EU Faces €241 Billion Challenge in Nuclear Expansion by 2050

Economic

Energy

Summary:

The European Union will need €241 billion in investment to expand and maintain its nuclear energy capacity by 2050, as the European Commission pushes for financial strategies to reduce risks for private investors...

Massive Investment Needed to Meet EU Nuclear Goals

According to a draft report by the European Commission, the European Union must mobilize €241 billion to fulfill its nuclear energy expansion goals by 2050. This figure includes €205 billion for new reactor construction and €36 billion for extending the operational life of current reactors. These ambitious plans aim to raise nuclear capacity from the current 98 GW to 109 GW by mid-century, reflecting a modest growth in installed capacity but a significant investment requirement.

This push is framed within the EU's broader clean energy transition strategy, where nuclear power—currently supplying about 24% of the bloc's electricity—plays a controversial yet central role.

Private Capital Needed, But Risk Aversion Persists

Despite the potential for stable long-term returns, recent nuclear projects in Europe have suffered from chronic delays and budget overruns, making them unattractive to many private investors. The Commission warns that a five-year delay in planned projects could inflate costs by another €45 billion, exacerbating financing challenges.

In response, the draft proposes developing new "de-risking instruments" to incentivize private capital, including a pilot €500 million power purchase agreement (PPA) program co-launched by the European Investment Bank. These PPAs, typically long-term contracts to buy electricity at agreed prices, would help provide income predictability for nuclear investors.

Political Divide Hampers Unified Policy Support

Nuclear energy has long been a point of contention within the EU. France, which depends on nuclear for most of its power, remains a vocal proponent, while Germany—despite its industrial power—has exited nuclear altogether. This division has historically led to EU-wide energy policies that sidestep nuclear, offering neither direct subsidies nor unified policy backing for new construction.

As a result, although twelve member states currently operate nuclear reactors—including expanding fleets in Hungary and Slovakia—national-level initiatives dominate, with countries like Poland entering the sector for the first time to bolster energy security and decarbonization efforts.

The Broader Context: Energy Security and Decarbonization

Russia’s war in Ukraine and the ensuing energy crisis have prompted several EU countries to reconsider nuclear as a low-carbon and geopolitically secure power source. However, high initial capital costs and the long lead times for reactor construction pose formidable challenges. The current investment gap underscores the need for not only financial innovation but also greater political alignment if the EU is to meet its 2050 energy and emissions goals.

While the draft proposal signals growing EU support for nuclear as part of its energy mix, achieving the required €241 billion investment will depend on the bloc’s ability to create a robust and attractive financial framework. Without effective risk-sharing mechanisms and political consensus, the vision of a nuclear-powered EU clean energy future may remain delayed and underfunded.

Source: Reuters

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Michelle

Commodity

Political

As tensions surge following Israeli strikes on Iran, fears have resurfaced that the Tehran could retaliate by targeting one of the world's most vital oil arteries — the Strait of Hormuz.

The Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea, sees roughly 20 million barrels per day of oil and oil products pass through, accounting for nearly one-fifth of global oil shipments. Any move to block it would ripple through energy markets.

However, market watchers believe a full-scale disruption of global oil flows by closing the waterway is unlikely, and might even be physically impossible.

There really is "no net benefit" that comes with impeding the passage of oil through the Strait of Hormuz, especially given how Iranian oil infrastructure has not been directly targeted, said Ellen Wald, co-founder of Washington Ivy Advisors. She added that any such action would likely trigger further retaliation.

She also warned that any major spike in oil prices caused by a closure could draw backlash from Iran's largest oil customer: China.

Their friends will suffer more than their enemies… So it's very hard to see that happening.

"China does not want the flow of oil out of the Persian Gulf to be disrupted in any way, and China does not want the price of oil to rise. So they're going to bring the full weight of their economic power to bear on Iran," Wald explained.

China is the number one importer of Iranian oil, reportedly accounting for over three-quarters of its oil exports. The world's second-largest economy is also Iran's largest trade partner.

"Their friends will suffer more than their enemies … So it's very hard to see that happening," said Anas Alhajji, managing partner at Energy Outlook Advisors, adding that disrupting the channel could be more of a bane than a boon for Tehran, given how most of Iran's daily consumption goods come via that route.

"It's not in their interest to cause problems because they will suffer first."

Iran in 2018 threatened to shut the Strait of Hormuz when tensions spiked following the U.S. withdrawal from the nuclear deal and the reimposition of sanctions. Prior to that, another major threat reportedly came in 2011 and 2012, when Iranian officials, including then–Vice President Mohammad-Reza Rahimi, warned of a potential closure if the West slapped further sanctions on its oil exports over its nuclear program.

Impossible to close the strait?

The Strait of Hormuz, which is 35 to 60 miles (55 to 95 kilometers) wide, connects the Persian Gulf and the Arabian Sea.

The idea of shutting the Hormuz waterway has been a recurring rhetorical tool but never been acted upon, with analysts saying that it's simply not possible.

"Let's be real about the Strait of Hormuz. First of all, most of it is in Oman, not in Iran. Number two, it's wide enough that the Iranians cannot close it," said Alhajji.

Similarly, Washington Ivy Advisors' Wald noted that although many ships pass through Iranian waters, vessels can still traverse alternative routes via the United Arab Emirates and Oman.

"Any blockade of the Strait of Hormuz will be a 'last resort' option for Iran and likely contingent on a military engagement between U.S. and Iran," said Vivek Dhar, Commonwealth Bank of Australia's director of mining and energy commodities research.

RBC Capital Markets' Helima Croft suggested that while there could be some disruption, a full-scale blockade was unlikely.

"It is our understanding that it would be extremely difficult for Iran to close the strait for an extended period given the presence of the US Fifth Fleet in Bahrain. Nevertheless, Iran could still launch attacks on tankers and mine the strait to disrupt maritime traffic," said Croft, head of global commodity strategy and MENA research at RBC.

U.S. President Trump has warned of possible military action if negotiations with Iran over its nuclear program break down, but it is uncertain whether these threats are meant to raise the stakes of U.S.-Iran talks or simply to increase pressure at the negotiating table, said Dhar.

Israel carried out a wave of airstrikes on Iran early Friday morning local time, claiming the attacks were aimed at facilities linked to Tehran's nuclear program.

According to Iranian state media, the strikes killed Mohammad Hossein Bagheri, chief of the Iranian Armed Forces, along with Hossein Salami, the commander-in-chief of Iran's Islamic Revolutionary Guard Corps.

While a closure of the strait remains highly unlikely, the escalating conflict has prompted some to consider even the faint possibility.

"[Closing the strait] is kind of an extreme scenario, although we are in an extreme situation," said Amena Bakr, head of Middle East and OPEC+ insights at Kpler.

"So that's why I'm not putting that option completely off the table. We need to consider it."

Crude futures jumped as much as 13% after Israel launched airstrikes against Iran early Friday. Global benchmark Brent futures were up 6.5% at $73.88 per barrel as of 4.30 p.m. Singapore time, while the U.S. West Texas Intermediate was trading 6.7% higher at $72.57 per barrel.

Source: CNBC

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Glendon

Economic

Forex

Euro zone industry and trade took major hits in April, likely reflecting U.S. tariffs announcements, challenging the view of economists that the bloc is holding up well in the face of economic turmoil.

Industrial production fell by 2.4% on the month in April, more than the already-weak expectations for a 1.7% fall in a Reuters poll of economists, as every segment within industry suffered a contraction, data from Eurostat showed on Friday.

Trade also suffered, with the surplus of the 20 nations sharing the euro falling to just 9.9 billion euros compared with the previous month's 37.3 billion euros.

The weak figures are not unexpected as U.S. firms frontloaded purchases in February and March in anticipation of the April 2 tariff announcement.

But the April reversal is larger than many had anticipated, indicating downside risks to economic growth forecasts, which are already below 1% for the year.

The euro zone's exports to nations outside the bloc fell by 8.2% on the month, while figures for the broader EU showed a 9.7% drop, Eurostat said.

The EU's total exports to the U.S., its biggest trading partner, totalled 47.6 billion euros in the month, well down on the 71.1 billion reported a month earlier, which included the frontloading and was itself considered unusually high.

The drop was mainly driven by sharply lower chemicals exports, likely relating mostly to pharmaceutical exports from Ireland, which hosts a number of international firms that are located there for tax reasons.

Irish pharmaceutical exports to the U.S. surged in the months leading up to the tariffs, pushing up economic growth to exceptional levels.

The figures also explain why Irish industry contracted by 15% on the month, leading euro zone production lower.

The hit to industry was so large that it erased nearly all gains from the past year, and output in April was just 0.8% higher than a year earlier, with only non-durable consumer goods showing any annualised increase.

Still, surveys conducted since the April turmoil indicate some modest optimism in manufacturing, suggesting that the sector is not going back into recession even if its recovery will be shallow.

Source: Yahoo Finance

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Gerik

Economic

Japan Emerges as a Global M&A Bright Spot

In stark contrast to the worldwide M&A malaise, Japan is witnessing a sharp uptick in mergers and acquisitions as foreign and domestic investors seize opportunities in a low-valuation, policy-friendly environment. According to data from Dealogic, the total value of M&A activity in Japan jumped 135% in USD terms during the first four months of 2025, building on a 39% surge in 2024 that marked the country’s highest deal volume in 17 years, totaling $180 billion.

This strong momentum defies the broader global trend, where M&A growth has been sluggish, with total activity up only 8% so far this year and hovering near decade-lows.

Valuation Gap and Policy Support Drive Investment Interest

Japan's relatively low corporate valuations have made its companies attractive targets, especially in sectors ripe for consolidation. The Bank of Japan’s continued low interest rate policy—holding its benchmark rate at 0.5% compared to 4.25%-4.5% in the U.S. and 2% in the Eurozone—further supports deal financing and investor appetite.

Long-term Japanese government bond yields remain around 1.5%, making leveraged acquisitions more feasible compared to other developed markets. As Daisuke Kitta of Blackstone Group noted, Japan stands out globally for its political stability and openness to foreign investment, a rare combination in the current macroeconomic climate.

Sector-Wide M&A Surge: From Finance to Pharma

Japan's M&A activity spans across key industries. In financial services, Nomura is acquiring asset management units from Macquarie, while Dai-ichi Life is investing in Capula and M&G. In retail, Bain Capital is taking over supermarket chain Seven & i, and Ain is acquiring rival pharmacy chain Kraft. The healthcare sector is also heating up, with Shionogi buying pharmaceutical units from JT, and Bain Capital acquiring Mitsubishi Tanabe Pharma.

Outbound M&A is on the rise as well, exemplified by Nippon Steel’s acquisition of US Steel—a response to global protectionism by acquiring local manufacturing footholds overseas.

Even unsolicited takeovers are increasing, such as Yageo’s bid for Shibaura Electronics, signaling heightened competitive tension.

Corporate Governance Evolution and Portfolio Optimization

Experts suggest that Japanese corporate culture is undergoing a meaningful shift. Takashi Ohara of Bain & Co. emphasized that company leaders are beginning to view stock prices as a key performance metric, departing from the traditional priority of merely completing their terms without disruption.

More firms are recognizing the need to divest non-core businesses to improve efficiency and focus. Hitachi is cited as a model of such transformation, while many others are just starting the journey.

Analysts, including Azusa Owa from Bain, warn that Japan’s attractiveness for M&A could wane if underlying factors—such as a weak yen, low interest rates, and subdued stock market valuations—begin to shift. Nonetheless, the current conditions present a fertile environment for consolidation, particularly in industries that remain fragmented.

Japan’s M&A boom highlights a structural divergence from global headwinds, driven by corporate reform, supportive fiscal conditions, and investor confidence. If macroeconomic stability persists, Japan may continue to outperform as a strategic hub for deal-making in Asia through 2025 and beyond.

Source: Nikkei Asia

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Gerik

Economic

Middle East Situation

Oil and Gold Prices Soar on Geopolitical Shock

The surprise escalation in Middle East tensions—marked by a large-scale Israeli strike on Iran—has sent immediate shockwaves through global commodity markets. In early Asian trading on June 13, Brent crude spiked by 12.2% to $77.77 per barrel, while WTI crude surged by 12.6% to $76.61. This marks one of the most significant intraday increases in recent months, driven by fears of supply disruptions in a region that remains critical to global energy flows.

Gold followed suit as investors rushed toward safe-haven assets. The precious metal climbed to nearly $3,425 per ounce, reaching its highest point in five months. This surge is fueled not only by geopolitical risk but also by growing speculation that the U.S. Federal Reserve may soon pivot toward interest rate cuts, which would enhance gold’s appeal in a low-yield environment.

Equities Sink Across Asia as Risk Sentiment Deteriorates

The equity markets reacted with immediate concern. Japan’s Nikkei 225 tumbled by 1.3% to 37,665.93 by late morning. Meanwhile, Hong Kong’s Hang Seng Index fell 0.8% to 23,848.26, and China’s Shanghai Composite slid to 3,376.40. This region-wide sell-off reflects heightened aversion to risk and the expectation that prolonged conflict could significantly disrupt supply chains and investor confidence.

Vietnam’s domestic stock market was not spared either. As of 10:45 a.m., the VN-Index dropped 5.68 points (0.43%) to 1,317.31, and the HNX-Index lost 1.51 points (0.66%) to 228.42, mirroring regional turbulence.

Hormuz Strait in Focus: Potential Macro Game-Changer

A key concern now centers around the Strait of Hormuz—a critical chokepoint responsible for approximately 20% of global oil shipments. According to SPI Asset Management’s Stephen Innes, if the strait is compromised, oil prices could spike to $90 per barrel or higher. JPMorgan has issued an even starker warning, suggesting that oil could breach $130 per barrel in the worst-case scenario involving a full-scale regional war.

The outcome hinges largely on Iran’s next move. A restrained response may allow markets to gradually recover. However, any retaliatory actions targeting Israeli or U.S. military bases in the region could escalate the crisis dramatically, potentially redefining the macroeconomic outlook for the remainder of 2025.

U.S. Role and Strategic Ambiguity

While the U.S. government has stated that it was not involved in Israel's strike, Iranian officials have warned that American military assets could become targets if a broader conflict unfolds. This raises the risk of secondary sanctions, proxy escalations, and renewed disruptions in energy markets—all of which could feed into inflationary pressures at a time when central banks, including the Fed, are contemplating easing cycles.

The convergence of geopolitical flashpoints, inflationary uncertainty, and monetary policy crossroads marks a volatile juncture for global markets. If tensions escalate, safe-haven assets like oil and gold are likely to outperform, while equities face sustained downside pressure. As the situation unfolds, investor attention will remain sharply focused on energy logistics, Fed rhetoric, and the geopolitical chessboard of the Middle East.

Source: CNBC

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James Whitman

Political

Middle East Situation

Alarmed by an intelligence assessment that Iran will be able to produce nuclear weapons within months if not weeks, Israel has launched a massive air campaign aiming to destroy the country’s nuclear program.

Israel’s air strikes hit Iran’s main nuclear enrichment facility at Natanz, as well as its air defences and long-range missile facilities.

Among the dead are Hossein Salami, the chief of Iran’s powerful Revolutionary Guards Corps; Mohammad Bagheri, the commander-in-chief of the military; and two prominent nuclear scientists.

Iranian Supreme Leader Ayatollah Ali Khamenei has promised “severe punishment” in response. Iran could potentially target Israel’s own nuclear sites and US bases across the Persian Gulf. Israel claimed Iran launched 100 drones towards it just hours after the attack.

The Middle East is yet again on the precipice of a potentially devastating war with serious regional and global implications.

Stalled nuclear talks

The Israeli operations come against the backdrop of a series of inconclusive nuclear talks between the United States and Iran. These negotiations began in mid-April at President Donald Trump’s request and aimed to reach a deal within months.

Israeli Prime Minister Benjamin Netanyahu opposed the talks, pressing for military action instead as the best option to halt Iran’s nuclear program.

The diplomatic efforts had stalled in recent weeks over Trump’s demand that Iran agree to a zero-uranium enrichment posture and destroy its stockpile of some 400 kilograms of enriched uranium at a 60% purity level. This could be rapidly enriched further to weapons-grade level.

Tehran refused to oblige, calling it a “non-negotiable”.

Netanyahu has long pledged to eliminate what he has called the Iranian “octopus” — the regime’s vast network of regional affiliates, including Hamas in Gaza, Hezbollah in Lebanon, the regime of former Syrian leader Bashar al-Assad, and the Houthi militants in Yemen.

Following Hamas’ attack on Israel on October 7 2023, Israel’s military has considerably degraded these Iranian affiliates, one by one. Now, Netanyahu has now gone for beheading the octopus.

Trump keeping his distance

Netanyahu has in the past urged Washington to join him in a military operation against Iran. However, successive US leaders have not found it desirable to ignite or be involved in another Middle East war, especially after the debacle in Iraq and its failed Afghanistan intervention.

Despite his strong commitment to Israel’s security and regional supremacy, Trump has been keen to follow this US posture, for two important reasons.

He has not forgotten Netanyahu’s warm congratulations to Joe Biden when he defeated Trump in the 2020 US presidential election.

Nor has Trump been keen to be too closely aligned with Netanyahu at the expense of his lucrative relations with oil-rich Arab states. He recently visited Saudi Arabia, Qatar and the United Arab Emirates on a trip to the Middle East, while bypassing Israel.

Indeed, this week, Trump had warned Netanyahu not to do anything that could undermine the US nuclear talks with Iran. He has been keen to secure a deal to boost his self-declared reputation as a peace broker, despite not having done very well so far on this front.

But as the nuclear talks seemed to be reaching a dead end, Netanyahu decided now was the moment to act.

The Trump administration has distanced itself from the attack, saying it had no involvement. It remains to be seen whether the US will now get involved to defend Israel if and when Iran retaliates.

What a wider war could mean

Israel has shown it has the capacity to unleash overwhelming firepower, causing serious damage to Iran’s nuclear and military facilities and infrastructure. But the Iranian Islamic regime also has the capability to retaliate, with all the means at its disposal.

Despite the fact the Iranian leadership faces serious domestic issues on political, social and economic fronts, it still has the ability to target Israeli and US assets in the region with advanced missiles and drones.

It also has the capability to close the Strait of Hormuz, through which 20%–25% of global oil and liquefied natural gas shipments flow. Importantly, Iran has strategic partnerships with both Russia and China, as well.

Depending on the nature and scope of the Iranian response, the current conflict could easily develop into an uncontrollable regional war, with none of the parties emerging as victor. A major conflict could not only further destabilise what is already a volatile Middle East, but also upend the fragile global geopolitical and economic landscape.

The Middle East cannot afford another war. Trump had good reasons to restrain Netanyahu’s government while the nuclear negotiations were taking place to see if he could hammer out a deal.

Whether this deal can be salvaged amid the chaos is unclear. The next round of negotiations was due to be held on Sunday in Oman, but Iran said it would not attend and all talks were off until further notice.

Iran and the US, under Barack Obama, had agreed a nuclear deal before — the Joint Comprehensive Plan of Action. Although Netanyahu branded it “the worst deal of the century”, it appeared to be holding until Trump, urged by Netanyahu, unilaterally withdrew from it in 2018.

Now, Netanyahu has taken the military approach to thwart Iran’s nuclear program. And the region — and rest of the world — will have to wait and see if another war can be averted before it’s too late.

Source: Theedgemarkets

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Gerik

Economic

Economic Signals Shift from Inflation to Growth Risks

For months, the Federal Reserve has prioritized inflation control, maintaining interest rates in the 4.25%–4.5% range since December 2024. However, with recent data pointing to softer-than-expected inflation and a gradually deteriorating labor market, the justification for maintaining elevated rates is beginning to erode. The latest core PCE readings — at 2.8% over the past three months — represent the lowest trend in four years, suggesting that inflation pressures may be subsiding more sustainably than previously believed.

The reimposition and escalation of tariffs under current U.S. trade policy have introduced fresh complications. In May alone, the U.S. Treasury collected an additional $15 billion in import duties compared to February, equivalent to about 3% of total consumer goods spending. Interestingly, retail prices for commonly affected goods, such as clothing and new vehicles, did not spike — and in some cases even declined. This suggests that while foreign producers aren’t lowering export prices and domestic wholesalers are squeezed, retailers are adjusting elsewhere, potentially through rising logistics costs rather than consumer-facing price increases.

Though the inflationary shock from tariffs is largely considered “one-off,” its pass-through effects may linger. Economists expect the full weight of these price distortions and confidence shocks to become more apparent in the months ahead. However, unless tariffs reshape long-term inflation expectations, these cost pressures are unlikely to derail the Fed’s path toward policy easing.

Labor Market Strains Intensify

More pressing is the gradual weakening in U.S. employment data. Since January, the unemployment rate has inched up by 0.25 percentage points and could reach 4.6% by Q4 if the trend continues. While monthly job additions remain positive — 139,000 new jobs were reported in May — analysts caution this figure may be revised downwards, as was the case for earlier months. Private-sector estimates, like those from ADP, showed a far more modest increase of just 37,000 jobs.

Meanwhile, new claims for unemployment benefits have risen sharply in recent weeks, suggesting that layoffs may be spreading beyond the public sector. Although the stock market remains elevated — an unusual occurrence during early recession signals — uncertainty surrounding trade policy may be causing firms to restrain hiring activity.

Fed’s Policy Dilemma and Market Expectations

As these dynamics unfold, the Fed's next steps become increasingly nuanced. Interest rates currently remain 0.5 to 1.5 percentage points above the estimated neutral level — the point where monetary policy is neither expansionary nor contractionary. If inflation is genuinely moderating and job market indicators continue to deteriorate, the rationale for rate cuts grows stronger.

Although the Fed’s upcoming policy meeting is unlikely to produce immediate action, analysts expect a shift in tone. Policymakers may begin to signal that risks have transitioned from overheating to underperformance — a prelude to monetary easing. With fiscal policy still in limbo and tariff-related uncertainty clouding forward guidance, monetary flexibility may be the most viable tool for supporting growth.

The convergence of tariff-induced uncertainty, fragile labor trends, and declining inflation momentum marks a turning point for U.S. economic policy. While the Fed remains cautious, the case for rate cuts is strengthening. Unless the economy receives a new jolt of fiscal stimulus or geopolitical clarity, the next stage of U.S. monetary policy may involve not just pausing, but pivoting.