European Markets Rise as Germany Passes Debt Reform, Trump and Putin Discuss Ceasefire

European stock markets saw a positive close on Tuesday, with investor attention focused on Germany’s approval of a historic debt reform deal and a high-profile call between U.S. President Donald Trump and Russian President Vladimir Putin. The pan-European Stoxx 600 gained 0.61%, with all major bourses in the green. Germany’s DAX index surged 0.98%, driven by gains in major companies like Rheinmetall, Bayer, and Thyssenkrupp. This surge came in the wake of Germany’s Bundestag passing a fiscal package aimed at increasing defense spending and creating a 500 billion euro infrastructure fund.

The German Bundestag approved the fiscal package that will allow for higher defense spending by relaxing long-standing debt rules. The reform aims to create a significant shift in Germany’s fiscal policy, unlocking more resources for both defense and infrastructure. A two-thirds majority in parliament voted in favor of the package, though it still requires approval from the Bundesrat to be fully enshrined in the country’s constitution. Economists expect this will boost Germany’s defense spending and overall infrastructure investments in the coming years.

In other geopolitical news, Trump and Putin held a 90-minute call to discuss a potential 30-day ceasefire in Ukraine, aiming to pause the ongoing war. While the details of their conversation remain private, the international focus on the potential ceasefire continues to impact market sentiment. The call marked an important moment in U.S.-Russia relations, with both leaders reportedly exploring the feasibility of halting the conflict temporarily.

As for the broader market, U.S. stock performance was mixed, while European markets continued to gain. Investors also kept an eye on developments in Germany’s bond market, with yields holding steady after the debt reform vote. Analysts predict that the yields on German 10-year government bonds could rise in the future as more government spending is needed to fund the increased defense budget. This marks a pivotal moment for Germany’s fiscal outlook, with far-reaching effects on the European economy.

source: cnbc