Stock Markets
EU and China set for talks on planned electric vehicle tariffs
By Maria Martinez
SHANGHAI (Reuters) -China and the European Union have agreed to start talks on the planned imposition of tariffs on Chinese-made electric vehicles (EVs) being imported into the European market, senior officials of both sides said on Saturday.
Germany’s Economy Minister Robert Habeck said he had been informed by EU commissioner Valdis Dombrovskis that there would be concrete negotiations on tariffs with China.
The confirmation came after China’s commerce ministry said its head Wang Wentao, and Dombrovskis, executive vice president of the European Commission, had agreed to start consultations over the EU’s anti-subsidy investigation into Chinese EVs.
“This is new and surprising in that it has not been possible to enter into a concrete negotiation timetable in the last few weeks,” Habeck said in Shanghai.
He said it was a first step and many more will be necessary. “We are far from the end, but at least, it is a first step that was not possible before.”
The minister had said earlier on Saturday that the European Union’s door was open for discussions regarding EU tariffs on Chinese exports.
“What I suggested to my Chinese partners today is that the doors are open for discussions and I hope that this message was heard,” he said in his first statement in Shanghai, after meetings with Chinese officials in Beijing.
Habeck’s visit is the first by a senior European official since Brussels proposed hefty duties on imports of Chinese-made electric vehicles (EVs) to combat what the EU considers excessive subsidies.
Habeck said there is time for a dialogue between the EU and China on tariff issues before the duties come into full effect in November and that he believes in open markets but that markets require a level playing field.
Proven subsidies that are intended to increase the export advantages of companies can’t be accepted, the minister said.
Another point of tension between Beijing and Berlin is China’s support for Russia in its war in Ukraine. Habeck noted Chinese trade with Russia increased more than 40% last year.
Habeck said he had told Chinese officials that this was taking a toll on their economic relationship. “Circumventions of the sanctions imposed on Russia are not acceptable,” he said, adding that technical goods produced in Europe should not end up on the battlefield via other countries.
TIME FOR TALKS
The EU’s provisional duties of up to 38.1% on imported Chinese EVs are set to apply by July 4, with the investigation set to continue until Nov. 2, when definitive duties, typically for five years, could be imposed.
“This opens a phase where negotiations are possible, discussions are important and dialogue is needed,” Habeck said.
Proposed EU tariffs on Chinese goods are not a “punishment”, Habeck told Chinese officials earlier in Beijing. “It is important to understand that these are not punitive tariffs,” he said in the first plenary session of a climate and transformation dialogue.
Countries such as the U.S., Brazil and Turkey had used punitive tariffs, but not the EU, he said. “Europe does things differently.”
Habeck said the European Commission had for nine months examined in detail whether Chinese companies had benefited unfairly from subsidies.
Any countervailing duty measure that results from the EU review “is not a punishment”, he said, adding that such measures were meant to compensate for the advantages granted to Chinese companies by Beijing.
Zheng Shanjie, chairman of China’s National Development and Reform Commission, responded: “We will do everything to protect Chinese companies.”
Proposed EU duties on Chinese-made EVs would hurt both sides, Zheng added. He told Habeck he hoped Germany would demonstrate leadership within the EU and “do the correct thing”.
He also denied accusations of unfair subsidies, saying the development of China’s new energy industry was the result of comprehensive advantages in technology, market and industry supply chains, fostered in fierce competition.
The industry’s growth “is the result of competition, rather than subsidies, let alone unfair competition,” Zheng said during the meeting.
After his meeting with Zheng, Habeck spoke with Chinese Commerce Minister Wang Wentao, who said he would discuss the tariffs with EU Trade Commissioner Valdis Dombrovskis on Saturday evening in a video conference.
“There’s room for manoeuvre, there’s room for discussion and I hope that this room for manoeuvre will be taken,” Habeck said.
In case the negotiations didn’t reach a deal, Chinese carmaker SAIC Group has designed an array of creative products in response to the threat of tariffs.
Shao Jingfeng, chief design officer of the SAIC Motor R&D Innovation Headquarters, released pictures on his Weibo (NASDAQ:) social media account showing products such as skateboards, hoodies, sneakers, cups, umbrellas and table tennis paddles, mainly yellow and black in colour and emblazoned with the EU emblem and the figure “38.1” – a reference to the level of the EU’s tariffs.
“What doesn’t kill you makes you stronger,” Shao wrote on Weibo. “Let us remember 38.1.”
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This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
By Alden Bentley, Samuel Indyk and Rae Wee
NEW YORK/LONDON (Reuters) -Wall Street topped off a global share rally in thin trade on Thursday as markets prepared for early Christmas Eve closes, while the dollar was buoyed by firmer Treasury yields and speculation that the Federal Reserve would slow its easing in 2025.
The was 0.47% higher in late morning trade, the rose 0.73% and the rose 0.99%.
U.S. stock trading wraps up at 1:00 p.m. EDT/1800 GMT, and the bond market closes at 2:00 p.m. Most financial centers around the world are closed on Wednesday for Christmas. The U.S. reopens on Thursday, while many financial centers have a second day off.
“Meagre news and data flow should keep the focus on a more hawkish Fed,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
MSCI’s gauge of stocks across the globe went up more than half a percent. The pan-European index rose 0.18%. 100 rose 0.19% and 40 rose 0.14%. German stocks were closed for the Christmas holiday.
In Asia, Chinese stocks rose after sources told Reuters that Beijing planned to issue a record amount of special treasury bonds next year as it ramps up fiscal stimulus to revive a faltering economy.
The blue-chip index and both ended 1.3% higher. Hong Kong’s advanced 1.1%.
The news came shortly after China’s finance ministry said authorities would ramp up fiscal support for consumption next year by raising pensions and medical insurance subsidies for residents, as well as expanding consumer goods trade-ins.
Still, investors remain cautious on the outlook for the world’s second-largest economy, particularly as it faces the threat of hefty tariffs from U.S. President-elect Donald Trump.
Elsewhere, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.37%.
FED FOCUS
Investors are taking direction from last week’s 25 basis point Fed interest rate cut, its signals on the strength of the economy and its slow progress bringing inflation down to its 2% target. Markets are now pricing in about 35 basis points of easing for 2025, implying one quarter-point rate cut and around a 40% chance of a second.
U.S. Treasury yields pared gains after the Treasury saw solid demand for a $70 billion sale of five-year notes, but remained higher on the day. The two-year Treasury yield, which is sensitive to changes in Fed rate expectations, was up 0.9 bp at 4.359%, while the benchmark 10-year yield rose 2.6 bp to 4.625%, reaching a seven-month high at 4.629%. [US/]
“Like markets, the Fed will need to consider U.S. policies on tariffs and immigration in its inflation and growth outlook. We believe the subtle slowing in the U.S. labor market will still be the Fed’s paramount concern,” said analysts at Citi Wealth.
“While always uncertain, our base case expectation for a 3.75% policy rate is unchanged. It’s a far cry from the 1.7% U.S. policy rate average of the past 20 years.”
The Fed’s cut was the third one this cycle, taking the Fed funds rate to 4.25%-4.5%.
Ahead of Trump’s return to the White House in January, global central banks have urged caution over their rate paths due to uncertainty on how his planned tariffs, lower taxes and immigration curbs might affect policy.
Data on Monday showed U.S. consumer confidence unexpectedly weakened in December as the post-election euphoria fizzled and concerns about future business conditions emerged.
In currencies, the rose 0.14% hovering near a two-year high hit Monday, having climbed more than 2% in December so far.
The euro eased 0.15% to $1.0389, while the yen languished near last week’s five-month low, trading at 157.35 per dollar.
Japan’s Finance Minister Katsunobu Kato on Tuesday reiterated Tokyo’s discomfort with excessive foreign exchange moves and put speculators on notice that authorities are ready to act to stabilise a faltering yen.
rose 0.13% to $2,616.26 an ounce, having risen about 27% this year, heading for its biggest yearly gain since 2010.
rose 1.56% to $70.32 a barrel and rose to $73.73 per barrel, up 1.51% on the day. [O/R]
By David French
(Reuters) -Wall Street’s main indexes all ended higher on Tuesday, with gains in megacap and growth stocks bolstering benchmarks in a truncated Christmas Eve session.
Both the and the scored four straight sessions of gains. For the Dow, the run follows its 10-session skid earlier this month, its longest losing streak since 1974.
The benchmarks closed higher on the first day of a historically strong period called the “Santa Claus rally.” The on average has gained 1.3% in the last five days of December and first two days of January, according to data from the Stock Trader’s Almanac going back to 1969.
With megacap stocks having outsized influence on markets, their performance is often a key driver of indexes. When coupled with reduced trading volumes and few other catalysts, as many investors take time off for the holidays, this is even more pronounced.
All the so-called Magnificent Seven megacap technology stocks climbed on Tuesday, led by Tesla (NASDAQ:).
The automaker’s rise helped push consumer discretionary shares higher, making them the top gaining sector in the S&P.
Elsewhere, chip manufacturers were also buoyant. Broadcom (NASDAQ:) and Nvidia (NASDAQ:) were up, while Arm Holdings (NASDAQ:) climbed a day after losses from losing a court case.
Growth names rose despite U.S. Treasury interest rates remaining elevated – the benchmark 10-year note yielded around 4.61% on Tuesday. Traditionally, higher debt costs crimp growth stocks.
However, the long-term themes around technology development, including advancements in artificial intelligence, overshadow any near-term moves in Treasuries, said Charlie Ripley, senior investment strategist for Allianz (ETR:) Investment Management.
“This reinforces that view that the sector is going to remain strong, and should be well into the new year,” he said.
According to preliminary data, the S&P 500 gained 64.93 points, or 1.09%, to end at 6,039.00 points, while the Nasdaq Composite gained 264.31 points, or 1.34%, to 20,029.19. The Dow Jones Industrial Average rose 366.75 points, or 0.85%, to 43,273.70.
Stock markets shut at 1:00 p.m. ET on Tuesday and will be closed for Christmas on Wednesday.
After a stellar run to record highs following the November election, which sparked hopes of pro-business policies under U.S. President-elect Donald Trump, Wall Street’s rally hit a bump this month as investors grappled with the prospect of higher interest rates in 2025.
The U.S. Federal Reserve eased borrowing costs for the third time this year last Wednesday, but signaled only two more 25-basis-point reductions next year, down from its September projection of four cuts, as policymakers weigh the possibility of Trump’s policies stoking inflation.
Allianz’s Ripley said the themes which had driven the market higher in the past two months remained intact, and actions by the Fed had not killed the rally.
“Heading into 2025, things are set up with good positioning,” he said, noting factors including economic outlook, consumption in the U.S. and the labor market.
Crypto-related stocks traded higher on Tuesday, including Microstrategy (NASDAQ:), Riot Platforms (NASDAQ:), and MARA Holdings, as the price of bitcoin advanced.
NeueHealth soared after the healthcare provider said New Enterprise Associates, its largest shareholder, and a group of existing investors will take the company private in a $1.3 billion deal.
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