by Diana Mandia

(Reuters) – The European scholarships finished down Tuesday after a session disrupted by German news, Friedrich Merz having finally been elected Chancellor by the Bundestag after having failed in the first ballot, to everyone’s surprise, to obtain the support of a majority of deputies.

In Paris, CAC 40 lost 0.40% to 7,696.92 points. In Frankfurt, the Dax ended up 0.46% and in London, the FTSE 100, the only exception among the main indices, grapple 0.01%.

The Eurostoxx 50 index fell 0.41%, the FTSEUROFirst 300 abandoned 0.29%and the Stoxx 600 lost 0.23%.

German policy was turned up Tuesday during a session which promised to be rather calm while waiting for the meetings of the central American and British banks.

Although Friedrich Merz, who led the CDU/CSU conservative block to victory during the February elections, was ultimately elected Chancellor, the equity markets did not return to the decline caused by a first unexpected setback in the morning, which aroused fears about any difficulties in implementing a more flexible budgetary policy to relaunch the first economy in the euro zone.

Friedrich Merz and the Social Democrats agreed in March on the creation of a background of 500 billion euros devoted to infrastructure and a reform of “debt brake” in order to support defense and revive growth.

“With the election of Friedrich Merz to the post of German Chancellor, the Bundestag took today a decisive turning point. If the new government quickly implements its 100-day program by providing the necessary support for the German economy, the fact that it took two attempts to elect the chancellor will pass quickly in the background,” said Marion Muehlberger, analyst at Deutsche Bank.

The World Trade War launched by the multiple customs rights decided by US President Donald Trump remains in all minds, encouraging caution, as is the expectation of monetary policy decisions of the American Federal Reserve (Fed) on Wednesday and the Bank of England (BOE) on Thursday.

US Treasury Secretary Scott Bessent said on Tuesday that the Trump administration could announce trade agreements with some of the largest partners in the United States this week, while indicating that Washington had not yet started dialogue with China.

At the end of the day on Monday, Donald Trump said that he would announce customs duties on pharmaceutical products in the next two weeks, a plan that goes against the wishes of the markets to see negotiations progress in order to avoid a trade war.

VALUES

In Paris, Coface, which warned of a “very volatile” environment linked to American customs duties, lost 6.4%.

Elsewhere in Europe, Hugo Boss, who reported on Tuesday of a quarterly turnover greater than expectations and maintained his forecasts for the whole year, took 5.8%.

In London, Deliveroo increased 1.9% after Doordash announced on Tuesday the acquisition of the British meal delivery company for 3.40 billion euros.

A Wall Street

At the time of the fence in Europe, the Dow Jones fell 0.45%, the Standard & Poor’s 500 of 0.41%and the composite Nasdaq of 0.56%.

The comments of the American president Donald Trump concerning any customs duties in the pharmaceutical sector, as is a series of results of halftone companies, weigh on the feeling.

WK Kellog, which lowered its forecasting of organic sales and profit for 2025 on Tuesday due to the drop in consumer spending on its products, sold 4.2%.

The indicators of the day

In Europe, investors knew the final indices of the purchasing directors (PMI) of the euro zone on Tuesday, which showed that the activity continued to grow in April, but at a slower rate, demand having been weakened and the sector of services having almost stagnated.

Production prices in the euro zone also fell in March, in accordance with forecasts, thanks in particular to a drop in energy prices, according to data published Tuesday by Eurostat.

Closely monitored in this period of commercial tensions, the American trade deficit widened in March to reach a record level of 140.5 billion dollars, companies having increased their imports of goods in anticipation of customs duties.

Changes

Donald Trump’s trade policy continues to supply significant sales of green tickets, pushing the euro, the Yen and the Swiss franc upwards, as well as certain Asian currencies.

The dollar thus fell 0.34% against a basket of reference currencies. The Taiwanese dollar has taken 8% in two sessions, an unprecedented level, reaching heights of three years, while in Hong Kong, the de facto central bank bought $ 7.8 billion to prevent the local currency from strengthening and breaking its anchoring in the greenback.

The euro in turn wins 0.2% to 1.1337 dollars.

The Romanian Leu fell by more than 2% on Tuesday, exceeding for the first time 5 LEU for a euro after the breakthrough of the far -right candidate George Simion in the first round of the presidential election on Sunday. The National Bank of Romania (BNR) said on Tuesday that it had noted significant capital outings since the electoral meeting.

RATE

The long -term German bond yields briefly reached their highest level on Tuesday in three weeks after the Conservative Friedrich Merz was elected Chancellor in a second ballot, before mitigating this increase at the end of the day.

The yield of the German Bund at ten years took 1.3 base points at 2,5330%. The two years, however, fell from 1.5 base points to 1,7560%.

Across the Atlantic, the Treasury yields are changing shortly before the Fed’s decision on rates, investors also awaiting a contract for bonds at 10 years later in the day.

The yield of Treasuries at ten years grabbed 0.4 basic point to 4.3472%. That of the obligation at two years, more sensitive to forecasts on interest rates, lost 4.6 base points to 3.7951%.

OIL

The oil market is experiencing a technical rebound on Tuesday after a sharp decline the day before at OPEC +’s decision to further accelerate its production increases.

Brent took 3.93% at 62.60 dollars per barrel and light American crude (West Texas Intermediate, WTI) advances from 4.31% to $ 59.59.

To be continued on May 7:

The monetary policy decision of the Federal Reserve is expected on Wednesday at 6:00 p.m. GMT.

(Written by Diana Mandiá, edited by Kate Entringer)

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