Euro and Stocks Rise Ahead of German Spending Vote Amid Global Uncertainty
European markets remained stable on Tuesday as investors awaited a key vote in the German parliament on a significant overhaul of government spending. This move could provide a much-needed boost to Europe’s largest economy and stimulate growth across the region. The German share price index, STOXX 600, saw a 0.5% rise, continuing its strong performance this year, while the euro climbed above $1.09, its highest since October, supported by a sharp rise in German bond yields.
This week marks a significant divergence in global market performance. While U.S. stocks face pressure, particularly from President Trump’s economic policies, European and Asian markets have benefited from a surge in investor confidence. The STOXX 600 has outperformed the S&P 500 by 8% in 2025 so far, reflecting increased optimism in Europe. The euro’s strength is further bolstered by a historic change in German fiscal policy, as the Bundestag is set to approve an increase in borrowing, signaling a shift from Germany’s traditionally conservative stance.
Investor sentiment in Europe has also been supported by developments surrounding the ongoing conflict in Ukraine. A scheduled call between U.S. President Donald Trump and Russian President Vladimir Putin is expected to discuss potential ceasefire terms. The uncertainty surrounding these talks has, however, kept gold prices elevated, with the precious metal holding above $3,000 per ounce, driven by safe-haven demand amid global instability and concerns over inflation.
Meanwhile, Asian markets also gained ground, with Hong Kong’s shares hitting a three-year peak and Japan’s Nikkei bouncing back from previous losses. China’s robust retail sales data and steps to boost domestic consumption have helped revitalize market confidence, making it an unexpected beneficiary of U.S. tariff policies. As market participants await further developments in both the U.S. and global economic landscapes, focus is also shifting toward the upcoming U.S. Federal Reserve meeting for clues on future monetary policy.
source: reuters