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Zelenskiy comments on US Donbas stance pleased Russia
A senior Kremlin representative said that Russia was pleased with the remarks made by Ukrainian President Volodymyr Zelenskiy, who claimed Washington had tied its offer of?security guarantee to Kyiv's surrender of eastern Donbas. Kirill Dmitriev, the Russian special envoy, told reporters that Zelenskiy’s comments, made in an article, “can't but make us happy”. Dmitriev stated that "he said an important thing...he finally understood the U.S. stance, which is?that they will only support security guarantee if Ukraine leaves Donbas." Zelenskiy said that President Donald Trump is applying pressure on Kyiv to end the four-year conflict triggered by Russia’s 2022 invasion. Zelenskiy acknowledged the U.S. position on Donbas but said Washington needs to do more. Understand "that the eastern part of our country is a part of our?security guarantees". He wants strong security guarantees from international partners in order to make sure that Russia doesn't restart hostilities after any peace agreement is reached. US-RUSSIA TALKS TO CONTINUE The Russian enemies are 'in a mad state' because the negotiations between Moscow, Washington and other countries on economic cooperation continue. He stated that the topic of raising money for reconstruction in areas devastated by war was being discussed. He cited as an example the U.S. playing a "positive" and "constructive" role in the European Union deciding last year to not seize 210 Billion Euros ($240 Billion) worth of Russian sovereign assets to pay for a Ukrainian loan. Dmitriev said that despite the ongoing negotiations with the U.S., Russia could still take tough action elsewhere, citing the "provocations" from the EU, Britain and other countries against the Russian fleet. Russia also informed the U.S. of recent drone attacks by Ukraine against Russian energy infrastructure. He called it an attempt to worsen the global energy crises,? he said. Calculations show that at least 40% of Russia’s oil export capacity has been halted following drone attacks by Ukraine, an disputed attack on major pipelines, and the seizure or tankers. This is the worst oil supply disruption that Russia has ever experienced. (Written by Gleb Brynski, edited by Andrei Khalip).
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Oil shock, war, and uncertainty: McGeever: Time to increase US equity outlook
It might seem odd to get more bullish about stocks at a time when the U.S. economy is so obscured by the "fog" of war and oil priced at $100 per barrel. From a valuation perspective, earnings and growth are compelling. Barclays strategists emphasized it when they increased their S&P 500 price and earnings predictions this week, and they are?not alone in the bullish camp. They argue that corporate America will not escape the economic impact?of?the Iran War and energy shock. However, it is still relatively well-positioned. Take technology, the engine that has driven Wall Street's recent boom. Recent concerns that firms overspend on artificial intelligence have caused the market to sputter. Concerns about AI disruption has also roiled software company shares. The "Big Tech' selloff was pretty large. Roundhill's "Magnificent 7" ETF is down 10%, which is three times more than the S&P 500. The tech sector, measured by the 12-month forward price-earnings ratio, is now cheaper than it was during the "Liberation Day' turmoil?a year earlier. This multiple hovers around 21, which is the lowest it has been in three years, and is down by a third since last October. This is a remarkable turnaround of a key sector in a short period of time. The valuation premium tech enjoyed in the past over the broad stock market is almost gone and now at its lowest level in seven years. According to Jefferies equity strategists, a narrower measure of this premium - "Mag Six" over the S&P 500 – is the smallest in seven years. The Re-Rating Game It is reasonable to argue that a major reset of the market was overdue, because tech stocks had become far too costly. The current valuations are simply back to their long-term mean. These companies' future earnings projections make tech look even cheaper. The LSEG consensus estimate for tech earnings growth during calendar year 2026 has increased to 42.5% from 30.8% at the beginning of January and is nearly twice as high as it was six months earlier. Barclays strategists said this week that they believe the U.S. will continue to grow faster than other major economies, and technology is a growth engine with a long-term outlook. The S&P 500's earnings per share for this year were raised to $321, up from $305. They also increased the price target of the index to 7650, up from 7400. This would mean gains of about 16% since Wednesday's closing. They added that "the road is likely to remain bumpy until the 'corner', but we are incrementally bullish about U.S. stocks." OVERWEIGHT AND SEE It's notable that U.S. consensus earnings estimates have been steadily rising over the past two months, while the S&P 500 continues to fall. Does this indicate an unjustifiably positive outlook for U.S. corporations, or a market overly pessimistic reaction to external factors? It looks as if it might be the former. Wall Street has performed better than its global counterparts in the four week period since the Middle East war broke out. This is partly because of the relative strength in the U.S. for growth, technology, earnings and energy. This situation is unlikely to drastically change in the near future. In their outlook for the second quarter, HSBC Private bank analysts stated that they remain "overweight on U.S. equities" due to resilient growth and solid corporate earnings. The fear of rising U.S. prices, which are already at a rate of 3%, shouldn't be a deterrent for America Inc., as higher prices should increase nominal earnings, particularly in sectors that have strong pricing power. Holding an over-weight position in the equity markets is fraught with risks, but it's the safest place to be if that's what you want to do. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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After talks with regional leaders, the PM said that Iran allowed Malaysian vessels to cross in Strait.
Malaysia's Prime Minister Anwar Ibrahim announced on Thursday that he had met with the leaders of Egypt, Iran, Turkey and other countries in the region. He said Malaysian ships were now allowed to cross the Strait of Hormuz. Anwar thanked the Iranian president in a televised speech for allowing passage of 'Malaysian vessels. He said, "We're now working on releasing the Malaysian oil tanks and their workers so they can continue home." Anwar stated that he spoke with Iran and other countries in order to facilitate peace in the Middle East. He said: "But it's not easy. Iran feels deceived and finds it hard to accept peace steps without a clear, binding security guarantee for its nation." Malaysia will maintain its oil subsidies, but is taking steps to reduce the impact of supply disruptions. He said: "We are compelled now to manage?the?situation because of the effects of the?blockade in the Strait of?Hormuz; the war and the?halted?supply of?oil?and gas," he added. (Reporting and writing by Ashley Tang, Editing by Martin Petty).
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Aluminium gains, copper falls as Iran rejects talks to end the conflict
Aluminium rose to its highest level in nearly a week after Iran denied talks to 'end the Middle East conflict. The benchmark three-month price of copper at the London Metal Exchange fell as much as 1.7% in the previous session. The metal, widely used in construction and power, closed up 1.8% Wednesday, thanks to dip-buying by Chinese consumers who were looking to replenish their stock. Copper, which is considered to be a bellwether of global economic health, has been under pressure because there are fears that the U.S. and Israeli war against Iran will hurt the growth. Copper?stocks are also available in LME-approved warehouses The remaining stocks are at an eight-year high, with 360,000 tonnes. They have increased by around 150% from the beginning of the year. John Meyer, SP?Angel's analyst, said: "I believe copper was under pressure even before the conflict began. This is because there was a build-up of copper in the warehouses." Donald Trump, the U.S. president, said Iran is desperate to reach a deal that will end four weeks of fighting. This contradicted the Iranian foreign ministry, who stated his country would only'review' a U.S. offer but had no intention to hold talks. Aluminum meanwhile rose by 1.5%, to $3,290.50 per ton. It reached its highest level since March 20, on fears that Middle East smelters, who account for 9% of the global supply, would not be able to deliver metal to world markets or bring in raw materials. Zinc rose 1.1% to $3.112, lead fell 0.9% to $1.894, nickel dropped 0.6% to $17.235, and tin fell 0.7% to $44,195. (Reporting and editing by Sonia Cheema, Rashmi aich and Sonia Cheema; Additional reporting by Amy Lv; Keith Weir Editing)
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WTO chief says world order irreversibly changed
The head of the World Trade Organization stated 'on Thursday that the multilateral system had fundamentally changed 'and that countries should look towards the future in order to reform the global trading system. We will not get it back...We must look?to the future", WTO Director-General Ngozi Okonjo-Iweala told delegates at the opening?of the 14th WTO ministerial conference in Yaounde, Cameroon. We won't get it back...We have to look forward," WTO Director General Ngozi Okonjo Iweala said at the opening of the 14th WTO Ministerial Conference in Yaounde. Okonjo Iweala stated that 72% of the global trade still takes place under WTO regulations, and the 'growth in AI related trade' is a positive sign. However, she said there are significant uncertainties regarding the trading system due to the Middle East conflict, as well as the impact of U.S. Tariffs on other countries. Okonjo Iweala presented a list of WTO problems, such as the paralysis in the WTO dispute resolution body and the lack of transparency when notifying the use or subsidies. Okonjo Iweala stated that only?64? members had submitted subsidy notifications to the WTO by 2025. This means 102? had not, she said. She told delegates that "lack of transparency leads to a lack of trust and this breeds suspicions about unfairness and anticompetitive behavior." Okonjo Iweala said that this?contributed a "vicious circle" of?mistrust, which was holding members back from agreeing on new rules and reforms. (Reporting and editing by Madeline Chambers.)
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Oil prices rise above $105 as Iran crisis causes stock and bond declines
Oil jumped up to $105 per barrel on Thursday, and Iran's denial that it had ever held any kind of talks with the U.S. has raised doubts about a rapid ceasefire for the Middle East war which is now nearly a month old. The conflicting signals about the extent of 'contact', as well as reports that thousands of U.S. soldiers were being sent to?the?region, halted a three day rebound in world stock markets and reignited sales in global debt market. Following the fall in Asia – where the Philippines held a central bank meeting that was not scheduled due to the chaos – European stocks and government bonds fell as Germany's head of the central bank said an ECB interest rate hike next week is "an option". Brent crude oil was just above $106 per barrel, and European gas was 54.5 euros a megawatt-hour. This brought their gains for the entire month up to 45% and 70 %, respectively. Joachim Nagel, the German central bank's chief, said in an interview that he believes there will be enough data to decide by April whether or not we should take action. But we shouldn't be afraid to do it just because it is still early. Donald Trump said on Thursday that Iran "begged" for a deal in order to end the conflict. Iran's Abbas Araqchi, the country's foreign minister, had said earlier that Tehran was examining a U.S. offer but did not intend to hold talks. The 'war', which was triggered by U.S. and Israeli strikes on Iran late in February, has shook global markets, and shut down the Strait of Hormuz - a channel for a fifth of all global oil and gas flows. After falling by 4 basis points on Wednesday, the yield of Germany's 2-year bonds, which is sensitive to expectations about interest rates from the European Central Bank, increased 6 basis to 2.67 percent. Bond yields are inversely related to bond prices. As traders bet on a Bank of Japan rate increase as soon as next month, the U.S. 2-year yield reached 4%. Japan's two-year yield hit its highest in 30 years, at 1.33%. Pascal Koeppel is the chief investment officer of Vontobel SFA. He said that a prolonged disruption in this Strait would keep energy and inflation prices high, forcing central bankers to tighten. Koeppel said, "I would be more nervous if we saw ground troops (from the U.S.) in action." If this happened, "we'd trim the risk... and invest more in short-term government bond and gold, obviously". STRUCTURAL CHANGES Wall Street futures predicted a lower opening, and Asian markets dropped overnight. Japan's Nikkei fell 0.3% while worries about rising energy prices slammed South Korea's KOSPI. It dropped 3.2%. Hong Kong's Hang Seng dropped 1.9%, and China's blue-chips fell?1.3%. This puts MSCI's Asia-Pacific index outside Japan at a monthly drop of 9.5%, the largest since October 2022. The dollar is gaining 2% this month and has been near its recent highs. This will revive the safe-haven appeal of the currency after last year's more 9% decline. Traders have priced out all chances of a Federal Reserve rate reduction this year due to fears that inflation will be similar to the one experienced in 2022. This has further supported the dollar. Gold, a traditional safe-haven, has fallen more than 16 percent this month, on track to be its steepest drop since October 2008. Gold was down 2% on Thursday at $4,421 an ounce, but still almost 50% higher than it was a year earlier. It will be difficult to reconcile the goals of the U.S., Israel, and Tehran, said Matthias Scheiber. He is the senior portfolio manager at Allspring Global Investments and head of their multi-assets team. "We think that there are still arguments to be made for higher energy prices at the moment."
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Sources say that the Thyssenkrupp and Jindal Steel sale talks have failed due to pension and energy costs.
Four people with knowledge of the matter have said that discussions of a possible Thyssenkrupp steel unit sale to Jindal Steel International may be called off because of differences regarding pension liabilities, investments, and 'energy costs. Despite the fact that talks are still ongoing over a possible sale of?Thyssenkrupp Europe (TKSE), and an agreement could still be reached, a deal now seems less likely to happen after almost six months' worth of due diligence and discussion, according to these people. One person said that the companies could decide to stop official negotiations as early as next month. Following the report, shares of Thyssenkrupp dropped 4%. Thyssenkrupp tried to sell TKSE a number of times over the last few decades. They have pursued everything from spinoffs, joint ventures and outright sales - to listing the cyclical business. The stalled TKSE sale threatens THYSSENKRUPP's divestment strategy If TKSE is not sold, it would be a blow to Thyssenkrupp's CEO Miguel Lopez?s plan to transform the storied German Engineering Group into a holding. This includes divesting stakes from all its business divisions, ranging anywhere from car parts and clean-tech. Thyssenkrupp announced on Thursday it would extend production cuts to its Isbergues sites in France. It said that production would be completely shut down from June to September. This will put 1,200 jobs in Germany and France at risk. The people who spoke to us said that a number of factors were complicating the talks, including 2.4 billion euros ($2.8billion) in pension liabilities linked to TKSE – a hurdle for past sales efforts – as well as different ideas about how much future investment was needed. The second source stated that Jindal Steel International is also becoming increasingly uneasy over the rising costs of energy in Europe. The energy costs in Europe are already higher than those in the United States or Asia. They have now risen even more as a result the Iran War. Thyssenkrupp stated that?on Tuesday confidential talks continued with Jindal Steel International, and labour representatives, adding that issues of valuation, obligations, and future investments will?need?to be agreed upon between the parties. Jindal Steel International (the international steel arm of Naveen Jindal group) had no comment to make. Earlier in the month,?Lopez stated that the group would continue TKSE's reorganization "with or without Jindal," and Thyssenkrupp’s deputy supervisory -board chairman Juergen Kerner said last week that talks had stalled. Lopez also stated that planned EU actions to protect the underperforming steel industry of the EU?had increased investor sentiment and strengthened Thyssenkrupp?s position in negotiations. Jindal Steel International made a?indicative' offer to TKSE in September. This included the completion of a new green steel production facility in Duisburg, and a commitment for more than 2 billion euros ($2.31billion) in order to increase electric arc furnace capacities.
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Nikkei reports that Rohm Toshiba and Mitsubishi Electric will begin talks to integrate power chips.
The Nikkei reported on Thursday that Japan's Rohm Toshiba and Mitsubishi Electric will begin talks to integrate their respective power semiconductor businesses in order to 'form the second-largest 'power chip group' after Germany's Infineon. Talks could complicate Denso’s bid to buy rival Rohm after Toyota Motor Group supplier approached the chipmaker earlier this month about a possible acquisition. Nikkei reports that the three chipmakers could announce the start of the talks on Friday. They also stated they were aiming to increase cost competitiveness by integrating. Rohm did not respond immediately to a comment request from Toshiba. Mitsubishi Electric stated in a filing that, "while it is true that the company was evaluating various 'options to improve the competitiveness of its power chip business. No new decisions have been made." Japan's strength is in power semiconductors. These are used in automobiles, electronic devices, and industrial equipment to control the electric power efficiently. Automakers are looking for stable semiconductor supplies after shortages that arose following the COVID-19 pandemic. The 'global AI boom' that has fueled investment in data centers around the world is also boosting chip demand. Kyoto-based Rohm announced last week that it had "established a committee consisting of external directors and others" to review Denso’s proposal as well as its own strategy and options for boosting its corporate value. Denso and the 'chipmaker' agreed in May to create a strategic partnership in semiconductors, with an emphasis on integrated circuits for electric vehicles.
Realistic check on MORNING BID AMERICAS
By Mike Dolan
26 March -
What's important in U.S. and Global Markets Today By Mike Dolan, Editor at Large, Finance and Markets
Energy or financial markets can take little comfort from the current situation despite all the rhetoric on both sides. The?U.S. Iran claims that no talks will take place and it is only reviewing the U.S. proposal. The fighting continues, and the Strait of Hormuz is effectively closed. Meanwhile, oil prices are rising and analysts have upgraded their estimates for the full year crude price.
Below, I will go into more detail. Check out my most recent column about the worrying signs on U.S. Treasury Markets and why they are important for broader markets. Watch the Morning Bid Podcast today. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
Reality Check: After falling by around 2% Wednesday, Brent and WTI crude oil futures both ticked up on Thursday as traders digested the latest mixed messages from the U.S. Benchmarks hover around $105 per barrel and $93 for WTI. As hopes of an imminent ceasefire waned, global shares were volatile. In Asia, the Nikkei index in Japan fell 0.7%; Hong Kong's Hang Seng Index dropped 1.7%; and South Korea's KOSPI Index was down 2.7%. Europe's STOXX600 fell Thursday morning. U.S. stocks futures also declined before the bell. Gold also fell, failing to record any safety bids and instead shedding some recent gains. The Treasury market was on edge following another round of bad debt auctions, and the mounting inflation risks in the longer term. Wednesday's data showed that import prices had risen much more than expected before war. Meanwhile, President Trump announced that he has rescheduled the highly anticipated trip to China. It will now take place in mid-May. Alphabet lost in a U.S. lawsuit over whether their social media platforms are harmful to children. Arm Holdings' stock rose over 16% Wednesday, after the company predicted that its in-house data center chip would generate $15 billion in revenue annually in five years. Arm's new chip is designed to power "agenttic" AI. It marks a change for the company, which had previously licensed its chip designs to companies such as Nvidia.
Chart of the Day Even before the oil shock this month, U.S. inflation rates had already risen sharply, reaching?1.3%, far above expectations, in February. The jump in the monthly price, excluding tariffs, is the largest since four years.
The increase was driven by the prices of food, energy and consumer goods. Prices of imported capital goods have risen to their highest level ever, largely due to the AI infrastructure boom. The core annual rate of inflation for import prices rose to 3.0% in part due to the dollar's weakness.
Watch today's events
* Weekly U.S. jobless claims (8.30 AM EDT).
* U.S. 7-year note auction (1:00 ?PM EDT)
Stephen Miran of the Feds, Lisa Cook and Michael Barr, as well as Philip Jefferson, all speak
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(source: Reuters)