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Good morning. Tariffs are everywhere you look, Christine Lagarde laid out some plans for the ECB and Europe is planning a very ambitious climate change policy. Here’s what’s moving markets.
U.S. President Donald Trump’s move to proposed duties on French goods over a tech tax, restore tariffs on steel from Brazil and Argentina, plus a threat to increase levies on Chinese goods if a phase one deal can't be reached between the two, will serve to add extra jitters to an already anxious market. The U.S. said the digital revenue tax France has proposed “discriminates” against U.S. companies and it is exploring whether to open investigations into similar digital levies in Austria, Italy and Turkey. Analysts, commenting primarily on the steel tariffs, said it demonstrates that no one is safe from the “tariff man,” as Trump once referred to himself.
Obscured though it was by the noise around trade and manufacturing data, European Central Bank President Christine Lagarde made her first appearance in her new role before the European Parliament. She reiterated that the ECB will be “resolute” in restoring price stability in the euro area and that the upcoming review of the central bank’s strategy will be wide-ranging. A key refrain from her predecessor was calling for European governments to unleash stimulus to help the regional economy, but even with the political turmoil in Germany, there is no guarantee that will arrive.
Germany’s Social Democrats may have got enough satisfaction from election left-leaning government critics as their leaders and, therefore, may avoid heading into a showdown with their CDU coalition partners that could threaten Chancellor Angela Merkel’s government. That may reduce some of the political risk in Germany, but certainly not all of it and the tensions between the two parties are likely to remain prominent for investors. As ever, though, Germany doesn’t have a monopoly on political turmoil and Finland’s prime minister was able to temporarily quell an uprising that threatened his career on Monday.
The European Union is gearing up to launch the world’s most ambitious policy for tackling climate change at a summit to be held in Brussels next week, a plan that would require a radical overhaul of the regional economy. Leaders are seeking a commitment to cut net greenhouse-gas emissions to zero by 2050, accompanied by more green investment, an ease on bans for state subsidies for companies and taxing imports from countries that fall short on environmental standards. Elsewhere, EU finance chiefs are calling for the creation of a money-laundering agency to prevent the crimes that have gripped the banking sector in the past year.
Stocks in Asia were lower but European stock futures are pointing higher following a sell-off on Monday, with most market watchers mulling the new wave of tariffs. Trump will be at the NATO summit in London on Tuesday and will be meeting with Queen Elizabeth II at a reception later, so many front pages will likely be carrying those events on Wednesday morning. It is relatively quiet on the earnings front, with the schedule topped by building-materials supplier Ferguson Plc.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- The world’s most popular city destinations in 2019.
- Danish bankers told to gird for the next wave of negative rates.
- Investors in Chinese electric cars face a shakeout.
- The diamond industry’s struggles are likely to continue.
- Disabled workers are paid less than peers in London.
- A Roger Federer coin proved too popular for the Swiss mint website.
- National Geographic’s best photos of 2019.
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