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Oil falls nearly 3% following Trump's announcement of new tariffs
Oil prices fell $2 on Thursday, after U.S. president Donald Trump announced tariffs against trading partners. This stoked fears that a trade war could dampen demand for oil. Brent futures dropped $1.97 or 2.63% to $72.98 per barrel at 0033 GMT. U.S. West Texas Intermediate Crude Futures fell $1.98 or 2.76% to $69.73. Trump hailed April 2 as "Liberation Day," with new duties that may overturn the global trading system. The benchmarks were higher during the previous session, but they turned negative after Trump's Wednesday press conference in which he announced an initial 10% tariff on all imports into the United States as well as higher duties for dozens of its biggest trading partners. We know that it will negatively impact trade, economic growth, and therefore oil demand. We don't yet know the full extent of the impact, as it is a few years away. The White House announced on Wednesday that imports of refined products, oil and gas were exempt from the new tariffs proposed by U.S. president Donald Trump. Trump's tariff policy could cause inflation, slow the economic growth, and intensify trade conflicts, all of which have caused oil prices to drop. Energy Information Administration data released on Wednesday confirmed the bearish mood, showing that U.S. crude oil inventories increased by an unexpectedly large 6.2 millions barrels in the past week. Analysts had expected a drop of 2.1million barrels. (Reporting and editing by SonaliPaul in New York, Nicole Jao)
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QUOTES - Trade and labor associations, analyst on Trump's reciprocal duties
Donald Trump announced on Wednesday that he will impose a baseline 10% tariff on all imports into the United States, and higher duties for some of the biggest trading partners. This could lead to a trade conflict and upset the global economy. Countermeasures from trading partners could result in a dramatic increase in prices of everything, including bicycles and wine. Trump has already levied 25% on automobiles and auto parts. SCOTT WHITAKER, CEO, ADVAMED "This type of tariff would be similar to an excise duty." R&D would be the most immediate and direct victim, as it threatens America's leadership in medtech innovation. Tariffs would cost U.S. workers, increase health care costs and hinder future medical progress." RYAN ORABONE MANAGING CONSULTANT BEARINGPOINT "Diversification (of the supply chain of an apparel retailer) and manufacturing is a moot issue because tariffs impact every major geographic facility where we produce clothing." Brands need to be more strategic than ever before and plan everything with precision. "There is no room for errors anymore, including assortment, allocation and pricing." DAVID SWARTZ ANALYST MORNINGSTAR FOLLOWING FITNESS The huge tariffs on imports from Vietnam are clearly a negative for Nike Adidas and other sportswear companies. Due to the difficulty of manufacturing, athletic footwear can't be easily produced in other countries. Tariffs are also being levied on other Asian nations. The industry will not react in a panic. If the tariffs remain in place, sportswear prices will rise and margins could be affected. The chances of significant footwear and apparel manufacturing in the US being a result of any of these initiatives are virtually zero. MARI SHOR SR., EQUITIES ANALYST AT COLUMBIA TREADNEEDLE INVESTIMENTS, WHICH HOARDS NIKE STOCKS "The announcement of the tariffs is much worse than expected." Nike and other footwear companies will find it difficult to avoid a 46% tariff against Vietnam. The companies will try to fight back against vendors but tariffs are likely to drive up inflation in many categories and pressure consumer discretionary spending." CHRIS VITALE, UAW VETERAN WHO RETIRED FROM STELLANTIS, ATTENDED TRUMP'S TARIFF ANNOUNCEMENT IN PERSON "You know what's amazing is that an announcement about trade policy could become emotional." "These are the things we've been preaching about for years. We've watched our factories and our capabilities being hollowed-out. To see a President address this and use some words and thoughts I've used, was incredible." LIZ SHULER PRESIDENT AMERICAN FEDERATION of LABOR and CONGRESS INDUSTRIAL ORGANIZATIONS The Trump administration's attacks against the rights of union workers at home, the gutting of government agencies that work to discourage outsourcing of American jobs, and efforts to erode crucial investments in U.S. Manufacturing take us backward. RICHARD CAPETTO, SENIOR DIRECTOR, NORTH AMERICAN GOVT. AFFAIRS IPC "A strong U.S. electronic industry requires a holistic approach - one that combines targeted investments and incentives, with policies that promote mutually beneficial trade partnership. Trade is crucial to innovation, cost-competitiveness, and supply chain resilience. Tariffs could increase costs for American companies and drive production overseas. ZOLTAN VAN HEYNINGEN EXECUTIVE DIRECTOR, U.S. WOOD COALITION We welcome President Trump's measures and the focus of his administration on Canada's unfair trading practices. We are especially pleased that the President has launched the Section 232 Investigation under the Trade Expansion Act of 1964 focusing on the imports of softwood lumber. MARK COMPTON EXECUTIVE DIRECTOR THE AMERICAN EXPLORATION & MINING ASSOCATION We are encouraged that the Trump administration is prioritizing the production and processing of domestic minerals so we can have the raw materials our manufacturing base, and society needs. We are looking forward to working together with the administration in order to ensure that the domestic mining industry can meet this challenge. TONY REDONDO, FOUNDER AT COSMOS CURRENCY EXCHANGE Intel is not immune to the cost increases caused by imported chips. Semiconductor giants such as Nvidia are also affected. China's retaliation against rare materials may worsen shortages. PC makers (Dell and HP) may face cost increases of 10%-25%, which could add $200-$500/unit to the unit price, causing margins to be squeezed or prices to rise. The cost of chips and steel may cause delays for AI server companies (Nvidia and Amazon). Construction and retailers like Walmart could also be affected. "Short-term, higher costs and chaos." "Long-term, maybe more U.S. Manufacturing but labor and infrastructure are lagging." Consumers will face higher prices by 2025, unless companies absorb the costs. This is not common. BERNSTEIN ANATOMY "We are concerned that the vehicle and part tariffs will be here to stay, and they will add a significant cost burden to this sector." We see more downside risk for automotive stocks if automotive tariffs do not get reversed, but are instead extended. TOM MADRECKI VICE-PRESIDENT OF SUPPLY CHAIN RESILIENCY CONSUMER BRANDS AFFILIATION The majority of consumer packaged goods are already manufactured in the United States. There are some critical inputs and ingredients that must be imported because they are scarce in the United States. Tariffs alone will not bring these ingredients back to the U.S. "Reciprocal Tariffs that don't reflect the availability of ingredients and inputs will increase costs, limit access to affordable products for consumers and unintentionally hurt iconic American manufacturers." We urge President Trump and his advisors to refine their approach to exempting key ingredients and inputs, in order to prevent inflation and protect manufacturing jobs. LENNY LARCCA, KPMG U.S. AUTOMOTIVE LEADERS "U.S. Automakers are looking for steps they can take to mitigate tariffs in the short term, such as working on items that can be shipped to the U.S. rapidly without major investment." Massive longer-term investments require more time and clarity." The current playbook of the U.S. automobile industry is insufficient, and it's a momentous time for them. Automakers have an opportunity to change the way they do business. Leverage emerging technologies like AI in all areas of their business. Explore and make alliance decisions faster. "Speed up the vehicle production cycle time." This watershed moment presents an opportunity for mergers and purchases. DAVID McCALL, PRESIDENT UNITED STAINWORKERS INTERNATIONAL We must make sure that our trade policy is aimed at cheaters and not trusted economic allies such as Canada. We should work to build relationships, not barriers, with partners who have shown their commitment to join us in tackling the global overcapacity. The administration must also take measures to prevent companies using tariffs to increase prices on consumers. MIKE HAWES is the CEO of UK's Society of Motor Manufacturers and Traders. The tariffs cannot be absorbed, and the U.S. consumer may pay more for British products, while UK producers could have to reduce production due to a constrained market. SETH GOLDSTEIN MORNINGSTAR ANALYST FOR U.S. SETH GOLDSTEIN, MORNINGSTAR ANALYST ON U.S. "I expect lower volumes due to tariffs." Tariffs are likely to be passed on to the consumer in order to increase prices of products. "I expect that consumers will buy less goods." Due to the high fixed costs of chemical production, lower volume would have a large impact on profits. We could also see another year with declining profits if tariffs are widely implemented. Many chemical producers manufacture their products in the U.S. for domestic sales, so there is less direct impact. DAVID FRENCH EXECUTIVE V.P. OF GOVERNMENT RELATIONS AT THE NATIONAL RAILWAY FEDERATION "More Tariffs = More Anxiety and Uncertainty for American Businesses and Consumers. Tariffs represent a tax that is paid by U.S. importers and passed on to the final consumer. No foreign country or supplier will pay tariffs. "We encourage President Trump, to hold trading partners responsible and restore fairness to American businesses without creating uncertainty or higher prices for American consumers." ART WHEATON DIRECTOR, ILR SCHOOL CORNELL UNIVERSITY, LABOR STUDIES It will take years and billions to bring new manufacturing jobs online. However, expansions in existing factories can happen much faster. Companies prioritize stability. Frequent policy changes can slow down investment decisions, as businesses wait to see clearer long-term signals. MICHAEL ASHLEY SCHULMAN IS A PARTNER AT RUNNINGPOINT CAPITAL ADVISORS AND THE CIO. "Trump may be trying not only to bring manufacturing back to the U.S. but also to increase the economic instability of China by putting tariffs on Chinese goods. Tariffs of 34% on Chinese products could force Chinese manufacturers to shut down, leading to increased unemployment and social unrest in China. If these tariffs are imposed, they will have a significant impact on the PC, server, and semiconductor manufacturers. Investors, analysts and politicians will all be watching with bated breathe to see what happens after this 'Liberation Day volley' from the administration. The announcement today is likely to be a worst case scenario. Hopefully, any negotiations will lead to improvements. Reporting by Juby B. Babu from Mexico City; Vallari Srivastava in San Francisco; Abhirup Roy and Caroline Humer at New York City; Nick Brown, Shounak D. Dasgupta, and Alan Barona for the editors.
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BHP considers spinning off its iron ore and coal divisions
Three sources familiar with the matter said that BHP, the world's largest listed miner, considered splitting off its Australian coal and iron ore divisions as part a medium-term strategy for growth. BHP Group considered separating the divisions as part of its plan to focus on commodities such as potash and cobalt, which are expected to grow in the future. Two sources confirmed that the company had considered a listing for Australia before management decided against it. They said that the consideration was in progress as BHP was preparing to bid on Anglo American for 2023 and 2024 and was pushing to green their business. BHP has declined to comment. This would fundamentally reshape BHP and divorce it from the more than 50 years of iron ore mines in Australia where it was founded in 1885. About 60% of BHP's profits are derived from iron ore. By separating coal from iron ore, the majority of its carbon emissions would be reduced. BHP will keep its South Australian assets. This is in line with its strategy of being a leader in the supply of metals needed for the energy transformation. BHP has decided to not move forward with its plans at this time, but the discussions provide an insight into how the miner will re-calibrate its future direction after a change of senior leadership. The former National Australia Bank chair Ross McEwan took over as BHP chairman this week after Ken MacKenzie left. A contest to replace CEO Mike Henry, who is in his fifth year at the top, will soon begin. Henry and David Lamont, BHP's CFO who stepped down in February 2024 from his role, spoke with investors about the plan to separate BHP’s future growth from declining growth businesses by the end of this decade. They decided that it was not the best time, because BHP needed the enormous amounts of cash generated from the two Australian divisions in order to fund capital expenditures at its Escondida Copper Complex in Chile and Jansen Potash Development in Canada. BHP believes that a spin-off from iron ore and coking coal will generate cash and franking credit benefits for Australian tax payers, so there may be a lot of interest on the part of Australians in any flotation. The people also said that a copper and potash unit with more freedom would be able to explore new combinations, like Teck Resources. BHP's refusal to buy Anglo, a copper-focused company that would have helped cash flow and boosted the copper business, complicated the plan. Meanwhile, the desire to go green has diminished as corporations around the world retreat from environmental goals. This suggests that any further progress on this path could be further away. Another person said: "The strategy depends on copper and potassium being self-sustaining business, as both have large capital needs for the next five years." (Reporting and editing by Melanie Burton, Barbara Lewis, Sam Holmes and Veronica Brown)
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Stocks fall as US tariffs hurt tech the most
Investors rushed to gold, bonds and the yen as stocks plunged on Thursday after U.S. president Donald Trump announced a wall of tariffs that was larger than expected around the largest economy in the world, disrupting trade and supply chain. China's and Taiwan's manufacturing hubs were hit with new tariffs of more than 30%. This brought the new total to a staggering 54% for imports from China. Ben Wiltshire, Citi's global rate trading strategist and expert on rates, said that the U.S. tariff rate for all imports is at its highest level in more than a century. Nasdaq Futures fell 4%, and Magnificent 7 technology leaders lost $760 billion in market value after-hours. Apple shares were down by nearly 7%, as the company produces iPhones in China. S&P futures dropped 3.3%. FTSE futures declined 1.8%. European futures were down nearly 2%. Gold reached a record-high above $3,160 per ounce. Oil, which is a proxy of global growth, fell more than 3%, with benchmark Brent futures now at $72.56 per barrel. Early trade in Tokyo saw the Nikkei down 3.9%, at its lowest level for eight months. Nearly every index member fell as banks, shippers, insurers, and exporters were all hit hard. Investors braced themselves for a slower U.S. economy, and interest rate futures price in an increased chance of rate cuts in the coming months. The tariffs were so large and comprehensive that we did not expect them, said Jeanette Gerratty. She is the chief economist of wealth advisory Robertson Stephens, located in Menlo Park, California, the heartland for U.S. technology. People were discussing whether clarity could boost the market earlier. Now that you've got clarity, no one is happy with what they see. RISK TO GLOBAL TRADE Trump announced a 10% import tariff as a starting point, with much higher levies for some trading partners in Asia. In addition to China's 34% tariff, Japan received a 24% tax, Vietnam 46%, and South Korea, 25%. The European Union received a 20% tax. South Korea's Kospi dropped 2%. Van Eck's Vietnam ETF dropped more than 8% after-hours. Australian shares fell 2%. The markets in Taiwan were closed on a holiday. China's Yuan hit a low of two months in offshore trading, just before the opening onshore. The 10-year Japanese government bonds futures saw their biggest jump in 8 months. Zhiwei Zhang is the chief economist of Pinpoint Asset Management, Hong Kong. He said that "the tariffs announced today pose a significant risk to global commerce." The pressure on East Asian supply chains is particularly high. The U.S. Dollar was higher in rollercoaster forex trade against Asian currencies, except for the safe-haven Japanese yen that rose to 148 yen/dollar. Trump has also closed a loophole that was used to ship low value packages from China. This is likely to hurt China’s giant online retailers. Trading partners will likely respond with their own countermeasures that could result in dramatically higher prices. Tony Sycamore, IG's market analyst, said that the tariff rates announced this morning were far above expectations. If they are not negotiated down quickly, then expectations of a U.S. recession will increase dramatically.
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What is Trump's new reciprocal tariff regime?
U.S. president Donald Trump has shattered a global trading system that dates back more than 75 years with a new 10% U.S. baseline tariff on all goods and higher reciprocal rates of tariffs for countries that, according to his administration, have high barriers against U.S. imported goods. Here are some of the key features of Trump's new tariff regime, as detailed by his executive order. High Tariffs on Major Trade Partners The reciprocal rate is meant to capture policies like currency manipulation, lax laws on pollution and labor, and burdensome regulations which keep U.S. goods out of foreign market. The European Union is hit with a tariff of 20% by the United States. This will increase to 45% in Vietnam, 24% in Japan, 25% in South Korea, and 26% in India. China, with a $295 billion trade surplus in 2024, will receive a reciprocal tariff of 34%. Treasury Secretary Scott Bessent stated that this rate would increase to 54% if combined with Trump's February 20% duties imposed due to the U.S. overdose crisis. Trump promised to impose a 60% tariff on Chinese goods as part of his election campaign in 2024. Britain, Brazil, and Singapore, who had trade deficits last year with the U.S., were still given the 10% baseline rate. White House officials claimed that many countries would have higher deficits with the U.S., if they had fairer policies. The U.S. Office of the Trade Representative reported that Russia would not be on Trump's list despite a $2.5 Billion goods trade surplus in 2024 with the U.S. REPRIEVE MEXICO AND CANADA The tariffs on goods from Canada and Mexico have not been reciprocated because Trump has maintained his 25% fentanyl duty, as well as 10% for Canadian potash and energy. The tariff exemption will be in effect for all goods that comply with the U.S., Mexico and Canada Agreement on Trade. This is a welcome relief to U.S. automobile manufacturers. Trump previously stated that the USMCA exclusion granted a month earlier would expire on Tuesday. Officials said that the fentanyl tariffs would remain in place until conditions regarding drug trafficking and migration at borders improve. If they are removed, a 12% import duty will replace them for products not complying with USMCA origin rules. METALS, AUTOS TARIFFS A DIFFERENT THING Certain tariffs will not stack on top the reciprocal duty. Imports subject to a separate 25% tariff under Section 232 of Trade Act of 1962, such as autos, auto parts, and steel and aluminum, will be excluded. This exemption also applies to other sectors that are subject to Section 232 investigations or could be investigated in the future, such as copper, lumber and semiconductors. In a future annex, other products will be listed as exempt, such as certain minerals, energy, and energy products. IMPLEMENTATION AND AUTHORITY The baseline 10% tariff will go into effect on April 5 at 12:01 am EDT (0401 GMT), while the higher reciprocal tariffs will be in effect the following day, at the same time. Trump has invoked the International Emergency Economic Powers Act, the 1977 law he used in February to justify his tariffs against Chinese, Mexican and Canadian products over fentanyl. IEEPA was not used for tariffs prior to Trump's current administration, but only to impose economic sanctions. Trump declared a state of national emergency in accordance with IEEPA due to the "large, persistent and growing" U.S. goods trade deficit which grew more than 40% by 2024, reaching $1.2 trillion. The executive order stated that "This trade imbalance reflects asymmetries of trade relationships which have contributed to atrophying domestic production capacity in the United States, particularly that of its manufacturing and defense-industrial bases." CHINA'S EXEMPTION FOR SMALL PACKAGES IS ENDED Trump signed a separate executive order ending the duty-free exemption "de minimis", which was granted to packages coming from China or Hong Kong that were valued under $800. This loophole had been exploited for years by Chinese ecommerce giants, including Shein Holdings and PDD Holdings Temu, to avoid tariffs in the U.S. by shipping directly to consumers. Trump's administration attempted to close the de minimis exception earlier this year. It blamed it for allowing unscreened fentanyl-precursor chemicals to enter the U.S., an assertion that was verified by a last year investigation. The administration decided to delay the exemption in order for the Commerce Department and Customs and Border Protection to implement adequate measures. The decision to close the loophole was first reported earlier Wednesday. Reporting by David Lawder, Editing by Lincoln Feast.
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Instant View-Hefty Trump Tariffs Surprise Markets, Stocks Slide
U.S. president Donald Trump escalated the trade war by announcing on Wednesday that he would impose tariffs in return for duties imposed by other countries on U.S. products. Trump told an audience in the White House Rose Garden that "it's our declaration" of independence. "We will set a minimum base tariff of 10%." China's rate would be 34% while Japan and the European Union would pay 20% and 24% respectively. S&P futures fell 3%, indicating that investors are expecting a big loss when Wall Street opens Thursday. Treasury yields and other stock markets fell as well, while the Chinese yuan hit a new low. COMMENTS: NIGEL GREEN is the CEO of DEVERE GROUP in Dubai, UAE "This is what you do when you claim to be supercharging the global economic engine, but sabotage it. The global trade is experiencing a historic day. Tariffs are simply taxes and the American consumer will be hit hard. Businesses freeze plans, stop hiring and invest when they don't know how the trade will be next quarter. This ripple effect reaches consumers. The recession begins with this chilling effect. "The dollar is no longer the dominant currency. The credibility of the United States is at stake. Investors are nervous about the dollar, which is the world's reserve currency. "Trust is earned and lost easily." SCOTT WREN SENIOR GLOBAL MARKET STRATEGIST WELLS FARGGO INVESTMENT INSITUTE, ST. LOUIS MISSOURI "There aren't many surprises in this case. I'm a bit surprised that the amount is a bit less than we had anticipated. We've always wanted to invest in the U.S. compared to other countries, and that won't change. We are overweighting midcaps and we like large caps. Our outlook on this pullback is positive, but not overly so. We're trying to get some exposure here. We are not trying to conceal. We don't wish to be defensive. We want to use stock price pullbacks as an opportunity to buy stocks to play what we perceive as a better second-half." OLGA YANGOL MANAGING DIRECTOR HEAD OF EMERGING MARKETS RESEARCH & STRATEGY AMERICAS CREDIT AGRICOLE CIB - AMERICAS NEW YORK "I don't believe that the baseline tariff number should surprise the market. We must cycle through each country and their impact. It seems, on the surface at least, that Brazil has a fairly good deal. With Mexico, it's not entirely clear. What will matter most is whether or not those USMCA exemptions are actually extended. We are underweighting MXN. Our overall directional outlook on the dollar against (emerging market) is neutral or slightly defensive. OLGA BITEL - GLOBAL STRATEGIST - WILLIAM BLAIR & CO., CHICAGO "Now, the question is: Is U.S. exceptionalism about to change? If so, to where will this leadership migrate?" Many countries have the capability and will to respond. "I don’t think that we are in for a time of clarity or stability, but rather I see this opening salvo, and I expect a lot of back-and-forth." The question is whether the U.S. can implement these tariffs given the different rates for different products coming from different countries. ERIC M. CLARK CHIEF INVESTMENT OFFICER ALPHA BRANDS PORTFOLIO MANAGER SAN DIEGO CALIFORNIA These tariffs will certainly push consumers in China or other countries to buy more of their products, whether they are Chinese-made or not. It is a dangerous game, because consumers who are forced to switch products will usually get used to them and never look back. "We are pushing nationalism further in these local market. Trump has chosen to be isolationist because of the tone in which he talks about other leaders and countries, and the nationalism he will bring. The S&P 500 companies generate more than 40% their revenues outside of the U.S. This increases the risk of a recession in the United States. "I expect this chaos to be created to create panic. The uncertainty will drive yields lower at a time when demand is high for our debt, which allows us to refinance $4 trillion to 5 trillion dollars at better rates. Over the next few months, the tariff agreements start to be retracted and the stock market begins to rise. JEANETTE GERRATTY CHIEF ECONOMIST, ROBERTSON STEPHENS MENLO PARK CA. "The tariffs were so extensive and larger than expected." Earlier, people were discussing whether clarity could boost the market. Now that you've got clarity, no one is happy with what they see. "It's not speculation that this will cause the economy to slow down and prices to rise. It will actually happen." MICHAEL MULLANEY IS DIRECTOR OF GLOBAL MARKET RESEARCH AT BOSTON PARTNERS IN BOSTON We have clarity now. When you dig deeper into the numbers you will find that the clarity isn't as good as the 10% baseline might have you believe. It means that the S&P 500's earnings per share are likely to continue declining for 2025, and possibly spilling into 2026. SARAH KETTERER, CEO, CAUSEWAY CAPITAL MANAGEMENT, LOS ANGELES This is just a salvo. It's not the final list. There will be several rounds of negotiation. "Market weakness should allow you to invest in global equity markets. European spending is going to be huge and pivotal. It will also be very stimulating, especially if combined with increased bank lending. It's certainly not "Happy Days", but global equity markets, and especially European stocks that have trailed U.S. stock prices for 17 years, will be able to perform better. We believe that some of the gap will be closed." BYRON ANDERSON HEAD OF FIXED RESULTS, LAFFER-TENGLER INVESTMENTS SCOTTSDALE, ARIZONA "Reciprocal Tariffs will ultimately deflationary, as our trading partners will begin to eliminate tariffs. If we do get some moderation, the market is not in a good position. We should also see the unwinding of the flight of safety. This means that treasury rates are rising and high yield credit spreads will be easing. Expect volatility as certain countries continue to defend their status quo." JOHN HARDY CHIEF MACRO STRATEGIST SAXO BANK COPENHAGEN It makes sense to watch the market's reaction. The Japanese yen will be a safe haven, as well as repatriation into Japan and falling U.S. interest rates. Treasuries, particularly at the low end of the yield-curve, can be considered a safe haven. I believe that these two trades would be the most important. Even longer-term Treasuries may do well. "If Republicans continue to hammer on about tax reductions, I wonder whether (longer-term Treasuries are a good investment). For now, the direction seems clear. "Gold, especially short-dated U.S. Treasury bonds, is the best option for storing things. There's also a wildcard for long-term investments." JASON BRITTON, CHIEF INVESTMENT OFFICER, REFLECTION ASSET MANAGEMENT, CHARLESTON, SOUTH CAROLINA "I consider this a net positive. These tariff levels are a good starting point for future negotiations. Mexico and Canada remain exempted from any further tariffs. I believe the market will calm down and start to analyze the details, and realize that it is at best a mixed bag." "I am looking at the large technology companies who are sitting on huge piles of money. I am a buyer of weakness if they are going to be squeezed by this retreat. "It's the market that's overreacting and I'm happy to take full advantage." PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK "The tariffs seem a bit high." Even though Powell said that tariffs will only cause temporary inflation, the Federal Reserve is now faced with a difficult decision. The effects of inflation could worsen and we could head towards recession. The markets are in a condition of oversold conditions. I believe the markets will rally. (Compiled by Global Finance & Markets Breaking News; Editing by Lincoln Feast.
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Stocks fall as tariffs hurt tech stocks
Stocks plunged, bonds surged and the dollar rose on Thursday, as U.S. president Donald Trump announced an even larger-than-expected wall around the largest economy in the world, disrupting trade and supply chain. Nasdaq Futures fell 4%. Tech was on the frontline because China, which has been hit with an additional 34% tariff on top of its previous 20%, is a major manufacturing hub. Apple shares fell nearly 7% after-hours. S&P futures declined 3.3%, while Nikkei Futures fell more than 4%. Australian shares fell 2%. The U.S. Dollar was higher on a rollercoaster of currency trading, except for the safe-haven Japanese yen that surged up to 148.15 dollars per yen. Fears of an economic slowdown in the United States pushed gold to record highs. U.S. Treasury Futures also soared. Oil, which is used as a proxy to measure global growth, dropped more than 2%, leaving U.S. crude oil futures at $69.73 per barrel. Trump announced an import tariff of 10%, with much higher rates for some trading partners in Asia. In addition to China's 34% tax on imports, Japan received a 24% duty, Vietnam 46%, and South Korea, 25%. The European Union received a 20% tax. Van Eck's Vietnam ETF dropped more than 8% after-hours. Trump has also closed a loophole that was used to ship low value packages from China. This is likely to hurt China’s giant online retailers. Trading partners will likely respond with their own countermeasures that could result in dramatically higher prices. Analysts at Wedbush said that the tariffs were worse than what the Street had feared. The technology supply chains in Taiwan and China have been hit hard. Investors priced in a slower U.S. economy and an increased chance of rate reductions. Tony Sycamore, IG's market analyst, said that the tariff rates announced this morning were far above expectations. If they are not negotiated down quickly, then expectations of a U.S. recession will increase dramatically.
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Canada and Mexico are not subject to the new global rates because the fentanyl tax is still in place
Mexico and Canada were spared new tariffs Wednesday, as President Donald Trump excluded the top US trading partners from his 10% global tariff baseline. Previous duties are still in place. Tariffs will not be applied to most goods from Mexico and Canada which comply with the USMCA agreement between the three nations, except for steel and aluminium and auto exports. Trump imposed tariffs of 25% on Mexico and Canada because they did not do enough to stop migration and the trafficking of fentanyl. However, he later announced a concession for USMCA-compliant goods. The White House fact sheet stated that "for Canada and Mexico, existing fentanyl/migration orders remain in place and are not affected by this order." "In the event that the existing fentanyl/migration... orders are cancelled, USMCA-compliant goods will continue to receive preferential treatments, while non USMCA-compliant goods will be subject to an 12% reciprocal duty." Analysts said that Canada and Mexico seemed to have avoided the worst case scenario. Michael Camunez is the chief executive officer of Monarch Global Strategies. The firm advises companies doing business in Mexico. "The North American Partners were shielded from a potentially very bad day." Candace Laing is the president and CEO of Canadian Chamber of Commerce. She said: "We hope today's position of the U.S. regarding Canada will be part of real negotiations, leading ultimately to a long-term relationship." Mark Carney, Canada's prime minister, said that he would still respond to Trump's declaration with countermeasures. He said: "We will fight these tariffs by countermeasures. We will protect our workers. And we'll build the strongest G7 economy."
Cocoa tops global products rally for second year, steel components battle on China need
Cocoa and coffee are poised to close 2024 as the biggest gainers among commodities for a 2nd year on an international supply deficit, while steelmaking coal will end as the worst performer, hit by slow growth in China.
Looking ahead, global trade stress are most likely to control the commodities landscape in 2025 as Donald Trump goes back to the White Home threatening substantial tariffs, experts said.
A strong dollar and gold's appeal as a safe haven for financiers are likely to support rare-earth elements rates, while adequate supply could depress oil for a 3rd year, they included.
In bad news for chocolate enthusiasts, cocoa almost tripled in cost over 2024, far outmatching gains in other commodities. It hit a record high of $12,931 a metric lot in New York previously this month on forecasts of lower supply for a fourth succeeding season in West Africa following dry weather condition.
The softs sector, led by cocoa and coffee, has been the main winner amid adverse weather in crucial growing areas, highlighting the threat to prices when products like these are produced and sourced from reasonably little geographical areas, said Ole Hansen, head of product strategy at Saxo Bank in Copenhagen.
Leading cocoa manufacturers Ivory Coast and Ghana have actually suffered crop losses due to adverse weather, bean disease, smuggling and lowered plantations in favour of prohibited gold mining.
Dryness has actually strained coffee supplies as well. ICE Arabica coffee costs skyrocketed to their highest in more than 40 years in the middle of worries that serious drought earlier this year harmed the upcoming crop in leading producer Brazil.
CHINA GROWTH CONCERNS HIT OIL, IRON ORE
Petroleum and bulk metals dealt with headwinds in 2024 as China, the world's second-biggest economy and leading commodities buyer, had a hard time generally due to a property crisis.
Brent and West Texas Intermediate crude could post a 3rd consecutive yearly decline in 2025 as supply outstrips a rebound in need growth, analysts stated, although Trump's policies on significant manufacturers Russia and Iran might suppress supply.
Spare capability in the Organization of the Petroleum Exporting Countries (OPEC) reached an extraordinary 5 million barrels daily (bpd), analysts approximated, with the group having extended production cuts to March.
The bleak inventory path next year recommends that OPEC+ will be challenged to revive barrels into the marketplace, Harry Tchilinguirian, head of research at Onyx Capital Group, stated in a note.
Iron ore prices in China recouped some losses in recent months however are still headed for a 15% decline in 2024. Prices could fall again next year as iron ore supply grows and Chinese steel need falls, experts said, in spite of Beijing's. stimulus procedures.
We anticipate the increase in iron ore supply from major miners. will be higher than that in 2024, however steel output in China will. likely slide, Pei Hao, senior analyst at brokerage Freight. Financier Services, said, forecasting a typical price of $100 a. lot in 2025, below an average of $110 in 2024.
Gold and silver increased more than 25% in 2024 and. might climb further in the year ahead depending upon the U.S. Federal Reserve's rates of interest cuts and Trump's tariff, tax and. diplomacies, analysts said.
Gold is the standout for us in 2025, ING's head of. commodity research Warren Patterson stated, including that strong. gold purchases by reserve banks will support need.
Copper and aluminium prices are set to end. 2024 higher, driven by tight materials, the energy shift and. hopes that China's stimulus steps will enhance demand.
PALM OIL, RUBBER AND GRAINS
For farming products, Malaysian palm oil futures. jumped around 20% in 2024, snapping two successive. years of losses, lifted by Indonesia's biodiesel mandate and. adverse weather condition in Indonesia and Malaysia.
Crop-threatening weather condition also drove a 42% gain in Tokyo. rubber futures.
In contrast, soybeans, corn and wheat were. in numerous supply, all on track for losses in 2024. Nevertheless,. wheat costs could discover some support in 2025 as warmer weather condition. in Russia, the most significant exporter, threatens to lower output.
Leading soybean exporter Brazil is poised to provide record. supplies in 2025, positioning it to satisfy a rise in Chinese. demand if a Washington-Beijing trade war appears.
(source: Reuters)