Key facts
- Up to 1.3 million EU jobs are at risk due to the Middle East war.
- The automotive sector could face up to 600,000 job losses.
- Low-income households may spend an additional 1.4% of income on transport fuel.
- USD/JPY experienced volatility, nearing the 160.00 level.
- European indices declined, with German stocks leading losses.
- WTI crude oil prices rose 2% to $95.70.
European Commissioner for jobs, Roxana Mînzatu, warned that up to 1.3 million jobs across the EU are at risk due to surging energy prices linked to the Middle East war. Energy-intensive industries, particularly the automotive sector, face the most significant potential layoffs, with estimates suggesting up to 600,000 jobs could be lost. Other sectors like construction, metals, chemicals, and transport could collectively lose 56,000 jobs, while battery projects and solar manufacturing face risks of 85,000 and 58,852 jobs, respectively. The steel sector might see 4,500 jobs go due to low-carbon measures. The economic impact also extends to consumers, with low-income households potentially spending an additional 1.4% of their income on transport fuel. The European Commission's Spring Semester Package highlights the need for quality jobs and addressing skills shortages in strategic sectors like AI and semiconductors, with 77% of companies reporting skill shortages as a barrier to investment. President Ursula von der Leyen has prioritized competitiveness, aiming to reduce economic barriers, foster a business-friendly environment, and minimize strategic dependencies, especially on China and the US, through a more robust industrial policy and simplified regulations. In parallel, geopolitical tensions between the US and Iran continue, with President Trump commenting on Iran's nuclear program and a potential US naval blockade extension. Tehran has denied previous notions of a baseline promise regarding its nuclear weapon. These tensions are contributing to market volatility, with WTI crude oil prices rising 2% to $95.70. European indices are trading lower, led by Germany's DAX, which fell 0.9%, while the CAC 40 declined 0.4%. S&P 500 futures are marginally down. The Japanese yen experienced significant volatility, with USD/JPY nearing the 160.00 intervention strike zone before pulling back. Bank of Japan Governor Ueda indicated a potential rate hike if the economic outlook holds, while ECB policymaker Elderson noted the war's impact on inflation. SNB Chairman Schlegel sees unchanged medium-term inflation pressure. Eurozone business activity is struggling, with May's final services PMI at 49.3. US 10-year Treasury yields rose 2.8 bps to 4.48%, and gold prices fell 0.5% to $4,463.