European stocks closed higher Friday, driven by momentum from Germany’s DAX, after reports surfaced that lawmakers were nearing consensus on reforming the country’s strict debt brake rule.
German Chancellor-in-waiting Friedrich Merz reportedly secured backing from the Greens to relax public borrowing limits, paving the way for increased defense spending.
The measure, requiring a two-thirds parliamentary majority, marks a significant shift in Germany’s fiscal stance.
The Stoxx 600 climbed 1.14%, with Germany’s DAX leading gains at 1.86%. Despite Friday’s uptick, the index remains on track for a second consecutive weekly loss, as investors weigh shifting transatlantic trade policies.
Tensions between the EU and U.S. escalated this week. Brussels vowed to retaliate against former President Donald Trump’s 25% tariffs on steel and aluminum with countermeasures on €26 billion ($28 billion) worth of American goods.
Washington fired back, threatening a 200% tariff on European champagne and spirits. The brewing trade war rattled markets, dragging European equities lower Thursday.
Meanwhile, diplomatic overtures between the U.S. and Russia offered cautious optimism, as both sides signaled tentative support for a ceasefire in Ukraine.
In corporate news, BMW shares slid 0.7% after reporting a 37% drop in annual profits, as demand from China waned.
Luxury giant Kering fell nearly 11% following the appointment of Demna Gvasalia as Gucci’s artistic director amid the brand’s ongoing struggles.
The U.K.’s economic woes deepened, with GDP contracting 0.1% in January, defying economists’ forecasts of slight growth. The surprise downturn fueled concerns over the nation’s sluggish post-Brexit recovery.
Asian stocks rebounded overnight after a volatile session, and across the Atlantic, Wall Street clawed back losses, pulling the S&P 500 out of correction territory.
With geopolitical tensions simmering and economic shifts unfolding, business leaders remain on edge, bracing for the next chapter in global financial turbulence.
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