Economic developments: European Union, Japanese markets, and Chinese stocks

The French Minister of State for European Affairs, Benjamin Haddad, said on Tuesday that the European Union should use the proceeds from the billions of euros in fines imposed on Google. To reduce the contributions of member states to the Union budget.

Haddad said in an interview with France Info TV: “This is a new source of revenue for the European Union, worth 4.6 billion euros, and it should automatically lead to a reduction in the contributions of all member states.”

The European Union capitals differ regarding the size of the budget and its spending priorities. In July, the European Union imposed fines totaling 890 million euros on Google for violating EU rules aimed at limiting the influence of major technology companies. The recent fines raised the total sanctions imposed by the European Union on Google. Due to anti-competitive practices to 10.38 billion euros over about two decades.

The European Union governments are currently negotiating the budget for the period from 2028 to 2034. Including during summits scheduled during October, November and December, in an effort to reach an agreement before the end of the year. The European Commission proposed that the value of the budget amount to two trillion euros.

Japanese government bond yields remained near their highest levels in decades, Tuesday, despite strong demand at a 40-year bond auction, at a time when inflation fears, rising oil prices and rising US bond yields increased pressure on Japanese financial markets, and pushed the Nikkei stock index to decline for the second session in a row.

The yield on Japanese benchmark 10-year government bonds rose 0.5 basis points to 3.09 percent, remaining close to the 30-year high of 3.115 percent, which was recorded last week.

In Japan, bets are increasing that the Bank of Japan will raise interest rates again before the end of the year. This adds pressure on bond prices. The Japanese Ministry of Finance sold 40-year government bonds worth about 300 billion yen at an auction that showed strong demand.

This atmosphere was reflected in the stock market, as the Nikkei 225 index closed down 0.6 percent at 65,481.27 points, while the broader Topix index fell 1.72 percent to 4,041.13 points.

Chinese stocks held firm on Tuesday, supported by government pledges to intensify anti-cyclical policies and stabilize the real estate market, while the yuan rose against the dollar as exporting companies increased the conversion of their revenues into the US currency before the week-long National Day holiday.

The main support for Chinese stocks came from the real estate sector, after the State Council pledged to take measures to stabilize the market. “Funky” shares jumped by about 8 percent, amid hopes for additional steps to support demand for housing.

In the currency market, the yuan rose as exporters increased their dollar holdings into the local currency before the holiday, weathering pressures resulting from the strength of the dollar. The yuan recorded 6.7057 per dollar in spot trading, up 61 points from the close of the previous session.