Despite the news flow regarding geopolitical tension and tariffs, European stock markets remain positive due to reaction purchases and sectoral divergences.
Military moves in the Middle East, which are intensifying day by day, continue to be the main factor determining the direction of the markets.
While it is claimed that US President Donald Trump is “seriously considering” a large-scale attack against Iran, the US Central Command announced that a new attack has been launched against military targets in Iran.
Regional indices are positioned on the positive side with the positive trend of some defense and heavy industry companies, as well as the IT and software sector.
With these developments, as of 10.10 in the European markets, the Stoxx Europe 600 indicator index is at 641.3 points, with a 0.3 percent increase, and the FTSE 100 index in the UK is at 10,663 points, 0.2 percent above the previous closing.
In Germany, the DAX 40 index is at 24,914 points with a 0.8 percent increase compared to the previous closing, in Italy the FTSE MIB 30 index is at 51,584 points with a 0.5 percent increase, in France the CAC 40 index is at 8,318 points with a 0.2 percent premium, and in Spain the IBEX 35 index is at 19,413 points with a 0.7 percent gain in value.
TARIFFS ARE ON THE AGENDA AGAIN
On the other hand, tariffs, which have been in the background for a while, have come to the fore again. The Office of the US Trade Representative (USTR) announced that 10 or 12.5 percent customs duty will be imposed on 60 trade partners as a result of investigations into the failure to ban the import of goods produced through forced labor and the failure to effectively implement this ban.
The customs duty in question will be applied as 10 percent to trade partners that ban the import of products produced through forced labor, undertake this ban through mutual trade agreements or apply a partial regime, and 12.5 percent to trade partners that do not impose such an import ban.
In this context, on the European side, the United Kingdom will be subject to a 10 percent customs duty. The total tax burden will be 10 percent, taking into account the “most favored country tax rate” for products originating from the European Union (EU) and Taiwan, and 12.5 percent for products from Japan, South Korea and Switzerland.
While this news flow affected the expectations for large companies exporting in the region, it caused the risk appetite to be limited throughout the region.
INFLATION MESSAGE FROM LAGARDE
On the monetary policy side, yesterday the European Central Bank (ECB) left the 3 main policy rates constant in line with market expectations.
Making an evaluation after the decision, ECB President Christine Lagarde said that the full effects of the energy shock due to the war in the Middle East regarding inflation have not yet emerged, fueling fears that the current risks may be felt more clearly throughout the region.
Lagarde stated that they concluded that they are in a suitable position to follow the developments and data to be announced in the coming weeks very closely.
Warning that the risks to the inflation outlook are upward and that the energy shock may become even more severe, Lagarde said that its impact on other prices and wages may be stronger than expected.
Lagarde underlined that they are closely monitoring the risks that the second round effects of the energy shock may occur and said, “We are concerned about the second round effects, but at this stage we do not see clear signs of the emergence of the second round effects.” he said.
