream in Brussels right now.
And as part of such a long wishlist, the details of the post-health crisis Recovery Fund are unlikely to be agreed anytime soon.
Following their Thursday summit, EU leaders will ask the European Commission to come up with concrete proposals but insiders say the painful process of compromise over the fund and the new EU budget is only likely to happen when leaders sit together in person. And who knows when that will next be?
In the aftermath of the 2008 financial crisis, there were calls all over the EU to leave the bloc. This time it's different. Eurosceptic politicians haven't gone away. Plenty of voters are still critical of Brussels. But the call to leave the EU altogether has broadly fallen silent.
EU relations are messy and further complicated by national politics but most EU leaders think the Covid-19 programmes they've got up and running together, are better than those they'd have achieved alone.

Dec 17, 2019

Europe Politics: Pound slumps 1% as Boris Johnson raises fresh risk of a no-deal Brexit

Holly Ellyatt

6-8 minutos - Source: CNBC

Premium: Prime Minister Boris Johnson Visits County Durham Following Election Victory
UK Prime Minister Boris Johnson gestures as he speaks to supporters on a visit to meet newly elected Conservative party MP for Sedgefield, Paul Howell at Sedgefield Cricket Club on December 14, 2019 in County Durham, England. F
WPA Pool

The pound fell more than 1% in early trade Tuesday after media reports said that the British government will make it illegal for the post-Brexit transition period to be extended, leaving little time for a trade deal to be agreed with the EU.
Local media reported early Tuesday that Johnson will add a revision to the Brexit bill (formally known as the Withdrawal Agreement Bill) that would explicitly rule out any extension to the transition period beyond December 2020. The U.K. is due to leave the EU by January 31, 2020.
The reports have raised concerns that the U.K.’s new, more empowered government under Prime Minister Boris Johnson could be steering the country towards a harder Brexit.
The legislation, if implemented, would leave only 11 months for a trade deal to be struck with the EU and many people think that is not enough time.
The pound initially fell to a low of $1.3236, down 0.7% from late Monday levels following the report by British broadcaster ITV, and later reported by the BBC and other media outlets.
Early Tuesday morning, the pound was down almost 0.4% against the dollar, at $1.3282 before weakening further to fall below $1.32.

The transition period seen as a time of adjustment for both sides post-Brexit. Crucially, it’s a time in which the EU and U.K. can negotiate a trade deal.
During the transition period, EU laws continue to apply in the U.K. as if it’s a member state, but the country would no longer be represented in the EU’s decision-making bodies. Currently, the transition period has the option of being extended for up to two years if both sides agree.
British media reports say that the Johnson’s government will try to make it illegal for the transition period to be extended in a bid to put more more pressure on the EU and to fast-track a trade deal.
Boris Johnson’s move comes from an emboldened Conservative Party which won a resounding victory in last week’s general election and gained a majority of 80 seats in Parliament. The win was seen as enabling Johnson to pursue his party’s own Brexit agenda more easily and Tuesday’s news appears to support that.
The U.K. has a vested interest in signing a speedy trade deal. It is keen to strike trade deals with other nations outside the bloc (a large part of the pro-Brexit argument was that leaving the EU would allow the U.K. to trade freely with the rest of the world) and while it can negotiate trade deals during the transition period, these cannot come into force until the transition period ends.
Experts think most countries will want to see what the U.K.’s trading relationship will be like with the EU before they negotiate their own trade deals with Britain, however.

Johnson empowered

Close follower of Brexit proceedings and J.P. Morgan Economist Malcolm Barr said that Johnson’s move was a surprise in that it was done without apparent pressure from a group of influential hard Brexit supporters, known as the European Research Group (ERG), from within the Conservative Party.
“As much as we anticipated that the possibility of extending the transition period would be removed from U.K. law, it comes as something of a surprise to us that Johnson appears to have done this entirely voluntarily, rather than as a result of pressure from amendments proposed by the ERG as the legislation came to the (House of) Commons. The signal of intent on his part is, in our view, very clear,” he said in a note Tuesday.
Following the latest media reports, Barr said the risk of a “no deal” end to the transition period stood at 25%, “a number we regard as uncomfortably high.”
“The negotiation process is path dependent and we could find ourselves on that path even though neither negotiating views it as their first preference,” he warned, although J.P. Morgan believes that some form of “deal” has a higher probability of 50%.
“Within the spectrum of probabilities, however, we are changing the numbers so that a simple (Withdrawal) Treaty amendment which changes the end date of the transition has less probability, while some form of “deal” has more. Given the commitment Johnson is now set to enshrine in law, it looks like whatever agreement is reached will be presented as a new deal, even if it takes large parts of the transition conditions and pushes them into 2021.”


The reported move to block any delay to is seen as a way for the government to show voters that backed the Conservative Party (many of whom doing so for the first time having abandoned the opposition Labour Party in droves) that it is determined for the U.K. to leave the EU without further delay.
Since the EU referendum in June 2016, many British voters have become frustrated with multiple instances of political deadlock. The Conservatives were seen to have performed well with much of the electorate in the election due to its mantra that it would “get Brexit done.”
The latest government move has drawn criticism from the opposition, with the Labour Party’s Shadow Brexit Secretary Kier Starmer saying it represents “reckless and irresponsible behavior we have come to expect from Boris Johnson’s Government.”
But Conservative Minister Michael Gove said Tuesday that the government was committed to securing a trade deal with the EU by the end of 2020, Reuters reported.
A weaker pound gave a little boost to U.K. equities Tuesday with London’s FTSE 100 index trading in positive territory while its continental counterparts traded lower. Maarten Geerdink, head of European equities at NN Investment Partners, told CNBC Tuesday that the latest reports from the U.K. would “produce another cliffhanger for Europe.”
“It will be another target that the market can focus on,” he told CNBC’s Capital Connection. “But I do think the fact that he (Prime Minister Boris Johnson) has such a huge majority in parliament does give him a lot more room to get the deal done.” Geerdink cautioned investors that “there is still some time to see how this plays out,” however.

Sep 23, 2019

Europe I Europe Markets Closing Report: European stocks fall close lower as weak German data rattles markets; Thomas Cook collapses

Sam Meredith, Ryan Browne

European shares were sharply lower Monday afternoon, as investors reacted to weaker-than-expected economic data and the collapse of one of the world’s most well-known tour operators.

European Markets: FTSE, GDAXI, FCHI, IBEX

FTSEFTSE 100FTSE7326.08-18.84-0.26484053582
The pan-European Stoxx 600 was down around 0.8% during afternoon deals, with most sectors and major bourses in negative territory.
Europe’s autos sector, mining sector, and banking index all traded sharply lower. France’s Peugeot Citroen, Germany’s Commerzbank and the Netherlands’ ArcelorMittal were the worst performers from their respective sectors.
Fragile market sentiment deteriorated on Monday after business activity data from the bloc’s biggest economy added to investors’ recession fears.
German private sector activity shrank for the first time in six-and-a-half years in September, survey data showed, as a manufacturing recession deepened unexpectedly and growth in the service sector lost momentum.
Markit’s flash reading of composite German PMI (purchasing managers’ index) came in at 49.1 in September, down from 51.7 in the previous month.
The manufacturing element was particularly troubling, coming in 41.4. That’s the lowest gauge of German factory sentiment for more than a decade. Any number below 50 indicates contraction.

Thomas Cook

Travel and leisure stocks traded marginally higher Monday afternoon. It comes after British tour operator Thomas Cook announced it had collapsed, leaving thousands of holidaymakers stranded.
CEO Peter Fankhauser apologized to the group’s customers and staff, adding it was “a matter of profound regret” the firm was unable to secure a rescue package from its lenders. The tour operator’s failure has put 22,000 jobs at risk worldwide.
European airlines and tour operator TUI rose to the top of the benchmark during lunchtime trade, with Britain’s easyJet also surging higher on the news.
The collapse of Thomas Cook could cut come overcapacity that has hurt profits and weighed on holiday prices in recent years, Reuters reported, citing traders. Shares of TUI jumped more than 7% for the day.

Trade developments

Market focus was largely attuned to the latest progress in U.S.-China trade negotiations. The two countries had described their latest talks as “productive” and “constructive,” but stocks on Wall Street fell Friday after Beijing officials canceled a visit to U.S. farms in Montana, cutting their trip to the country short.
Washington and Beijing have slapped tariffs on billions of dollars’ worth of each other’s goods since the start of an intense trade dispute which began last year.
Back in Europe, Britain’s opposition Labour Party kicked off its annual party conference over the weekend. According to Reuters, the party is expected to decide between two Brexit policies on Monday — to campaign to remain in the EU in a second referendum or defer a decision on what position to take until after an election. The U.K. is slated to leave the EU on Oct. 31.
— Reuters contributed to this report.

Sep 19, 2019

Europe | Europe Markets Closing Report: European markets close higher amid Fed easing; Bank of England holds rates

Sam Meredith

European stocks closed higher Thursday, after the U.S. Federal Reserve cut interest rates as expected but signaled a higher threshold to further policy easings.
The pan-European Stoxx 600 closed provisionally up 0.6%, with most sectors and major bourses in positive territory.

European Markets: FTSE, GDAXI, FCHI, IBEX

Looking at individual stocks, Britain’s IG Group surged to the top of the European benchmark after the company said it expects to return revenue growth in 2020. Shares of the online trading platform rose over 10% on the news.
Sticking with British stocks, Next tumbled toward the bottom of the index after reporting first-half results. The clothing chain posted a 2.7% rise in profit during the first six months of the year, but said the first few weeks of its fall season had been disappointing. Shares of the London-listed stock dipped 5%.
The Bank of England (BOE) held interest rates steady on Thursday, as Brexit uncertainty continues to hang over the world’s fifth-largest economy.
With less than 45 days to go before the is set to leave the European Union, the BOE’s nine-member Monetary Policy Committee (MPC), led by Mark Carney, unanimously voted to hold interest rates at 0.75%. Sterling was little changed on the news.

Central banks

On Wall Street, stocks were higher amid gains in the tech sector. The Dow Jones Industrial Average rose 100 points while the Nasdaq and S&P 500 indexes were also in positive territory.
The Fed announced Wednesday that it would take down its benchmark overnight lending rate to a target range of 1.75% to 2%, but offered few indications that further reductions are ahead — with members split on what to do next.
Easier monetary policy has generally supported equities, but a split vote from the U.S. central bank raised concern about predicting the future path for interest rates in the world’s largest economy.
Central banks around the world have been loosening policy to counter the risk of low inflation and recession. On Thursday, the Bank of Japan held interest rates steady, as widely expected, but signaled it could ease next month.
U.S.-China trade talks are also in focus, with officials on either side set to meeting in Washington later in the day. The two-day negotiations are aimed at preparing for high-level talks in early October, which will determine whether Washington and Beijing can progress toward a deal and avoid higher tariffs.
— Reuters contributed to this report.

Sep 18, 2019

Europe | Europe Markets Closing Report: European markets close slightly higher ahead of Fed rate decision

Sam Meredith, Ryan Browne

European stocks closed slightly higher Wednesday, amid investor caution ahead of an expected U.S. interest rate cut.

FTSEFTSE 100FTSE7320.17-0.230.00365309668

The pan-European Stoxx 600 closed provisionally up around 0.1%. Europe’s oil and gas stocks were among the biggest gainers, up almost 0.5%.
It comes after Saudi Arabia announced late Tuesday that oil production would be fully restored by month-end. The OPEC kingpin’s largest oil processing facility Abqaiq and the nearby oil field was attacked on Saturday, knocking out more than half of the kingdom’s output.
The drone attack has heightened tensions between the U.S. and Iran, with Washington blaming Tehran for the attacks. On Wednesday, President Donald Trump said he ordered Treasury Secretary Steven Mnuchin to “substantially increase” sanctions on Iran. The country denies any involvement.
Looking at individual stocks, France’s EDF was among the best performers. The state-controlled utility company said Wednesday that it did not need to close any of its nuclear reactors following the discovery of problems with weldings in their steam generators. Shares of the company rose over 3% on the news.
Italy’s Moncler slumped toward the bottom of the index, with shares of the Milan-listed stock down 6%. It comes after the chief executive of the luxury brand warned ongoing unrest in Hong Kong could have an impact on business this year.
On the data front, prices of goods and services paid by consumers in Britain rose at an annual rate of 1.7% last month, after a 2.1% increase in July. It marked the slowest rate of expansion since December 2016. The weaker-than-anticipated economic data prompted sterling to dip 0.3% to trade at $1.2460 at around 11:30 a.m. London time.
Meanwhile, European Commission President Jean-Claude Juncker said Wednesday that Britain was on track for a damaging no-deal Brexit. Addressing EU lawmakers in Strasbourg, Juncker said Westminster’s ideas to replace the contentious backstop policy were falling short just six weeks before the U.K. is set to leave the bloc.
On Wall Street, stocks dropped as traders looked ahead to September’s Federal Reserve’s policy decision. Policymakers are set to conclude their two-day meeting in the afternoon session of U.S. trading.
A quarter-point rate cut is seen as a near-certainty, but investors are also expected to closely monitor the central bank’s statement and economic projections.

Sep 17, 2019

Europe | Europe Markets Closing Report: European stocks close slightly lower as oil plummets; Fed meeting in focus

Elliot Smith

European stocks closed slightly lower Tuesday as investors monitored the fallout from the weekend attacks on Saudi Arabia’s oil supply.

FTSEFTSE 100FTSE7302.77-18.64-0.25391807451

The pan-European Stoxx 600 closed provisionally almost 0.1% lower, paring losses after dropping as much as 0.5% earlier in the day. Bank shares were the worst performers, down 1.9%, while food and beverages stocks led gains with a 1% rise.
Oil prices reversed course after Monday’s massive gains after a Reuters report said Saudi Arabia’s oil output would be restored to normal levels faster than initially expected. Drone attacks on two key oil facilities in the country have been the source of heightened geopolitical tension between the U.S. and Iran.
Brent crude, the international benchmark, plummeted $4.70 or 6.8%, to $64.31 a barrel. Brent had soared as much as 19.5% in the previous session, its biggest jump on record.
U.S. West Texas Intermediate crude dropped $3.93 or 6.2%, to about $59.
President Donald Trump said on Monday that it was likely Iran was behind the attacks on oil plants, estimated to have wiped out 5% of global crude supply, but stressed that he did not want to go to war. Iran has rejected U.S. charges it was behind the attacks, while President Hassan Rouhani suggested it was a reciprocal response from Yemen’s Houthi rebels.
Developments in the U.S.-China trade dispute also remain in sharp focus. The U.S. Trade Representative’s office said on Monday that deputy-level talks between the world’s two largest economies are set to start in Washington on Thursday, paving the way for high-level talks in October intended to resolve the drawn-out trade war.
Investor focus is also attuned to impending policy meetings for the U.S. Federal Reserve and the Bank of England this week.
On Wall Street, stocks fell as investors kept tabs on the latest Fed meeting, which concludes on Wednesday. Market expectations for a 25 basis-point rate cut were at 63.5%, according to the CME Group’s FedWatch tool. However, the possibility of the Fed keeping rates unchanged has risen lately.
In corporate news, German lighting group Osram Licht has advised shareholders to accept a 4.3 billion euro ($4.8 billion) bid for the company from Austrian chipmaker AMS.
On the data front, investor sentiment polls out of Germany showed move improving more than expected in September, the ZEW indicator rising 21.6 points to a -22.5 reading, versus -37.0 expected by economists in a Reuters poll. However, the ZEW Institute cautioned that the outlook for Europe’s largest economy remains negative amid trade disputes and Brexit uncertainty.

Stocks on the move

Looking at individual stocks, shares of French payments firm Ingenico climbed 4.3% to top the Stoxx 600, while Swiss lender Cembra Bank gained 4% after Credit Suisse upgraded the stock to “outperform” from “neutral.”
At the other end of the European blue chip index, Zalando shares tumbled 9.5% after Swedish investment firm Kinnevik sold its stake in the German e-commerce company.

Sep 16, 2019

Europe | Europe Markets Closing Report: European stocks close lower amid geopolitical tensions; oil shares spike 3%

Elliot Smith

European stocks closed lower Monday as investors digested an escalation of tensions in the Middle East following an attack on Saudi oil production.

FTSEFTSE 100FTSE7344.58-22.88-0.31451921646

The pan-European Stoxx 600 closed provisionally about 0.4% lower. Household goods fell over 1% to lead losses while oil and gas stocks surged 3% as crude prices soared following the oil attack in Saudi Arabia.
Oil prices surged overnight after drone attacks at the weekend hit major oil production facilities in Saudi Arabia, effectively wiping out 5% of global supply. Brent crude hit its highest intra-day percentage gain on record, last trading more than 10% higher at $66.52 a barrel.
President Donald Trump said the U.S. is “locked and loaded” and was waiting to hear from Saudi Arabia as to the next steps, sparking fears of imminent military confrontation. Trump also authorized the release of U.S. oil reserves to help maintain global supply.
Washington has placed the blame for the attacks squarely on Iran — a claim Tehran has disputed. U.S. Secretary of Energy Rick Perry told CNBC on Monday that a coalition of countries should be formed to “put a stop to Iran’s malign activity.”
Elsewhere, data revealed Chinese industrial output for August grew at its slowest pace for 17.5 years. Chinese Premier Li Kequiang said it is “very difficult” for China’s economy to grow at a rate of 6% or more, due it its high starting base and a turbulent international backdrop.
On Wall Street, stocks slid as fears of a global economic slowdown grew amid the surge in oil prices. The Dow Jones Industrial Average fell over 100 points, while the S&P 500 and Nasdaq indexes were both in negative territory.
Back in Europe, U.K. Prime Minister Boris Johnson met with European Commission Jean-Claude Juncker in Luxembourg on Monday, who said he reminded Johnson that it was now up to the British government to offer a solution to the Brexit impasse.
Meanwhile in Italy, reports suggested that former Prime Minister Matteo Renzi is planning to break away from the ruling Democratic Party (PD) to set up a new centrist movement, complicating the new coalition between the PD and the anti-establishment Five Star Movement (M5S).
In corporate news, Axel Springer is planning layoffs as part of a cost-cutting effort after U.S. investment firm KKR became its largest shareholder, the German media group’s chief executive said in an interview published Sunday by the Sueddeutsche Zeitung.
After the board of the London Stock Exchange (LSE) rejected a proposed $36.6 billion takeover offer from Hong Kong Exchanges and Clearing (HKEX), the Asian trading house has arranged meetings with LSE investors in a bid to curry favor, raising the prospect of a hostile takeover, according to Reuters. LSE shares fell over 2%.
Benetton holding company Edizione, which has a controlling 30.25% stake in Italian infrastructure giant Atlantia, expressed its dismay on Sunday following allegations of safety violations by Atlantia. Police on Friday revealed that evidence of falsified safety reports had been discovered as part of a probe of a deadly bridge collapse in Genoa last year.

Stocks on the move

Oil and gas stocks were the biggest climbers, Tullow Oil and Lundin Petroleum each climbing more than 9% during afternoon trade while Technipfmc added 5.8%.
Atlantia shares slid nearly 8% to the bottom of the Stoxx 600 on the back of Friday’s arrests. AMS fell 4% after the management and supervisory boards of Osram Licht, which is subject to a takeover offer from the Austrian chipmaker, expressed concerns about its strategy.
Politico reported that the World Trade Organization (WTO) will rule in favor of the U.S. in a long-running dispute with the European Union over its subsidies granted to aerospace giant Airbus. The decision would give Washington a green light to impose billions of euros in punitive tariffs on EU products. Air France KLM shares slid 4.5% while Airbus and Lufthansa each fell more than 3.5%.

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