Monday, March 3, 2025

Brussels edition: Defense stocks rally

Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union.President Donald Trump's
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Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union.

President Donald Trump's decision to pause to all military aid to Ukraine days after a heated Oval Office exchange with Ukrainian leader Volodymyr Zelenskiy laid bare the urgency of the European Union's pledge to bolster its security and assist to Kyiv. Even before the order was reported, the fast-moving developments sent defense stocks soaring. European contractors added some $30 billion in market capitalization, and optimism about a defense spending bonanza spread to currency markets, with the euro rising as much as 1.2% against the dollar to $1.0503, while the Swedish krona strengthened 1% to 10.6700 per dollar. European leaders will discuss the plan in an emergency summit on Thursday in Brussels.

 Gian Volpicelli

What's Happening

Going Strong | Since Friday's clash, the Trump Administration has relentlessly portrayed Zelenskiy as an obstacle. Zelenskiy, though, has no plans to leave office. Speaking in London on Sunday, he said that "given the support, simply replacing me will not be simple." Paradoxically, the more Trump and his team lambaste Zelenskiy, the more popular he grows at home. 

Auto Flex | The stock price of Europe's biggest carmakers jumped after Commission President Ursula von der Leyen gave them a reprieve on the bloc's climate goals this year. Not everyone was pleased, however, amid accusations that the EU was at risk of losing credibility with business over the green transition. Plans are in the works to further help the auto sector, including insights on how your company car plan may change.

Austrian Government | Over five months after elections, Austria appointed a conservative-led government entrusted with heading off a recession while cutting the budget deficit and staving off a far-right surge. People's Party leader Christian Stocker will lead a coalition that includes the Social Democrats and liberal NEOS as junior partners. 

Spending Boost | A new Europe-wide multilateral development bank is in talks with the US and other governments to push for a massive security spending boost, a former NATO official spearheading the initiative told. The US is "very much open" to supporting the initiative, Rob Murray, founder of the Defense, Security and Resilience Bank, told Bloomberg Television on Monday. 

Around Europe

Truce Punt | France's Emmanuel Macron and Britain's Keir Starmer are working on a plan to reach a one-month truce in Ukraine. The potential deal would include air and maritime operations as well as energy infrastructure, the French leader said in an interview with Le Figaro Sunday. Starmer's spokesman said the cease-fire was one of a "number of options" on the table. 

Power Vacuum | James Dyson's family holding company has tapped a legal veteran from his technology empire to be its next chief executive, the latest staffing shakeup at the firm overseeing Britain's biggest fortune. Martin Bowen was appointed to the top job at Weybourne last month. He succeeds James Bucknall, who helped lead Weybourne for over a decade. 

Euro Doge | European telecommunications executives gathered at at the Mobile World Congress in Barcelona blamed Brussels bureaucrats for hampering consolidation in the industry, which has fallen behind peers in the US and Asia. "What Europe needs is a DOGE," Deutsche Telekom chief Tim Höttges said, referring to the Trump administration's cost-cutting Department of Government Efficiency spearheaded by Elon Musk. 

Swiss Rents | Switzerland's national benchmark for mortgage costs dropped to the level it had before the global inflation surge, potentially setting up tenants on the country's high-price housing market for rent cuts. 

Chart of the Day

Euro-area inflation eased, boosting confidence that it's approaching the 2% target as the European Central Bank enters the last leg of interest-rate cuts. Consumer prices rose 2.4% from a year earlier in February, down from 2.5% in January, Eurostat said. 

Today's Agenda

  • Commission president von der Leyen participates in Strategic Dialogue on Steel.
  • EU Digital Chief Henna Virkkunen speaks at CEPS Ideas Lab 2025.
  • Trade commissioner Maros Sefcovic meets Israeli economy minister Nir Barkat, and New Zealand trade minister Todd McClay.

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