TEAM Bytes

Markets never sleep, and neither do the forces shaping our financial world. Here’s what caught our eye over the last week.

European Corporate Finance Out of the Doldrums 

With the US grappling with the global repercussions of Trump’s actions, his rhetoric appears to be inadvertently boosting Europe’s momentum in deal structuring. As European countries collectively ramp up defence and infrastructure spending, signs of consolidation are also emerging in both the banking and energy sectors. Last year, Unicredit signalled a possible assault on German lender Commerzbank AG, while Banca Monte dei Paschi di Siena is pursuing a takeover of its larger Italian rival, Mediobanca. On the energy front, services and drilling specialists Saipem and Subsea7 are finalising a merger to create a $10 billion company. As more deals take shape, European corporate finance activity is on the rise. 
 

Spain – The Laggard in Defence Spending  

Trump has singled out Spain as the EU laggard in defence spending. As larger economies commit to boosting defence budgets, Spain risks being left behind. Currently spending around 1.2% of GDP on defence, Spain sits at the bottom of the league tables, trailing behind Portugal, Italy, and Belgium. Although plans are in place to increase this to 2% by 2029—a target set a decade ago—progress has been slow. Despite experiencing moderate economic growth and maintaining a small but well-trained and well-equipped army, Spain’s defence spending remains insufficient. This could become a hot topic of discussion between Trump and EU leaders in the coming months.  
 

Euro-Area Inflation – A Positive Signal for Rates?  

Inflation in the euro area slowed more than initially reported in February, strengthening the case for the European Central Bank (ECB) to continue cutting interest rates. However, with economic expansion and inflation projections remaining uncertain, ECB officials are likely debating whether to pause or proceed with further rate cuts next month. Encouragingly, wage growth has moderated, inflation expectations remain contained, and service-related price gains have started to ease. For now, the EU remains in good economic shape. 

Europe and the Nuclear Deterrent  

Following a recent EU meeting, it is evident that Europe’s nuclear capabilities, driven by France and the UK with their technologically advanced submarines, provide a credible deterrent through their ability to deliver a so-called retaliatory strike. This means that a hostile attack can be responded to, even if struck first, reducing the incentive for escalation.  Despite Trump’s insistence on US backing, Europe is increasingly aware of the need to prepare for a potential reduction in American defense support. Cooperation plans are underway to reduce reliance on the US, as Europe works towards greater self-reliance while maintaining its nuclear deterrent. Consequently, defense stocks are expected to rise further.  

 

Trump Alienating Germany – Where Will the US Troops Go?  

Germany currently hosts around 50,000 US troops, including the US Army’s European and Africa commands based in Stuttgart. These bases serve as crucial operational hubs, managing soldiers, aircraft, vessels, and drone command centres for Middle East and African theatres. German military hospitals have treated nearly 100,000 US troops injured in Middle East conflicts, highlighting Germany’s strategic importance to American military logistics. Redeploying these forces would be both expensive and logistically challenging. As tensions rise between Trump and Germany, expect concessions from the US to preserve this vital alliance.