European Markets Rise on Germany’s Debt Reform and Trump-Putin Call
European stock markets closed higher on March 18, 2025, with investors focusing on key developments including Germany’s landmark fiscal reform and a crucial phone call between U.S. President Donald Trump and Russian President Vladimir Putin. The pan-European Stoxx 600 gained 0.61%, with major indexes like Germany’s DAX, France’s CAC 40, and the UK’s FTSE 100 all seeing positive movement. Germany’s approval of a fiscal package was a key driver, particularly after a vote in the Bundestag passed a reform allowing for higher defense spending and the creation of a 500 billion euro infrastructure fund.
Germany’s historic debt reform involves changes to its long-standing fiscal rules, creating room for increased defense and climate-related expenditures. The Bundestag approved the package with a two-thirds majority, and it now awaits approval from the Bundesrat on March 21 to finalize the reform. The changes are expected to boost Germany’s defense budget by an additional 0.2-0.3% of GDP annually, with infrastructure spending also providing an economic lift. This shift was particularly significant for defense stocks, with companies like Rheinmetall and Thyssenkrupp showing notable gains.
In parallel, attention turned to the diplomatic conversation between Trump and Putin, lasting over 90 minutes, during which the two leaders discussed potential steps toward a ceasefire in Ukraine. While details of their conversation remain unclear, the focus was reportedly on agreeing to a 30-day pause in the conflict. Markets, particularly those in Europe, kept a close eye on the outcome, as it could have wider geopolitical and economic implications.
Meanwhile, Asian markets also posted gains, fueled by positive retail sales data from the U.S., which helped ease recession concerns. Despite early-day losses in the U.S. stock markets, European investors remained upbeat, with the overall sentiment driven by both fiscal and geopolitical factors. As Europe continues to monitor developments from both Germany’s fiscal reform and the U.S.-Russia dialogue, market participants are poised for the next steps in global economic policy.
source: cnbc