"The FTSE 100 appears to be faring best, benefitting from strong gains in the precious metals space and defence stocks. Notably, the weekend newswires told of a potential military deployment into Greenland from the likes of Germany and the UK in a bid to deter Trump's overtures for the island. While Trump's apparent willingness to take aim at land owned by a fellow Nato member does highlight the need for Europe to ramp up defence spending,"
"The independence of the Fed has come into question once again, with Powell finally reaching breaking point after the DoJ opened criminal proceedings against the governor around comments made at the Senate regarding the Fed's building renovations. Powell claimed that this "unprecedented" move was essentially a bid to stifle the Fed's ability to "set interest rates based on evidence and economic conditions.""
"Instead, Trump seeks to build an environment where "monetary policy will be directed by political pressure or intimidation." The ability to construct a Federal Reserve that serves the President rather than the stability of the US economy means that markets will start to price additional near-term rate cuts and higher long-term risks. That steepening of the US yield curve serves to further benefit precious metals, with the prospect of additional Fed easing alongside rising debt and inflationary concerns"
European markets opened on a downbeat tone as traders reacted to dramatic US headlines. The FTSE 100 outperformed, lifted by strong gains in precious metals and defence stocks amid reports of potential German and UK deployments to Greenland to deter US overtures. Heightened geopolitical tension underscores the need for increased European defence spending and pressures UK finances to cover an MoD forecast £28bn shortfall over four years. The independence of the Federal Reserve was questioned after the DoJ opened criminal proceedings tied to Powell's Senate comments, prompting concerns about political interference. Markets priced additional near-term rate cuts and higher long-term risks, benefiting gold and silver.
Read at London Business News | Londonlovesbusiness.com
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