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Australia shares are heading for correction as US tariff tensions rise
Australian shares continued to fall on Wednesday, briefly entering correction territory. Investor appetite was dampened by local media reports that the White House confirmed Australia would not be exempted from U.S. tariffs on steel and aluminum. S&P/ASX 200 Index fell by 1.2% at 0001 GMT to 7,793.6. The benchmark index fell up to 1.6% in the morning session. It is now down around 10% from its February 14 high. This is known as a "market correction". Local media reported on the fact that Australia would not be exempted from U.S. tariffs on steel and aluminum that President Donald Trump will impose against other countries. They cited White House spokesperson KarolineLeavitt. The reports stated that Trump had agreed to exempt Australia from tariffs in February, but decided not to do so. This was due in part because of the U.S. surplus trade with Australia. The U.S. stock market continued its biggest overnight sell-off in many months after Trump announced he would increase tariffs on Canadian steel and aluminum products by 50%. These tariffs will take effect in a few hours. Real estate stocks in Sydney fell by as much as 1.5 percent to their lowest level since the second of July 2024. The heavyweight financials fell for the seventh consecutive session, dropping as much as 1,7% and reaching their lowest level since Oct 7, 2024. The 'Big Four" lenders fell between 1.1% to 1.9%. The index fell 0.7%, while the miners' price dropped by 0.7%. BHP Group, the world's largest listed mining company, fell 1.1%. Rio Tinto, Fortescue and Fortescue, on the other hand, both fell by 2.2% and 1.6%. Gold stocks rose 0.8%, bucking the trend. The gold price increased on demand for safe havens amid concerns about an economic slowdown due to tariff wars and a weaker US dollar. The benchmark S&P/NZX50 index for New Zealand fell by 0.9%, to 12,305.19.
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Australia is 'disappointed’ after Trump ruled out exemptions from steel tariffs
Australia said on Wednesday that it was "really disappointed" U.S. president Donald Trump didn't give it exemptions from steel and aluminum tariffs. But it vowed to keep lobbying for a reprieve. Trump stated in February that he would give "great consideration" to exempting Australia, based on the U.S. trade surplus with Australia. This was after a telephone call with Australian Prime Minster Anthony Albanese. The White House announced on Tuesday that all steel and aluminum products imported into the U.S., from any country, would be subject to a 25% tariff on Wednesday. There were no exemptions or exceptions. Richard Marles, the Australian Deputy Premier, said that his government will continue to push for an exception from Trump's administration. Marles, a radio host at 2GB, said: "Well obviously this is a very disappointing news." Tariffs are a form of self-harm. We will be able find other markets for steel and aluminium, and we are diversifying these markets." During Trump's first term as president, he exempted Australia of U.S. Tariffs on Steel and Aluminium. The last time we tried, it took nine months for the Trump administration to grant us an exemption on steel and aluminum. Marles stated that we will continue to press the issue. Trump threatened on Tuesday to increase tariffs by 50% for Canada, but changed his mind just hours later, causing the financial markets to panic. Australia is an important U.S. ally and security partner in the Indo-Pacific region. However, it exports very little steel to the U.S.
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CERAWEEK: Agarwal, a billionaire oil industry investor, may expand Cairn production by investing in US oil service companies
Cairn India, India's largest private oil and gas company, said Tuesday that it could invest in U.S. engineering and service companies as part a plan of $5 billion to increase output by five times in the next few years. Anil Agarwal, a billionaire, said in an interview that he wanted to invest $5 billion to develop his project and reach 500,000 barrels of oil per day. Cairn Limited, a part of Vedanta, produces today 100,000 bpd. The company plans to drill several deepwater exploratory wells in the next year. Agarwal said, during a trip to Houston, where he attended CERAWeek, that Cairn is looking to buy five or six drilling rigs and work with seven or eight technical partners to explore and develop the offshore project. Agarwal stated, "We would like to have at least 20 drilling rigs working in our field." He said, "I can invest into the engineering company and the rig company because it will help me explore India better." I'd love to see American companies come together and work on this project. (Reporting and editing by Simon Webb, David Gregorio, and Ron Bousso)
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Trump rules out Australia's exemption from steel and aluminum tariffs
Australian media, citing an official at the White House, reported that Australia would not be exempted from U.S. tariffs on steel and aluminum that President Donald Trump will impose Wednesday. In February, Trump and Australian Prime Minister Anthony Albanese agreed to exempt Australia from tariffs due to the U.S. surplus in trade with Australia. Australian Broadcasting Corp, citing White House spokesperson KarolineLeavitt, reported that Trump had decided against it. Leavitt said that if they wanted to be exempted they should move the steel manufacturing here. During his first term as president, Trump exempted Australia of U.S. steel and aluminum tariffs. On Wednesday morning, tariffs of up to 25% will be applied on all steel and aluminum products imported into the United States from other countries. On Tuesday, Trump sparked a trade war between his country and its northern neighbor by stating that Canada would pay 50% of the tariffs. Later, he said he'd likely lower the tariffs after Canadian officials agreed for talks. A spokesperson for the Australian government said that Albanese’s administration has been working at all levels within the U.S. Government to secure an exemption. The spokesperson stated by email that "We are still in discussions with the United States Administration and will have more information to say." Australia is an important U.S. ally and security partner in the Indo-Pacific region. However, it exports very little steel to the U.S.
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Kimmeridge wants to increase Canada oil and Gas activism in the face of trade war and underperformance
Kimmeridge Energy Management, according to a senior executive, will be more active in its efforts to improve the performance of Canadian oil and natural gas producers. The company is also looking for ways it can benefit from the current trade war between the United States and Canada. The U.S. President Donald Trump has increased tariffs against Canada's northern neighbor. However, Canadian oil and natural gas exports have received less penalties. Kimmeridge managing director Mark Viviano said that tensions could spur new thinking and increase Canadian energy exports to other countries. This is especially true for liquefied gas. Mark Viviano, managing partner at Kimmeridge, said the tensions would encourage new thinking to boost Canadian energy exports. Viviano, in an interview at the CERAWeek Conference, said that the tariffs and trade war would be long-term beneficial for the Canadian Industry, as it will force the industry to diversify its export markets to Asia. Kimmeridge reached a settlement last week with Advantage Energy after the Calgary-based oil and natural gas producer appointed two new independent directors. The company also set up a committee to examine the possibility of selling the company. Viviano stated that Kimmeridge is expecting to make additional investments in Canada, as the upstream industry there is ripe for activistism, even though it does not have any positions outside of Advantage. He said: "We believe that the industry needs to be consolidated because of its fragmentation. We also think there are a lot of poorly performing management teams and boards who are more concerned with increasing production than generating shareholder value." Kimmeridge, a leader in the oil and gas industry in the United States in recent years has targeted many of the issues Viviano believes are prevalent in Canada. The company has been largely absent from the U.S. market for the past year. It currently only owns one U.S. producer: Expand Energy. This is due to its legacy holdings in Chesapeake Energy (previously Southwestern Energy) and Chesapeake Energy before their merger into Expand. The combination of a slumping U.S. stock market and lower crude oil prices has pushed the valuations of small and medium-sized U.S. manufacturers down by more than 20 percent in the past month. Viviano stated that "clearly we are seeing a lot of volatility and a huge amount of underperformance" in some smaller and midsized exploration and production firms. We have some capital that we can put to good use, and we believe the market will be coming to us.
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Guyana is considering a plan to refine oil and import fuel in the US
Irfaan Ali, the Guyanese president, said that Guyana was considering a plan for exporting crude oil to America for refinement and bringing back fuel to supply domestically and perhaps to sell to other countries nearby. Guyana's economy is one of the fastest growing in the world thanks to the rapid increase in oil production at its prolific offshore oilfields. These fields are operated by an Exxon Mobil-led consortium. The government has a right to receive a certain percentage of the oil produced as profit, which is exported through trading companies that distribute cargoes on different markets, primarily Europe. Guyana doesn't have refineries but it is in talks with Dominican Republic and companies to build a small one. Ali, who was also asked by the CERAWeek conference if there were tensions with Venezuela, said that Guyana would do whatever it takes to maintain regional peace. A long-running dispute has erupted between the South American neighbors over which country is entitled to the area of Esequibo, measuring 160,000 square kilometers (62,000 square miles). The case before the International Court of Justice is still ongoing. He said: "We only ask that Venezuela respects the ICJ, and the rule law." (Reporting and editing by Simon Webb, Nia Williams, and Marianna Pararaga)
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Brazil wants to increase its sugar exports tax-free to the US
Two sources familiar with the situation said that Brazil would propose a boost in tax-free sugar imports to the United States during talks in Washington. The South American country is looking to protect its sector in the face of possible U.S. tariff increases on ethanol. Brazil's sugar sector has tried to increase the quota for tax-free exports of sugar to the United States in the past, but without success. It is not certain that existing tax-exempt export quotas will be renewed. The urgency of these discussions has increased as Brazil is facing a potential challenge on another front in its agricultural trade with America - ethanol. In February, just a few months after Donald Trump was elected, the White House announced reciprocal tariffs on countries that tax U.S. products. The U.S. Government has promised to announce a new tax package on April 2 that could include a potential tariff on ethanol. This renewable fuel is made in Brazil primarily from sugarcane. At present, 147,000 tons of Brazilian sugar may be exported to the United States without being subjected to import taxes. Exports exceeding this figure are subject to an average tax of 80 percent per ton. According to Brazilian government statistics, last year, 1.1 millions tons of Brazilian sugar was sent to the U.S. Sources claim that if tariffs were implemented, the increase in tax-free quotas would allow Brazilian sugar producers to increase production in case of a possible drop in demand for the ethanol. The sources reported that the first meetings were held between Brazil's Vice-President Geraldo Alckmin, and U.S. Commerce Secretary Howard Lutnick last week. This was followed by a meeting between Brazil’s Foreign Minister Mauro Vieira, and U.S. Representative Jamieson Greer. Sources said that during the talks, officials agreed to have technical groups begin discussions on tariff issues. They also added that Brazil expects new products to be included in future talks. Brazil's corn-ethanol industry is expanding rapidly, and this has led to a focus on U.S. exports of sugar. Citi Investment Bank said that Brazil's corn ethanol annual production will nearly double by 2032 to 16 billion liters. One of the sources stated that there will be attempts to increase an additional U.S. Meat Export Quota. (Reporting and writing by Bernardo Caram, Lisandra Paraguassu and Oliver Griffin; editing by Roberto Samora, Lisa Shumaker and Lisa Shumaker).
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Stocks recover some of their losses as optimism about Ukraine counters tariff fears
Investors gained some ground Tuesday, despite their fears about the impact of U.S. Tariffs. They were encouraged by Ukraine's agreement with Russia to end hostilities. During talks in Saudi Arabia with U.S. officials, Ukraine agreed to a 30-day immediate ceasefire. U.S. Secretary Marco Rubio stated that this left it up to Russia to respond. The news came after President Donald Trump exacerbated economic worries by announcing that he had instructed his Commerce Secretary to impose an additional 25% on all U.S. imports of steel and aluminum from Canada. This would bring the total tariff for these products to 50%. Mona Mahajan is the head of investment strategy for Edward Jones. She cited Trump's recent tariff announcement as a reason why there was still uncertainty and volatility in this market. The slowdown in economic growth was already occurring before the uncertainty surrounding tariffs in the U.S. This is normal in the first quarter, but it is unusual to add policy uncertainty to the mix. The S&P 500 dropped the most on Monday after Trump refused to rule out recession due to his trade policies in an interview with Fox News over the weekend. He also spoke of a "period transition" and a "period that is changing." Adding to the concerns over tariffs, data released on Tuesday showed that U.S. small business confidence fell for a third consecutive month in February. This erased much of what had been gained after Trump's election win in November. Phil Blancato of Osaic Wealth, a New York-based chief market strategist, said that Delta Airlines' and Kohl's' guidance also suggested a softerening in consumer spending. Investors also awaited the latest inflation information from the U.S. Consumer Price Index reading for February due on Wednesday. The data for last month was hotter than expected, with the largest monthly price increase since August 2023. The Dow Jones Industrial Average fell 188.56, or 0.45% to 41,716.7, at 2:52 pm EDT (1852 GMT). The Nasdaq Composite was up 182.80 or 1.05% at 17,645.07. After spending the majority of the morning in the red and closing 10% below its previous record high, the S&P500 rose 11.45 points or 0.2% to 5,624.63. MSCI's global stock index fell 0.85 points or 0.1% to 831.88, having fallen as low as 822.44, which was over 7% below the most recent record closing on February 19. The STOXX 600 pan-European index closed earlier with a 1.7% decline. After dropping sharply on Monday the U.S. Treasury Yields have also stabilized and are pulling away from the five-month lows that were hit earlier in this session. The yield on the benchmark U.S. 10 year notes increased 7.8 basis points from 4.213% on Monday to 4.291%. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve has risen 4.5 basis points, to 3.941%. The U.S. Dollar rose to an all-time high of one week against the Canadian Dollar, while the Euro reached a four-month-high against the Greenback amid hopes for a German defense spending agreement. The euro rose 0.9% to $1.0928, but the dollar gained 0.38% against the Japanese yen at 147.82. The Canadian dollar rose 0.26% against the greenback, to C$1.44 a dollar. After a sharp drop on Monday, oil prices increased, but gains were limited as worries about a U.S. economic slowdown and tariffs' impact on the global economy grew. U.S. crude oil settled up by 0.33% to $66.25 per barrel. Brent crude settled at $69.56 a barrel, an increase of 0.4%. After a day of selling, gold prices rose 1.01%, to $2,918.63 per ounce. U.S. Gold futures increased 0.85% to $2.915.50 per ounce. Reporting by Sinead carew in New York; Alun John, in London; Ankur Banerjee, in Singapore; Alun, in London; additional reporting by Dhara, Kirsten, and Rod Nickel.
FOCUS-Lure of Anglo's copper mines might check BHP's spending willpower
BHP, the world's greatest miner, would need to use a minimum 40% premium over Anglo American's share price to make a restored takeover quote now the rival's worth has been boosted by property sales, 2 sources near the matter informed Reuters. As varied miners shift their focus to metals needed for the transition to cleaner energy, copper, with numerous usages from power to building, has actually drawn in extreme interest.
BHP desires Anglo's valued copper assets in Chile and Peru. Its $49 billion, or 31.11 pounds sterling ($ 39.38) a share, effort stopped working in May, but BHP did not dismiss a renewed offer.
Investors and banking sources state a minimum of a 15-to-20 pound per share premium to its existing worth of around 23 pounds per share, consisting of a money component, is needed to make any offer engaging. Anglo has enhanced its balance sheet after getting nearly $ 6 billion in cash from selling coal assets and shares in its South African platinum unit as part of a restructuring plan CEO Duncan Wanblad revealed in May.
Its shares have actually rallied by simply over a 5th throughout the last 12 months, LSEG data reveal, while BHP's stock has lost almost the same percentage over the same duration.
The marketplace is preparing for any restored deal from BHP might face competitors, the sources stated, as a restructured Anglo focused on copper might attract competing quotes.
The sources, who requested privacy due to the fact that they were not authorised to speak publicly, said the need to come up with an deal that might be successful was a challenge given CEO Mike Henry's. stated goal of keeping spending discipline.
Investors likewise said it would be challenging.
There most likely is a window for an offer still, but I do not. believe there is much of one, Ian Woodley, a fund supervisor at Old. Shared, which holds shares in both Anglo and BHP, told Reuters.
They (BHP) truly need to come in with a strong bid and. that's not what they want to do.. BHP chairman Ken MacKenzie informed the business's yearly general. conference on Oct. 30, it had proceeded from pursuing Anglo. The company, nevertheless, right away opposed its top director. It stated the UK Takeover Panel had validated MacKenzie's comments. will not be treated as a declaration of intention not to make an. offer in respect of Anglo.
BHP declined to comment for the functions of this story. Instead it referred to remarks Henry made at a conference in. Paris on Tuesday.
We did try the Anglo American acquisition. They had other. ideas and they've kind of gone off on their own, however I go back. and say strategy A for BHP is constantly to make more of the resources. we have both through efficiency however also advancements, he. said.
SIGNIFICANT OFFER?
Some Anglo investors said they anticipated BHP could renew its. bid after the company finishes the spin-off of Anglo American. Platinum in mid-2025. An investment banker stated Anglo investors might accept a. large deal, however one that features a greater cash split. He. mentioned the premium Rio Tinto used to get Blue-green Hill. Resources in 2022, as an example.
BHP outlined plans to invest in between $10 billion and $14.7. billion within 10 years to draw out more copper from its giant. Escondida mine, where output is forecast to decrease, and from. the smaller sized Spence operation. It also wishes to reboot the Cerro. Colorado mine.
Anglo will keep drawing interest from competitors primarily. because of its Collahuasi, Quellaveco and Los Bronces mines in. Chile and Peru, with rich copper deposits making them longer. life possessions. It aims to raise output to about 1 million metric. tons of copper by 2030 from about 790,000 heaps now.
WANBLAD'S GAMBIT
BHP investors have long alerted the company against pricey. deals and might resist any attempt to pay up for Anglo assets.
They (BHP) plainly like the possessions, however the reality is you. can't make the numbers work, Jack Gabb, an investment analyst. at Pendal Group in Sydney, stated.
Without a turnaround in share cost values of each miner,. making a deal would be tough, investors stated.
Financiers in Anglo American, which was long undervalued. relative to its mining peers, expect to capitalise on a higher. premium as the company is re-rated closer to a pure-play copper. manufacturer.
A spokesperson for Anglo American stated the re-rating was. expected to continue and the company had currently increased from. trading around 4.5 times forward EV/EBITDA in the middle of the. year to between 5.5 and 6 times now.
The enterprise value (EV) to earnings before interest,. taxes, devaluation, and amortisation (EBITDA) ratio is a. assessment numerous that compares a company's value to its cash. revenues.
This would indicate that the market is starting to value us. differently as we focus the portfolio around copper, premium. iron ore and crop nutrients, the spokesperson said.
Even after its restructuring, another financial investment banker stated. Anglo would not be a pure play copper producer offered its. Brazilian iron ore company, restricting the degree to which it. could be re-rated.
Some Anglo investors likewise want to see the method completely. executed, Old Mutual's Woodley said.
People might say, let's see Anglo proceed with their. restructuring and we can see what sort of a business we're left. with at the end of that, rather than having actually somebody can be found in and. take it now, he said.
(source: Reuters)