Key Takeaways
- German Industrial Production Plummets: Germany's industrial output saw a significant month-over-month decline of -1.9% in June, far exceeding the estimated -0.5% drop and reversing the previous month's growth. The year-over-year figure also fell sharply by -3.6%.
- Trump Threatens 100% Chip Tariffs: Former US President Trump announced a potential 100% tariff on chips and semiconductors not manufactured in the United States, with an exemption for domestic production.
- German Trade Surplus Narrows: Germany's trade balance for June came in at €14.9 billion, below estimates of €17.3 billion, despite a 0.8% rise in exports, as imports surged by 4.2%.
- UK House Prices Edge Up: UK Halifax House Prices rose by 0.4% month-over-month in July, indicating a modest but positive trend in the housing market.
Global financial markets are digesting a series of fresh economic data points this morning, highlighted by notably weaker-than-expected industrial figures from Germany and a significant trade policy announcement from former US President Donald Trump.
Germany's industrial production experienced a sharp contraction in June, falling -1.9% month-over-month, a substantial miss compared to the -0.5% estimate and a reversal from the prior month's 1.2% gain. On a year-over-year basis, industrial production declined by -3.6%, further underscoring a challenging economic environment for Europe's largest economy. This weakness was also reflected in the country's trade balance, which narrowed to €14.9 billion in June, below the €17.3 billion forecast, despite a 0.8% increase in exports, as imports surged by 4.2%.
In geopolitical news, former US President Donald Trump stated his intention to impose a "very large tariff" of approximately 100% on chips and semiconductors not built in the United States. He clarified that products manufactured domestically would face "no charge," signaling a potential aggressive protectionist stance on critical technology if he were to return to office. This announcement could have significant implications for global supply chains and technology companies.
Elsewhere, the UK housing market showed signs of resilience as Halifax House Prices increased by 0.4% month-over-month in July, slightly above the 0.3% estimate. The year-over-year growth eased slightly to 2.4% from 2.5%.
In Scandinavia, Sweden's budget balance swung to a surplus of 20.1 billion SEK in July from a previous deficit of -81.7 billion SEK. Swedish inflation data was mixed, with the Consumer Price Index (CPI) showing a 0.2% month-over-month increase in July, below the 0.3% estimate, bringing the year-over-year rate to 0.8%. The CPIF (CPI with fixed interest rate) rose 0.3% month-over-month and 3.0% year-over-year, slightly below estimates. Norway's industrial production saw a -0.1% month-over-month decline in June, while year-over-year production plummeted -7.1%.
South Africa's net reserves edged down to $65.14 billion in July from $65.22 billion, though gross reserves increased to $69.16 billion.
On the corporate front, German consumer goods giant Henkel reported mixed Q2 earnings, with revenue of €5.16 billion missing estimates of €5.26 billion, but H1 EBIT of €1.61 billion exceeding the €1.57 billion estimate. The company adjusted its full-year organic sales forecast to +1%–2% from +1.5%–3.5%. Separately, reports indicate that Samsung will manufacture iPhone 18 image sensors for Apple (AAPL) in Texas, a significant development for the tech supply chain. Crude futures declined yesterday amid ongoing geopolitical tensions related to Russia and Ukraine.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.