S&P 500 falls on pressure from retail stocks, weak jobless claims
Investing.com -- The European Central Bank (ECB) is expected to reduce its key interest rates to 1.75% by 2026, according to economists closely monitoring the institution, Louis Navellier of Navellier & Associates highlighted in his podcast today. This prediction is based on the current economic recession in the eurozone, largely due to economic difficulties in France and Germany. These challenges suggest that four 0.25% key interest rate cuts are anticipated in the coming years.
The Bank of England is also predicted to reduce its key interest rates, in light of the ongoing recession in Britain. A lack of consensus among the governors over calls for up to 100 basis points in future interest rate cuts is contributing to this expectation. The global decline in yields is likely to prompt the Federal Reserve to respond to falling Treasury bond yields.
The economic strain in Europe is evident in the auto parts sector. Continental, a supplier in this industry, has announced plans to cut 3,000 jobs due to a challenging market environment. Less than half of these job cuts will occur in Germany. Additionally, Commerzbank (ETR:CBKG), a German bank, has announced 3,900 layoffs. These recent layoffs may influence the German election scheduled for February 23rd.
A recent poll showed that 28% of German voters remain undecided. Many of these voters are expected to support the AfD Party, which is seen as the most pro-business change.
The Trump Administration’s push for onshoring manufacturing from European allies, unless they reduce their tariffs to U.S. levels, has caused concern among countries with these trade barriers. The European Union’s (EU) complaints are expected to be largely ignored by the Trump Administration, potentially leading to the eventual dissolution of the EU.
Political shifts are also taking place in Britain, where the Labor Party and Prime Minister Keir Starmar are losing popularity. Nigel Farage’s Reform UK party is gaining momentum and is increasingly replacing the Conservative party. The AfD Party’s rise in Germany is likely to result in a new ruling coalition after the February 23rd election.
Despite the ongoing political drama, the stock market seems to be unaffected. The political uncertainty in Germany is expected to be resolved after the elections on February 23rd. Britain and France, however, are likely to continue facing economic challenges until new leaders are elected. Meanwhile, the ongoing Ukraine peace negotiations between Russia and the U.S. in Saudi Arabia have led to a relief rally in the stock market, indicating a desire to eliminate uncertainty.
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