European stocks are heading for a higher open on Wednesday amid optimism that U.S. President Donald Trump’s 25% duties on Canada and Mexico could be relaxed, with investors also paying attention to the potential reform of Germany’s contentious debt brake system.
The U.K.’s FTSE 100 index is expected to open 56 points higher at 8,806, Germany’s DAX up 416 points at 22,733, France’s CAC 146 points higher at 8,176 and Italy’s FTSE MIB 403 points higher at 38,282, according to data from IG.
The introduction of fresh U.S. tariffs has rattled global market sentiment amid concerns they will reignite inflation and escalate a global trade war.
In Germany, the conservative alliance and the Social Democrat party — the two groups expected to form the next coalition government following last month’s election — agreed to try to reform the constitutional debt brake system in order to enable defense spending in excess of 1% of GDP. Friedrich Merz, widely billed as likely to become the next chancellor of Europe’s largest economy, said they would also seek to create a 500 billion euro ($529 billion) credit-financed special infrastructure fund over ten years.
Alterations or exemptions to the debt brake system have been seen as crucial as a way to allow fiscal loosening to boost Germany’s struggling economy and increase military spending. The step remains politically contentious.
The euro rallied against the U.S. dollar late Tuesday on the news and was 0.13% higher at $1.064 Wednesday morning.
Euro/U.S. dollar.
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