It's Friday, so today I'll provide a quick overview of

what's happening in global markets and then offer you some

weekend reading suggestions away from the headlines.

Today's Market Minute

* U.S. President Donald Trump on Thursday threatened to slap a

200% tariff on wine, cognac and other alcohol imports from

Europe, opening a new front in a global trade war that has

roiled financial markets and raised recession fears.

* Top U.S. Senate Democrat Chuck Schumer on Thursday said he

would vote to advance a Republican stopgap funding bill,

signaling that his party would provide the votes to avert a

government shutdown.

*The European Central Bank has given UniCredit approval to buy

up to 29.9% of Commerzbank, the Italian bank said on Friday,

adding it would likely wait until next year before deciding

whether to pursue an acquisition.

* Germany's Chancellor-in-waiting Friedrich Merz urged sceptical

lawmakers on Thursday to back his proposals for a massive

increase in state borrowing, framing them as a test for Germany

to stand tall on the world stage and safeguard European

security.

* China's Hong Kong and Macau Affairs Office reposted a

commentary criticising CK Hutchison's port deal with U.S. firm

BlackRock as a betrayal of China, sending shares of the Hong

Kong-based conglomerate sharply lower on Friday.

Shutdown reprieve

The S&P 500 on Thursday clocked a technical 10%

correction from recent highs for the first time since 2023, but

it may get some relief at the end of a torrid week from signs

that a partial U.S. government shutdown may be averted.

With losses of more than 4% for the week through Thursday's

close, the S&P 500 was on course for its worst week in two

years, but futures bounced overnight as one of the

multiple clouds hanging over the market appeared to pass after

the bell.

Top U.S. Senate Democrat Chuck Schumer said he would vote

to advance a Republican stopgap funding bill, signaling that his

party would provide the votes needed to avert a government

shutdown before the midnight deadline on Friday.

But risk of a partial government shutdown was just one of the

uncertainties weighing on stocks, which include an escalating

global trade war and fears that it may sow a rare downturn in

the economy.

With few major economic updates this week and the Federal

Reserve's latest policy meeting coming next week, markets will

likely focus today on the University of Michigan's latest survey

on consumer confidence.

Economic jitters appear to be undermining investment

confidence beyond stocks, as high yield bond risk premiums

have widened off recent lows without further drops in

benchmark Treasury yields.

So called junk spreads on the sub-investment grade corporate

bond index expanded to their widest in more than six months to

340 basis points on Thursday, with high-yield volatility gauges

hitting their highest since November 2023.

Overseas, stocks indexes caught a break on Friday as Wall

Street futures stabilized, despite ongoing losses in some

sectors in Europe wary of upcoming U.S. tariffs.

Chinese mainland shares jumped more than 2% on fresh

domestic stimulus hopes. China's financial regulators urged

institutions to boost support for consumption, promising in a

statement on Friday to relax consumer credit quotas and loan

terms.

Meanwhile, the dollar ticked higher, and gold

surged to a another record high.

Weekend reading suggestions

Here are some articles away from the day-to-day headlines

that you may find interesting.

* Former Reserve Bank of India boss and ex-IMF chief economist

Raghuram Rajan takes "Trumponomics' to task in a post on Project

Syndicate and asks if Trump's agenda is worth it if the price is

America's 'exorbitant privilege'.

* Washington's Institute of International Finance takes a look

at Trump policies today and frets about the sustainability of

America's debt trajectory, with its models showing tax hikes or

spending cuts of over 2.5% of GDP needed to steady the ship.

* Voter regret? Reuters shows how DOGE job cuts are bringing

pain to Trump supporters.

* The Bank for International Settlements' quarterly review this

week talked of the risks that markets and economies face because

of "tariffs wrapped in uncertainty" and "the race between the

growth trajectory and the debt trajectory".

* This year's Central Banking magazine prize for economic

research at central banks goes to Adrian, Boyarchenko and

Giannone for their work on 'growth at risk' models and the use

of financial conditions gauges to predict downturns.

* As European defence and fiscal policies have been transformed

this year and defence stocks have soared, Reuters reporters show

how many of Europe's money managers are reviewing ESG policies

to find ways to take part in the shift.

* In the meantime, former Airbus boss Tom Enders is urging

Europe to prepare for the worst by leading the race to build

armed robots.

* The messy world of sovereign debt restructuring and 'odious

debt' turns to Syria, as explains Peterson Institute for

International Economics's Adnan Mazarei.

* Speaking of 'odious debt', some financiers are examining what

may happen if those on a thrift drive at the U.S. Treasury look

into the long-dormant unpaid British debts to America from World

War One.

* As the world looks back at five years since the pandemic, many

are still being impacted by it directly, as ThomsonReuters

Foundation's Emma Batha explains with her feature on "UK parents

quit jobs to care for children with long COVID".

Chart of the day:

Next week brings a sweep of major central bank meetings that

would normally hold world markets in thrall. But the scale of

U.S. policy uncertainty and an unfolding global trade war mean

the monetary easing of the past year will likely come to a halt

as central bankers move to the sidelines and consider the

fallout.

Today's events to watch:

* University of Michigan March consumer sentiment survey;

Canada January manufacturing sales

* European Central Bank board member Piero Cipollone speaks

* US corporate earnings: Hudson Global, Drilling Tools,

WeRide, GoGo

* NATO Secretary General Mark Rutte in Washington

(By Mike Dolan, editing by Anna Szymanski

[email protected])