Germany Cuts Growth Forecasts Amid Policy Delays

King Ten

Data Interpretation

Remarks of Officials

Economic

Summary:

Germany trimmed 2026/27 growth forecasts, citing policy delays and persistent global trade headwinds.

Germany has downgraded its economic growth forecasts for 2026 and 2027, citing ongoing global trade uncertainty and a slower-than-expected rollout of domestic economic and fiscal policies.

The government now anticipates GDP growth of 1.0% in 2026, a reduction from the previous forecast of 1.3%. The projection for 2027 has also been trimmed from 1.4% to 1.3%.

German Economy Minister Katherina Reiche explained the revision on Wednesday, stating that "the larger economic and fiscal-policy measures that had been expected have not materialized quite as quickly and not to the extent that we had assumed."

Despite the downgrade, these figures represent an improvement over the 0.2% expansion recorded in 2025, which itself followed two consecutive years of economic contraction. The economy ministry's annual report noted that a "cyclical recovery is being supported by stronger domestic momentum, while external headwinds are easing somewhat."

Fiscal Stimulus Lagging Behind Expectations

A key pillar of Germany's growth strategy, a landmark €500 billion ($600 billion) special fund for infrastructure, is facing implementation delays. Although the national parliament approved the fund in March, only €24 billion had been invested by the end of the year, reflecting the slow pace of decision-making within Germany's federal system.

Despite the slow start, the government projects that fiscal policy measures will contribute significantly to the economy, accounting for approximately two-thirds of a percentage point of GDP growth in 2026.

However, economists and business groups have warned that this fiscal package alone is insufficient to secure long-term growth. They are calling for more comprehensive structural reforms to bolster the economy's foundation.

Persistent Headwinds for Trade and Consumption

While government spending is expected to drive growth, other areas of the economy show signs of weakness.

Private consumption is forecast to grow by only 0.8% in 2026, a notable slowdown from the 1.4% growth seen in 2025. This projection assumes the household savings rate will remain unchanged at around 10.5%.

On the trade front, Germany continues to face challenges. The economic report highlights that U.S. tariff increases from last year are still weighing on the global economy. Combined with weaker demand from key export markets outside of Europe, this will likely cause Germany to lose further global market share.

After declining for three consecutive years, exports are expected to see a modest recovery with 0.8% growth.

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Stocks

A Packed Day: Fed Meeting, Tech Earnings, and Chip Optimism

Today might be the busiest market day of the first quarter if you’re paying close attention to the Fed and earnings calendars. Overnight, ASML reported blockbuster chip equipment orders and this news is already moving U.S. stock index futures.

This afternoon at 19:00 GMT, the Federal Reserve announces its rate decision. And after the stock market close at 21:00 GMT, three of the biggest names in tech—Tesla, Meta, and Microsoft—report earnings. For anyone trading the major indexes, it’s a lot happening at once, which likely means heightened volatility, so be prepared.

ASML’s Record Orders Light Up Semiconductor Sentiment

Daily ASML Holding N.V.

ASML, the Dutch company that makes the machines chipmakers need to produce advanced semiconductors, reported quarterly bookings of €13.2 billion—more than double what analysts expected. The company also announced a €12 billion stock buyback and said revenue from its most advanced equipment should rise significantly in 2026.

The guidance is good news for the chip sector and the AI infrastructure story more broadly. We’ve mentioned several times since earnings season began that the investors weren’t looking at the past, but the future and ASML delivered just what they were looking for. This is even better news for customer stocks because if ASML is seeing strong orders, it suggests companies like Nvidia, AMD, and TSMC are still investing heavily in capacity. Investors may be anticipating this to show up in their earnings reports.

The Nasdaq Composite Index, which leans heavily on semiconductors, got an early boost from the ASML report and is expected to open higher when the cash market resumes trading at 14:30 GMT.

One caveat: ASML noted that China will account for about 20% of revenue this year, down from 33% last year, though traders seem focused on the global demand picture rather than regional slowdowns. In my opinion, China is gradually being accepted as a wildcard in the chip business due to ever-changing regulations.

Powell’s Press Conference Takes on Outsized Importance

No one expects the Federal Reserve to cut rates today, but Chairman Jerome Powell’s press conference afterward could move markets. Investors want to know whether the Fed sees any rate cuts later this year—possibly in June or December—or if it’s inclined to stay on hold longer than expected by remaining data dependent.

There’s also unusual political tension around this meeting. President Trump has hinted he might name a potential successor to Powell this week, and the Justice Department recently issued a subpoena related to the Fed’s headquarters renovation.

Powell has called the investigation politically motivated, but he’s likely to avoid direct political commentary today. Still, the backdrop adds uncertainty to an already closely watched event. After making headlines earlier in the month, the Powell issue has become a whisper, with all experts saying Powell will stay the course until he leaves the position in May.

Three Tech Giants Could Reset the Nasdaq After Hours

After the close, Microsoft is expected to report 15% revenue growth, driven by its Azure cloud business and AI services. Meta’s forecast is even stronger, with a consensus of analysts projecting record quarterly revenue above $58 billion. Both companies carry heavy weight in the Nasdaq, so even small surprises—positive or negative—could swing futures prices after the cash market close.

Nasdaq Index: ASML Surge, Powell Remarks and Megacap Earnings Drive Today’s Forecast_2

Daily Tesla, Inc

Tesla faces a tougher setup. Analysts expect earnings to drop sharply, deliveries fell last quarter, and competition from Chinese automakers like BYD has intensified. Investors will be looking for signs that the shift to a subscription model for Full Self-Driving is gaining traction. Nonetheless, Tesla may be the stock with the greatest volatility after the company reports.

Between the Fed, chip optimism, and heavyweight earnings, today has the potential to reset expectations heading into February. It seems that investors will really be emphasizing the future from the Fed and from the companies reporting. Investors will be looking for “when” the Fed will make its first cut and “when” AI is going to pay off.

Source: fxempire

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Nathaniel Wright

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Daily News

Why the Fed is Hitting the Brakes on Rate Cuts

The Federal Reserve is widely expected to keep its key policy rate steady on Wednesday, bringing a halt to three consecutive rate cuts of 25 basis points each. This decision comes as the central bank navigates a murky economic landscape, with persistent inflation and mixed signals from the labor market complicating its dual mandate.

After reducing the federal funds rate by 75 basis points late last year, Fed Chair Jerome Powell signaled in December that a pause was likely. He noted the policy rate was "now within a broad range of estimates of its neutral value," suggesting the central bank was "well positioned to wait to see how the economy evolves."

According to Glen Smith, chief investment officer at GDS Wealth Management, further rate cuts are not justified at this time. "It's prudent to now take a wait and see approach," Smith said, pointing to improving labor market data, stable inflation, and the simple fact that the Fed just completed a series of cuts.

Looking further ahead, Smith anticipates a cautious path. "We expect just one rate cut for 2026," he noted, adding that "the timing of this next rate cut is debatable, it will likely come towards the second half of the year, which will also be under the rein of a new Fed Chair."

Beyond Rates: Fed Independence Under Scrutiny

While the interest rate decision is largely a foregone conclusion, investors are laser-focused on another issue: the central bank's independence. All eyes will be on whether Powell addresses the Trump administration's investigation into the Fed.

Earlier this month, the U.S. Department of Justice served the central bank with grand jury subpoenas concerning the renovation of a Fed office building. In a highly unusual public response, Powell suggested the investigation was a form of punishment. He stated the Fed was being targeted for "setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President."

This development is the latest chapter in a long-running dispute between President Donald Trump and the Fed Chair. Trump has repeatedly and publicly ridiculed Powell for not lowering interest rates and has even threatened to fire him.

Powell's Press Conference: The Real Market Mover

For Wall Street, the interest rate announcement itself is already priced in. The main event will be Powell's press conference that follows the decision.

Analysts and traders will be listening for any commentary on the political pressures facing the institution. "This is the first Fed press conference since news came to light about a DOJ investigation into Powell," said GDS Wealth's Smith. "We expect Powell to address this during the press conference and broader questions about the Fed's independence."

Investors tracking the market's reaction can monitor several popular exchange-traded funds (ETFs) that follow the benchmark S&P 500 index, including:

• SPDR S&P 500 ETF Trust (SPY)

• Vanguard S&P 500 ETF (VOO)

• iShares Core S&P 500 ETF (IVV)

To stay updated on all economic events of today, please check out our Economic calendar

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King Ten

Remarks of Officials

Economic

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Political

Middle East Situation

A U.S. aircraft carrier group arrived in the Middle East on January 27, dramatically raising tensions as speculation over a potential strike against Iran intensifies. The military deployment comes as Tehran carries out a brutal crackdown on nationwide protests that rights organizations report have killed thousands.

This external pressure coincides with severe internal turmoil. Iran’s currency, the rial, plunged to a historic low against the U.S. dollar, trading at 1.5 million on the same day.

US "Armada" Signals Military and Diplomatic Pressure

U.S. President Donald Trump has publicly stated he "hopes" military action against Tehran will not be necessary. However, he has also dispatched what he termed an "armada" to the region, confirming that air strikes remain an option in response to the violent suppression of largely peaceful demonstrators.

In a January 26 interview with Axios, Trump described the situation with Iran as being "in flux." He confirmed that a strike group led by the USS Abraham Lincoln is now in Middle Eastern waters, according to U.S. Central Command.

Despite the military posturing, Trump suggested that Tehran is eager to negotiate. "They want to make a deal. I know so. They called on numerous occasions. They want to talk," he was quoted as saying.

Nationwide Protests Met with Deadly Force

The current wave of unrest began on December 28 among shopkeepers in Tehran's markets, who were initially angered by dire economic conditions. The protests quickly spread across the country, evolving into broader demonstrations against falling living standards and the suppression of freedoms.

The response from authorities has been violent. According to the U.S.-based rights organization HRANA, the confirmed death toll has reached 6,126, a figure that includes security forces. An additional 17,091 fatalities are still under investigation. Some unofficial estimates from media outlets, citing off-the-record officials, suggest the actual number could be several times higher.

Eyewitness accounts and verified reports indicate the crackdown reached its peak on January 8 and January 9, when security forces used live ammunition against demonstrators.

Currency Collapse and Soaring Inflation Fuel Unrest

The rial's dramatic fall is symptomatic of a broader economic crisis. The annual inflation rate stands at 44.6 percent, with food prices having surged by nearly 90 percent year-on-year. For years, Iran's economy has been strained by international sanctions and the consequences of the 12-day war with Israel last June.

Internet Blackout Masks Crackdown Amid Emerging Evidence

To control the flow of information, the Iranian government has imposed a weeks-long internet blackout. The watchdog group NetBlocks confirmed in a January 26 report that the shutdown continues, with only limited access reported intermittently. NetBlocks noted that authorities are tightening controls to prevent circumvention while using whitelisted accounts to promote the government's narrative.

An Iranian government spokesman claimed on January 27 that the internet was cut "to preserve human lives," without offering further explanation.

Despite the blackout, new evidence of the suppression continues to surface online. The Vahid Online channel published images reportedly from the city of Amol on the evening of January 9. The visuals appear to show uniformed government forces armed with Kalashnikov rifles firing directly at protesters, contradicting official claims that "terrorists," not state security agents, were responsible for the killings.

To stay updated on all economic events of today, please check out our Economic calendar

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Justin

Stocks

The S&P 500 crossed the 7,000 mark for the first time on Wednesday and the Nasdaq inched towards a fresh record, helped by gains in chip stocks, with investors gearing up for a Federal Reserve rate decision and quarterly earnings results of Big Tech companies.

The move through the psychological level underscored risk appetite tied to AI optimism and expectations for strong corporate results, which outweighed lingering geopolitical concerns.

"These big round numbers can be difficult psychological tests for the market. So certainly from a technical analysis perspective, we think it's a very positive sign," said Jeff Buchbinder, chief equity strategist for LPL Financial.

Tech stocks led gains as Nvidia climbed 1.8%, Intel jumped 9%, and Micron and Microchip Technology each gained over 4%. SK Hynix, a key Nvidia supplier, reported a record quarterly profit and ASML booked its highest ever fourth-quarter orders, igniting a tech rally from Europe to Asia.

The Philadelphia SE Semiconductor index rose 2.3%.

The Fed convenes later in the day for its rate decision, with policymakers widely expected to keep it unchanged at 3.5%–3.75%. Traders will watch out for the Fed's statement and Chair Jerome Powell's remarks, for clues on the future rate trajectory.

"We would expect any (Fed rate) cuts that come in 2026 to be accompanied by economic growth, that is certainly a key piece of our positive stock market outlook for 2026. We would argue that the earnings and AI investment is a bigger deal and should be the focus of investors more so than the Fed," Buchbinder added.

Wall Street has rebounded to trade higher, with attention shifting to the earnings story after U.S. President Donald Trump's threats to acquire Greenland had led to bouts of sell-offs earlier this month, sending safe-haven gold soaring.

At 09:32 a.m. ET, the Dow Jones Industrial Average rose 118.82 points, or 0.24%, to 49,122.23, the S&P 500 gained 22.45 points, or 0.32%, to 7,001.05 and the Nasdaq Composite gained 150.01 points, or 0.63%, to 23,967.11.

The U.S. central bank, which recently started receiving real-time data on the economy's health after a partial government shutdown last year, is navigating policy while peering through an increasingly politicized fog.

This meeting arrives in the backdrop of a Justice Department inquiry launched earlier this month involving Powell as well as Trump's hints that a successor will be named "soon".

The markets currently expect the first rate cut to come in June, according to CME's FedWatch tool.

"MAG 7" KICKS OFF EARNINGS

Meta , Microsoft and Tesla report after market close, kicking off the so-called "Magnificent Seven" earnings that have driven the AI trade, powering markets to record levels.

With lofty valuations driving rotation into undervalued areas of the market, the group's capital plans will be closely watched as investors question whether AI spending will drive returns.

Texas Instruments surged 6% after the analog chipmaker forecast first-quarter revenue and profit above Wall Street estimates. Starbucks jumped 6.7% after posting a bigger-than-expected increase in first-quarter comparable sales. AT&T climbed 4% after the U.S. carrier projected annual profit above market expectations.

In industrials, GE Vernova raised its annual revenue forecast, shares rose 2%. Textron fell 6.2% after guiding fiscal profit below estimates, while Otis dropped 5% after fourth-quarter revenue missed expectations.

Meta and Microsoft were flat, while Tesla gained 0.5%. Bellwether IBM , also due to report after the market closes, was flat.

Seagate Technology jumped 14.5% after it forecast third-quarter revenue and profit above Wall Street expectations. Rival Western Digital rose 7.7%.

Source: TradingView

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Adam

Commodity

Oil hit a fresh four-month high after President Trump threatened another attack on Iran, urging Tehran to negotiate a deal.

“Hopefully Iran will quickly ‘Come to the Table’ and negotiate a fair and equitable deal,” Trump said in a post on his Truth Social network, adding that “the next attack will be far worse!” than the one that took place last year.

The potential risk to Iranian supplies has injected a premium into oil prices and led futures to start the year on a strong footing, up more than 10% this month, despite forecasts for a glut. That has also kept the cost of bullish options high relative to bearish ones.

Brent futures reached $68.19 a barrel after Trump’s post, the highest level since the end of September, extending a 3% jump in the previous session.

Trump had already reiterated on Tuesday that a “big armada” was headed to the Middle East, adding that hopefully the US wouldn’t have to use it. On Wednesday, he said the fleet is larger than the one sent to Venezuela, where Nicolas Maduro was deposed earlier this year.

Trump’s focus on Iran followed the Islamic regime’s deadly crackdown on protests against the government of Ayatollah Ali Khamenei.

There’s already been regional reaction to Trump’s signals over recent days. The Iranian and Qatari foreign ministers stressed the need to continue diplomatic efforts to reduce tensions, while Saudi Arabia’s Crown Prince said the Kingdom’s land won’t be used to carry out operations against Tehran.

Oil Hits Fresh Four-Month High as Trump Warns Iran to Make Deal_1

“Market sentiment appears to be gradually turning more positive, as the bearish oversupply narrative so prevalent in the second half of 2025 weakens,” Standard Chartered analysts including Emily Ashford wrote in a note. “We envisage an uptick in volatility and increasing focus on both supply and demand risks..”

The prompt spread for both oil benchmarks — the difference between their two nearest contracts — has widened in a bullish backwardation structure over the course of this month, indicating tighter supply. That gauge topped $1 for Brent on Wednesday.

A gauge of the dollar tumbled to the lowest in almost four years on Tuesday after Trump said he wasn’t concerned about the currency weakening. The drop has been fanned by his unpredictable policymaking, including threats to take over Greenland and pressure on the Federal Reserve.

Source: Bloomberg

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Adam

Economic

A renewed push to conclude a U.S.-India trade deal may get underway, analysts say, as the White House sees other countries and power blocs working harder than ever to remove barriers to trade and tariffs.

The urgency and impetus to get talks over the line could come after the EU and India signed off on a long-awaited trade deal on Tuesday, with the agreement seeing both sides phase out tariffs on the vast majority of each other’s imports.

“The EU–India deal could ... light a fire under efforts to conclude a U.S.–India trade deal and help to move negotiations forward on a comprehensive bilateral trade agreement,” Mark Linscott, nonresident senior fellow on India at the Atlantic Council, commented Tuesday.

Trump has yet to react to the EU-India deal, which was two decades in the making, but Washington could view bilateral trade agreements between other powerful nations with concern and as a potential threat.

The U.S. already has a trade deal with the EU (which has maintained 15% tariffs on EU exports to the States) but when it comes to the U.S.′ own stalled trade talks with India — a country it imposed a 50% tariff on — it certainly leaves negotiations in more uncertain territory.

But according to Atlantic Council expert Linscott there is no need for a U.S.-India deal to be derailed. “While the agreement may be interpreted as a response to the Trump administration’s tariffs and tariff threats, there is no reason it should undermine the U.S. trade relationships with either the EU or India,” he said.

India’s oil and gas minister told CNBC on Tuesday that a U.S.-India trade deal was at a “very advanced stage” but conceded he didn’t have a timeline for the conclusion of a deal.

“I would try and look at the positive side, I’m not a soothsayer, I don’t know when trade deals will get signed, how long it takes ... but I think one [everybody] needs to chill a bit,” he told CNBC’s Amitoj Singh, as India and the EU announced a landmark trade deal.

“I’m told by the people who are in it [the negotiations] that it’s at a very advanced stage, and I’m hoping that, sooner rather than later, it will also see the light of day,” he added of the U.S. deal.

Sticking points

The EU and India described their agreement as the “mother of all deals” and while the accord sees the two countries ally themselves at a time when global trade is under strain from tariffs, sanctions, and geopolitical rivalry, it does not reduce India’s desire for a deal with the U.S., analysts at global risk consultancy Teneo noted.

The deal “reduces (though not eliminates) the pressure on India to conclude a deal with the US which remains its largest trade (in both goods and services) and defense partner,” analysts Arpit Chaturvedi and Carsten Nickel said in emailed comments Tuesday.

Shumita Deveshwar, chief India economist at TS Lombard, noted that there were a number of sticking points preventing an immediate agreement.

“A free trade deal with the EU after nearly 2 decades of negotiations couldn’t come at a better time for India, which is struggling to strike an agreement with the U.S.,” she said in emailed analysis Wednesday.

“Trade talks with the U.S. are stuck owing to its insistence on getting greater access to India’s farm market and for India to stop buying cheap Russian oil ...Agriculture is a highly politically sensitive sector in India given the low level of farm mechanisation and vast numbers of subsistence farmers. However, India does seem to be scaling back its Russian oil purchases,” she said, noting such purchases had fallen to their lowest level in two years in December.