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London copper suffers its biggest weekly loss for nearly five months due to US tariff issues
After U.S. president Donald Trump announced an extensive set of tariffs that dampened the outlook for global metal demand, copper prices in London dropped on Friday. The London Metal Exchange's three-month copper contract fell 1.57%, to $9.219 per ton at 0708 GMT. The contract has seen its largest weekly decline since early November. It is down 5.93%. ANZ analysts wrote in a report that the prospect of a trade war around the world and a weaker economy should continue to put downward pressure on commodities markets. ANZ warned that these concerns would worsen if the countries impacted retaliated with their own tariffs, resulting in a global war of trade. Trump announced a set of tariffs which were particularly harsh on China and other major trading partners. Beijing announced on Thursday that it would take countermeasures against the new tariff of 34%. This will bring the total to 54%. The White House did not include copper. For this metal, the U.S. Administration is conducting a separate investigation into possible new tariffs. The reciprocal tariffs will not apply to certain minerals not available in the U.S. The exclusions included zinc and tin. ING analysts said that despite the fact that base metals are exempt from the new tariffs, the concern about how the latest levies will affect the demand for raw materials has weighed on the sentiment. Other metals include LME aluminium, which fell 0.8%, to $2,428.5 per ton. Lead was down by 0.74%, to $1,941, while zinc fell 1.33% to $2,677.5. Tin was down 0.63% to $37,100, and nickel was up 0.24% to $15,695 per ton. China's financial market is closed for the public holiday on Friday. Trading will resume Monday, April 7. Click or to see the top news stories about metals, and other topics (Reporting and editing by Eileen Soreng & Christopher Cushing).
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Japan's ruling coalition agrees to reduce gasoline prices starting in June
A DPP legislator said that the ruling coalition in Japan and the opposition Democratic Party for the People have agreed to lower gasoline prices. This will help consumers avoid the wider economic impact of U.S. Tariffs. After a meeting, Kazuya Shiimba, DPP, told reporters that the secretary-generals from Prime Minister Shigeru Shiba's Liberal Democratic Party, junior coalition partner Komeito and DPP had agreed to implement these measures by June. Shimba didn't specify what steps the government would be taking. According to Japanese media, Hiroshi Muriyama, the secretary-general of LDP, said separately that these steps would be implemented until March next year. They could also be funded without a supplementary funding budget. Shigeru Shiba, the Japanese prime minister, has pledged to assist domestic industry in dealing with the fallout of President Donald Trump's new tariffs. These include a 25% tax on auto imports as well as a 24% reciprocal tariff on Japanese goods. Ishiba, who spoke to the parliament on Friday, said: "This situation could be described as a national emergency." "I think it's important to respond and consider it non-partisanly, not just the government, but the ruling parties and the opposition as well."
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VEGOILS - Palm slips due to weak Chicago crude oil and soyoil, Trump tariff woes
Malaysian palm futures declined on Friday as a result of lower Chicago soyoil prices and crude oil, while President Donald Trump’s reciprocal tariffs fueled uncertainty about global trade. This fueled fears about inflation and slowing growth. At midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for June delivery fell 126 ringgit or 2.81% to 4,363 Ringgit ($988.00), a metric tonne. This week, the contract has fallen by 1.27%. A Kuala Lumpur based trader stated that crude palm oil futures fell due to the uncertainty surrounding global trade after Trump's tariff announcement. The trader reported that palm oil prices dropped due to a drop in crude oil as well as soybean oil. "Liquidations have been heavy since last night, and they continue to be so today at midday. The physical market is still strong but futures are on a lower note. Prices of soyoil on the Chicago Board of Trade have fallen by 0.4%. Dalian Commodity Exchange will be closed on Friday for Qingming Festival. It will reopen Monday. As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils. The price of oil fell further in the early Asian trading and was on track for its worst week in several months due to new U.S. Tariffs. This further fueled concerns about a possible global trade war which could impact demand. Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures. As Trump's tariffs caused fears about steep price increases in the largest consumer market, several countries have vowed to escalate a trade conflict with the U.S. The palm ringgit's currency has strengthened by 0.54% compared to the U.S. Dollar, increasing the price of the commodity for buyers who hold foreign currencies. Technical analyst Wang Tao stated that palm oil could retest its support level of 4,347 ringgits per metric ton. A break below this price would trigger a drop into the range 4,266-43,303 ringgits.
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Oil to have worst week for months due to Trump's tariffs
Oil prices dropped over 1% Friday and are on track to have the worst week for months due to U.S. president Donald Trump's tariffs. This has stoked fears that a trade war around the world could harm oil demand. Brent futures dropped 76 cents a barrel to $69.38 by 0532 GMT. U.S. West Texas intermediate crude futures declined 78 cents or 0.5% to $66.13. Brent is on track to suffer its largest weekly percentage loss since the week ending October 14 and WTI since January 21. The impact of Trump's highly anticipated announcement on tariffs was felt more in other markets. As the news shocked the global financial markets, investors rushed to gold, bonds and the Japanese yen for safety. The dollar index (which measures the U.S. money against six other currencies) fell to 102.98. This is its lowest level since mid-October. Weakness appears in futures contracts with longer dates. The spreads for both the six-month and 12-month periods have shrunk dramatically," BMI analysts said in a Friday note. The tariffs are most damaging to key Asian emerging economies, which represent a major market for the growth of oil consumption. The Organisation of Petroleum Exporting Countries (OPEC+), which is a group of oil-producing countries and their allies, has decided to move forward with their plan to increase the amount of oil produced. They now aim to return 411, 000 barrels per day in May instead of the 135,000 bpd originally planned. This brings forward the surplus we expect to see on the oil market in this year. Analysts at ING stated on Friday that more OPEC+ production should lead to a greater medium sour crude and a larger Brent-Dubai differential. This spread has been at a discount unusual for most of the year. The new tariffs on imports of oil and gas, and refined products, were not applied to these imports. However, the policy could increase inflation, slow down economic growth, and intensify trade conflicts, which would impact oil prices. (Reporting and editing by Gerry Doyle, Shri Navaratnam and Sudarshan Varadhan)
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Wall Street Journal, April 4, 2019
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. The European Commission's Ursula von der Leyen said that Donald Trump's tariffs on all goods and services were a serious blow to the global economy. She also stated that the European Union would be ready to take countermeasures in the event of a failure to reach an agreement with Washington. Deloitte has cut the number of U.S. employees in its consulting division after the federal government asked it to find ways to reduce the costs of the government projects on which it works. Hershey has agreed to pay a total of 750 million dollars for the brand LesserEvil. Puma announced that Chief Executive Arne Friendt was leaving the company due to differences of opinion with the company's Supervisory Board on execution strategy. Former Adidas executive Arthur Hoeld has been named as his successor. Kirkland & Ellis is the largest U.S. Law Firm by Revenue. The firm is currently in discussions with the White House about avoiding an executive order that would be similar to the ones imposed on several of its competitors. Activist investor Elliott Investment Management has revealed the names of four of its nominees for the board of Phillips 66 in the midst a proxy battle with the oil refiner. (Compiled from Bengaluru Newsroom)
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Indian shares sell off alongside global stock market as US tariffs cause recession fears
Indian shares sold off on Friday amid fears of a global economic recession due to the U.S. tariffs. They had largely avoided the storm during the previous session because the duties on India were lower than those on its competitors. As of 10:51 a.m. IST the Nifty 50 was down 1.17% at 22,977.85, and the BSE Sensex fell 0.97% to 76,552. On Thursday, they fell by a very mild 0.4%. The Asian share market fell by 0.8% today, following a 0.7% drop on Thursday. This was after Trump imposed a 10% tariff on all imports as well as higher rates for several trading partners. India received a retaliatory tax of 27%, which is lower than China, Vietnam, and Bangladesh, who all had levy rates higher than 34%. "While India is in a better position than its peers in terms of trade, global trade uncertainty has increased, and we believe that markets will be volatile in the short term," said Umesh Gaupta. He is the fund manager at Ambit Global Private Client and the head of PMS equity. After a minimal impact the previous session, the mid-cap and smaller-cap indexes also fell 3% and 3.5% respectively. The drug industry fell 6% following Trump's alleged threat to impose tariffs at "levels not seen before" on pharmaceutical products. After the sector was exempted of tariffs, it more than erased Thursday's gains of 2.3%. Fears of a drop in client spending due to tariffs have led IT companies to fall 3%. This is on top of their previous 4.2% decline. These fears have also led to a drop in crude oil prices, which has dragged the energy sector down by 3.3%. Reliance Industries, which is heavily weighted in energy, dropped by 3.5%. It was one of the largest drags on Nifty 50. HDFC Bank, on the other hand, jumped by 2% following an encouraging report for the prior quarter. It kept the financial sector afloat. (Reporting and editing by Janane Venkatraman, Sonia Cheema and Vivek M.)
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As Trump tariffs cause recession fears, US Treasuries rise as shares fall
The financial markets were gripped with recession fears on Friday as stocks continued a punishing selloff in response to U.S. President Donald Trump’s sweeping tariffs. This helped drive a rally for U.S. Treasuries, and supported gold near its record high. Wall Street stock prices have suffered their worst performance in 24 hours, since the COVID-19 Pandemic. Investors are struggling to catch their breathe. After Trump announced Washington's most severe trade barriers in over 100 years on Wednesday, investors scrambled for safe havens such as government bonds, yen, and gold. Investors' nerves have not been eased as the week comes to an end. U.S. Stock Futures indicated further weakness. Nasdaq futures fell 0.7%, while S&P500 futures dropped 0.66%. This came after S&P 500 Companies lost a total of $2.4 trillion overnight in stock market values, their largest one-day loss ever since the global coronavirus outbreak hit markets on March 16th, 2020. Other Wall Street Indexes also suffered sharp drops. The futures of the FTSE and DAX also fell by 0.32%, 0.52% and 0.53% respectively. Japan's Nikkei fell 3.4%, and was on track to lose almost 10% for the entire week. This is its worst performance since March 2019. MSCI's broadest Asia-Pacific share index outside Japan dropped 0.5% on a thin market, as markets in China Hong Kong and Taiwan were closed for holidays. The index was expected to drop more than 2% in the coming week. David Bahnsen is the chief investment officer of The Bahnsen Group. He said that if tariffs remain unchanged, a recession in Q2 or Q3 is possible as well as a bear market. The question is whether President Trump wants to take these policies off the table if we experience a stock market bear market. We think Trump will pivot and focus on companies making significant investments in America, but it is unclear if that would change the market sentiment. Investors have flooded into safe-haven bonds, causing yields on U.S. Treasury bonds to fall. Bond yields are inversely related to bond prices. The benchmark 10-year Treasury rate hit a low of 3.970% six months ago, and the yield on two-year Treasury notes also reached its lowest level in October at 3.6200%. In response to the increased fears of a global economic recession, especially in the United States of America, traders have bet on more Federal Reserve rate reductions this year. They believe that policymakers will have to ease up more aggressively in order to boost growth in the largest economy in the world. Fed Funds Futures point to a reduction of over 100 basis points by December. This was closer to 70 basis points just before Trump announced his tariffs on Wednesday. David Doyle, Macquarie Group's head of economics, said that central banks were not equipped to handle stagflation because the effects of lower growth and higher inflation push policy in opposite directions. This means that a stronger core inflation will likely limit the extent of the Fed's policy response due to the headwinds for growth created." Investors will be watching for Fed Chair Jerome Powell's speech on Friday. They are interested in his assessment of the U.S. economic situation and the outlook on policy following Trump's latest tariff salvo. The risk-sensitive Australian dollar and New Zealand dollar both fell more than 1% on the foreign exchange markets. The dollar fell 0.3% to 145.68 yen after falling 2.2% the previous day, the steepest daily decline in over two years. The euro gained 0.38%, to $1.10935, after a 1.9% increase on Thursday. Meanwhile, the Swiss Franc advanced 0.7%, to $0.8530, after also gaining 2.6% the previous session. The dollar was near its six-month low of 101.67 against a basket. The U.S. Dollar has been weakening this year due to the accumulation of long positions at the end of last year, as well as the renewed focus on U.S. economic growth risks which have accompanied the tariff talks for several weeks. Spot gold, meanwhile, was nearing a record high of $3,096.37 per ounce, and on course for a fifth consecutive weekly gain as concerns about the impact Trump's tariffs would have on the global economic system boosted its appeal as a safe-haven metal. The oil price, which is a proxy of economic activity, continued its steep fall from the previous session. Brent futures dropped 0.93% to $74.49 per barrel while U.S. West Texas Intermediate Crude futures declined 1% to $66.30 per barrel. Both are on course for their worst weeks in months
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The Wall Street most at risk from lost trust is MORNING BID EUROPE
Wayne Cole gives us a look at what the future holds for European and global markets. The Nikkei has dropped 3% today and 9.6% this week. This is the largest drop since March 2020 when the pandemic began. Wall St futures began steady, but have since fallen around 0.7%. European stock futures have also dropped between 0.3% and 0.6%. The dollar has lost 2.7% against the yen, 3.0% versus the Swissy and 2.4% versus the euro. The USD is not benefiting from tariffs. Investors are not surprised by the sudden changes in U.S. foreign policy. If you wage a trade war without provocation on your allies or opponents, with no apparent goal other than to extract money and favours, you shouldn't be shocked when you don't make it onto their Christmas cards. Analysts have noted that for decades, global investors have allocated 70 percent of their equity funds to U.S. shares, far above the 26% of global GDP that is accounted for by this economy. Money could flow in the opposite direction if this preferred status was lost, for example, by starting a trade war on a global scale. The amount involved dwarfs any dollar boost from the U.S. purchasing fewer imports. It also squeezes foreign investors who have unhedged Wall Street positions - which is most of them. What firm would be willing to risk its capital in order to encourage more investment in U.S. Manufacturing when the White House has the power and ability change the rules at any time? The problem is exacerbated by the notion that the punishing tariffs are a bargaining tactic that can be moderated as long as countries pay Trump enough. It's fine to be unpredictable in game theory, but it is not acceptable when you are a company investing billions in a long-term investment. Apple is a good example. Apple's supply chain is deeply embedded in Asia where tariffs range between 24% and 54%. If it were to move some manufacturing to the States - a huge ask - the iPhones that resulted would be priced at multiples of their current price. Apple's large profit margins make it better equipped than others to absorb tariffs in the short term. But it is those margins, which are comparable to Kobe beef, that have pushed the stock price so high. Spare a thought for Fed, which is caught between a nearly certain rise in consumer prices as well as the growing risk of recession due to the reductions made by consumers and business. Fed fund futures have risen 9 basis points today for December, which implies 99 basis points in cuts this year. This is a sure sign that the markets believe rising unemployment will overshadow (sorry!) the rise in inflation, and force the Fed into easing. Bet Fed Chair Powell really looks forward to his speech about the economy that will be delivered later today. The following are key developments that may influence the markets on Friday. - EU construction PMI, German industrial orders, UK PMI - Addresses of Fed Chair Powell and Governors Waller & Barr US payrolls report - March
OPEC+ accelerates oil production increases, but oil drops
Eight OPEC+ nations agreed Thursday to increase oil production by 411,000 barrels a day in May. This unexpected decision caused oil prices to extend their earlier losses.
Brent crude, which had already fallen over 5% after U.S. president Donald Trump announced tariffs against trading partners, continued to fall over 5% as OPEC released a statement updating its plans. Brent crude fell over 5% toward $70 a barrel.
In May, eight members of OPEC+ (which includes the Organization of Petroleum Exporting Countries, and its allies, led by Russia) were scheduled to increase their output by 135,000 barrels a day as part of a gradual unwinding of the most recent layer of production cuts.
After a meeting online of the eight nations held on Thursday, the group said it would increase output by 411,000 Bpd in may. OPEC cited the "continuing positive market outlook and healthy market fundamentals."
In a statement, OPEC stated that the increase was originally planned for the month of May and included two monthly increases. The gradual increases can be stopped or reversed depending on the market conditions.
The May increase is part of a plan that Russia, Saudi Arabia and the UAE have agreed to implement in order to slowly unwind the most recent production cut of 2.2 millions bpd. This was implemented this month.
OPEC said that the eight countries would meet on May 5, to decide June's output.
OPEC+ has also agreed to cut 3.65 million bpd in other production until the end next year. Reporting by Alex Lawler and Olesya Astakhova. Editing by David Evans and Louise Heavens.
(source: Reuters)