DAX Surges as Germany Loosens Fiscal Rules; ECB Meeting Today

Germany's DAX index saw its best day in over two years after Berlin announced major fiscal rule changes, triggering a surge in the euro and a sharp selloff in German bonds. Meanwhile, the European Central Bank is expected to cut rates for the sixth time at its 1315 GMT decision today. Asian and Wall Street markets climbed as US President Trump delayed auto tariffs for a month, though uncertainty over trade policy continues to drive volatility.

Equities

The FTSE 100 remained flat on Wednesday, stabilising after Tuesday’s sell-off, while the FTSE 250 gained 0.9%. The index was weighed down by a stronger pound, which reached a four-month high against the dollar, putting pressure on multinational companies like Unilever and British American Tobacco.

Falling oil prices also dragged down Shell, which saw its stock price drop. Precious metal miners led sectoral gains, rising 4.6%, while financial shares recovered, with the banking sector up 1.8%. The British defence sector climbed 3.1% following increased government spending commitments in Germany.

Games Workshop saw a 3.2% rise after forecasting higher-than-expected profits for 2025. Quilter jumped 6.6% after reporting annual profits above expectations and setting aside a smaller-than-expected provision of £76 million for its ongoing advice review. The UK services PMI slipped slightly to 51 in February, showing that firms cut staff at the fastest rate since 2020 ahead of upcoming tax and minimum wage increases.

In the US, major indices ended the day higher as markets reacted to a possible easing of trade tensions. The Dow Jones rose 1.14%, the S&P 500 gained 1.12%, and the Nasdaq climbed 1.46%. Stocks turned positive after reports suggested President Donald Trump was considering delaying auto tariffs on Canada and Mexico for one month. Carmakers benefitted, with Ford up 5.8% and General Motors rising 7.2%. Tesla also gained 2.6%.

Intel dropped 2.4% after Trump called for the removal of semiconductor subsidies, affecting sentiment around the chip industry. CrowdStrike fell 6.3% after issuing a weaker-than-expected revenue forecast for the first quarter. Huntington Ingalls surged 12.3% following Trump's announcement of a White House shipbuilding office and new tax incentives for the sector.

Forex & Commodities

The euro climbed 0.3% to $1.0820, reaching its highest level since November 7, after Germany announced a €500 billion infrastructure fund and eased borrowing limits. The currency has risen 4.3% this week, heading for its strongest week since March 2009.

Sterling also gained, touching a four-month high of $1.2913, supported by expectations of more government spending in Europe. The US dollar weakened, with the dollar index slipping to 104.09, its lowest since early November, after the Trump administration announced a one-month delay on auto tariffs for Canada and Mexico.

Gold rose 0.1% to $2,921.19 an ounce, as the weaker dollar supported demand. Prices are up 11% this year, with analysts suggesting the $3,000 mark is increasingly within reach. Investors are watching Friday’s non-farm payrolls data, which is expected to show 160,000 jobs added in February.

Oil prices recovered slightly after heavy losses, with Brent crude up 0.7% to $69.80 per barrel and WTI rising 0.7% to $66.79. Both had dropped to multi-year lows, with Brent falling 6.5% in four sessions. Concerns remain over rising US crude stockpiles, which increased by 3.6 million barrels, significantly above forecasts. Uncertainty around Trump’s tariffs on Canadian and Mexican energy imports has also weighed on sentiment, though reports suggest Canada’s 10% tariff on crude oil could be removed. Meanwhile, OPEC+ has agreed to increase output quotas for the first time since 2022, adding further supply pressure.