PMI’s pick up in Europe
Business activity in the euro area reached its highest level in seven months thanks to strong recovery in manufacturing ahead of massive increase in German spending.
- Composite Eurozone PMI* rose to 50.4 (from 50.2 in February), slightly below analysts’ predictions of 50.7
- Improvement was largely attributable to Germany and its upcoming package of infrastructure and defense outlays which should take its economy out of stagnation
- France also regained some ground but its reading remained nevertheless below 50
- While manufacturers surprised on the upside, the service sector, while still growing, fell short of estimates
*PMI: Purchasing Managers’ Index
Trump’s new trade weapon
Earlier this week Donald Trump appeared to have invented a new weapon to add to his trade war arsenal – secondary tariffs!
- The US President confirmed the imposition of secondary tariffs of 25% on trade with the US on any country that would buy oil or gas from Venezuela
- The decision is meant to pressure Venezuela following a vast number of criminals that have been, according to Trump, purposely sent to the US
- The targets of these secondary tariffs would vary widely given that Venezuelan oil goes to the US, Spain, India and to the black market (where the main actor is China). The first three countries are covered by licenses to Chevron, Repsol and Reliance Industries
SAP overtakes Novo Nordisk
An interesting shift at the top of Europe’s most valuable companies: Germany’s SAP has overtaken Denmark’s Novo Nordisk, putting a technology company back at the top of the rankings.
- SAP has a market cap of €317 billion, driven by a 40% share price rally over the past year
- SAP’s rise fuels DAX outperformance, now outpacing most major global indices. SAP alone now carries more weight in the index than Germany’s entire automotive sector
- Strategic focus on cloud and AI, with cloud revenue expected to grow more than 25% in 2024, and new AI-powered products to help customers connect and analyze all their data
- Novo Nordisk loses steam, hit by disappointing clinical trial results for CagriSema and concerns over its pipeline beyond actual blockbusters
Heathrow Blackout
The shutdown of London’s Heathrow Airport last Friday, caused by a fire in an electrical substation, is turning into a matter of national concern:
- Impact on airlines: Estimated losses for carriers likely amount to tens of millions of GBP, primarily due to passenger compensation and exceptional operational costs
- Effect on the UK economy: Heathrow handles more than £500 million in goods per day; the closure had repercussions on logistics and trade
- The CEO of National Grid stated that sufficient alternative power sources were available to keep the airport operational; the airport management denied
- The government has announced an investigation into the incident, once again highlighting the critical importance of ensuring the resilience of key infrastructure systems.
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