European stock markets surged as the region’s leaders prepare to ramp up military spending, boosting defence contractors such as Rheinmetall, BAE Systems, Thales and Saab.
Germany’s DAX 30 climbed 2.6%, the UK’s FTSE 100 advanced 0.7% to a record, and France’s CAC 30 rose 1.1% led by gains in defence companies as European leaders attempt to build a coalition to broker peace between Russia and Ukraine after the tense meeting between US President Donald Trump and his Ukrainian counterpart Volodymyr Zelenskyy over the weekend.
Meanwhile, Reuters reported Germany’s likely next government is considering establishing special funds worth almost a trillion euros to pay for urgent defence and infrastructure spending.
The euro and British pound were broadly stronger, with the kiwi trading at 53.72 euro cents at 7am in Auckland from 53.78 cents yesterday and 44.31 British pence from 44.45 pence. The New Zealand dollar rose to 56.35 US cents from 56.02 cents yesterday.
“There is increased optimism in Europe after UK PM (Kier) Starmer hosted European leaders at the weekend in a bid to support Ukraine,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “The UK and France said they would lead a European effort to forge a peace plan to present to President Trump.”
What is in a tariff?
Across the Atlantic, stocks on Wall Street were weaker as the Trump administration prepares to set the tariff level on neighbours Canada and Mexico, which are due to come into effect on Tuesday in the US.
The S&P 500 declined 0.4% in afternoon trading, with tech stocks such as Nvidia on the backfoot. The Nasdaq Composite was down 0.8%.
The US ISM manufacturing survey showed new orders at factories fell in February as the spectre of tariffs drives up costs for manufacturers.
Meanwhile, Taiwan Semiconductor Manufacturing Co chair CC Wei is due to meet Trump at the White House on Monday, with the Wall Street Journal reporting that the world’s biggest contract chipmaker is poised to announce plans to invest US$100 billion in chipmaking plants in the US over the next four years.
The downbeat mood in the US is expected to spread across the Pacific, with Australian futures pointing to a 0.1% decline for the S&P/ASX 200 index today.
Domestically, Statistics New Zealand is scheduled to release new building consents data for January, while across the Tasman, Australia’s current account and retail sales figures are due. The minutes to the Reserve Bank of Australia’s February board meeting are also on the calendar.
Among the speakers at the Australian Financial Review BHP 2025 Business Summit today is CDC chief Greg Boorer.
Reporting by Paul McBeth. Image from Joshi Milestoner on Unsplash.