Key Takeaways
- China's economy faces significant risks and challenges, with President Xi Jinping emphasizing the need for a "win-win" approach in trade talks and the Politburo acknowledging the need for forceful macroeconomic policies without detailing new large-scale stimulus.
- Copper and iron ore prices have dropped following a weak statement from China's Politburo that underwhelmed investors hoping for substantial stimulus measures.
- Spain's annual CPI rose to 2.7% in July, exceeding expectations and indicating persistent inflationary pressures in the Eurozone.
- Mercedes-Benz (MBG) views the U.S. to Europe tariff as "beneficial", despite a new trade deal lowering tariffs from 27.5% to 15%, as the company is a top U.S. car exporter and benefits from exemptions on U.S.-built vehicles.
- Bayer (BAYN) plans to sell its new herbicide, Icafolin, globally in the coming years, with a peak sales potential exceeding €750 million.
China's top leadership has acknowledged that the nation's economy continues to grapple with numerous risks and challenges. President Xi Jinping highlighted the importance of seeking "win-win outcomes" in trade discussions with the U.S. to foster healthy, stable, and sustainable relations. This comes after a Politburo meeting where leaders vowed to implement forceful macroeconomic policies to bolster the economy, though the lack of detailed large-scale stimulus measures disappointed markets.
The subdued Politburo statement led to a decline in copper and iron ore prices. Investors had anticipated more robust stimulus, and the absence of such announcements caused these key commodity prices to reverse earlier gains. The property market downturn in China continues to weigh on iron ore prices, while the shift towards a consumption-based economy is seen as beneficial for copper and electric vehicles.
Meanwhile, Spain's Consumer Price Index (CPI) saw an increase in July, with the annual rate rising to 2.7%, up from 2.3% in June and surpassing the estimated 2.4%. The harmonized CPI (EU Harmonised) also increased to 2.7% year-over-year. This suggests ongoing inflationary pressures within the Eurozone.
In the automotive sector, Mercedes-Benz (MBG) expressed a positive outlook on the U.S. to Europe tariff situation. Despite a new trade deal reducing the tariff rate on European car imports to the U.S. from 27.5% to 15%, the CEO stated it is "beneficial" for the car industry, particularly for Mercedes, given its position as a leading U.S. car exporter. The company benefits from exemptions on approximately 185,000 vehicles exported annually from its U.S. plants to Europe. However, the 15% tariff remains significantly higher than the pre-2018 rate of 2.5%, prompting some automakers to consider price hikes or further shifts in U.S. production.
In pharmaceutical news, Bayer (BAYN) announced plans to introduce its new herbicide, Icafolin, in the U.S., Canada, EU, and other regions in the coming years. Icafolin, the first new post-emergent herbicide mode of action in 30 years, has a peak sales potential of over €750 million and is expected to be critical for weed management, especially against tough-to-control weeds.
Finally, the Switzerland KOF Leading Indicator for July showed a significant improvement, rising to 101.1 from a revised 96.3 in June, exceeding the estimated 97.9. This strong bounce back in economic sentiment suggests a brighter outlook for the Swiss economy in the near future.
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.