Investing.com - European stock markets edged higher Monday, as investors look towards a historic deal on debt in Germany, fuelling hopes for a boost to Europe’s economic fortunes.
At 05:00 ET (09:00 GMT), the DAX index in Germany climbed 0.4%, the CAC 40 in France gained 0.3% and the FTSE 100 in the UK rose 0.1%.
Increase in German borrowing likely
Friedrich Merz, in line to be the next German chancellor, reached an agreement with the Greens on Friday on a plan to dramatically increase state borrowing to fund defence and infrastructure investment.
The proposals by Merz’s conservatives and the Social Democrats mark one of the biggest political changes in Germany since the fall of the Berlin Wall in 1989.
Such a plan requires a change to the German Constitution, and the Bundestag is expected to vote on the debt reform on Tuesday, needing a two-thirds majority.
Optimism about Germany’s fiscal reset plan has seen money pour into Europe, with the DAX leading the way, gaining more than 15% year to date.
U.S./EU trade war
This has helped investors gloss over a trade war with the U.S., after the EU announced last week it would retaliate to President Trump’s 25% tariffs on steel and aluminum with countermeasures, taking aim at clothing, alcohol and industrial goods imported from the United States.
Trump then threatened to slap 200% duties on champagne and spirits originating from the bloc, raising concerns that regional and global growth could take a major hit.
Trump’s tariff policy has generated uncertainty for the world economy and made the situation more opaque than what it was six months ago, European Central Bank Vice President Luis de Guindos said on Monday.
AstraZeneca (NASDAQ:AZN) buys biotech company
In the corporate sector, AstraZeneca (LON:AZN) stock fell 0.8% after the drugmaker agreed to buy biotechnology company EsoBiotec for up to $1 billion, seeking to accelerate the development of its cell therapy capabilities, particularly for cancer and autoimmune diseases.
AstraZeneca has been actively expanding its cell therapy capabilities, particularly in oncology, through internal developments as well as strategic acquisitions.
Crude rises after strikes on Houthis
Oil prices rose Monday, buoyed by the potential for supply disruptions, after the U.S. launched a series of strikes against Yemen’s Houthis, vowing to continue attacking until the Iran-aligned group ends its assaults on shipping.
At 05:00 ET (09:00 GMT), Brent futures rose 0.9% to $71.18 a barrel, while U.S. West Texas Intermediate futures rose 0.9% to $67.50 a barrel.
The Houthis have a history of targeting commercial vessels in the Red Sea, a crucial corridor for global commerce, accounting for about 15% of the world’s shipping traffic.
The heightened conflict has raised concerns over potential disruptions to vital shipping routes in the Red Sea, leading to a notable impact on global oil markets.
Elsewhere, U.S. President Donald Trump said on Sunday that he will speak to Russian counterpart Vladimir Putin on Tuesday, as his administration works to broker peace between Russia and Ukraine.
Ukraine last week accepted a tentative ceasefire deal proposed by the U.S. at talks happening in Saudi Arabia, although it was unclear what the terms were.