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GLOBAL-MARKETS-Stocks sell off, US dollar weakens as Trump tariffs fuel economic worries
Stock indexes fell on Thursday with the S&P 500 falling more than 4 percent, the U.S. Dollar weakened, and oil prices dropped more than 6 percent as Donald Trump's U.S. tariffs caused investors to flee for safe havens like bonds and yen. The new 10% baseline tariff on imported products, plus the eye-watering tariffs that Trump imposed on dozens countries he claimed had unfair trade barriers, left traders frightened by their severity. Investors are concerned that a full-blown dispute over trade could lead to a global economic slowdown, and even inflation. The latest round of U.S. tariffs has hit a world economy still recovering from the inflation spike after the pandemic and is also dealing with geopolitical tensions. The euro rose by 1.53% against the dollar dollar . The dollar fell by 2.07% against the Japanese yen to 146.15. The Nasdaq fell more than 5% on the day, with shares related to technology being amongst the biggest drags. Apple's stock dropped 9.2% as a result of tariffs imposed on China, the country where it does most of its manufacturing. Amazon.com fell 7.9%, Microsoft dropped 1.5% and Nvidia fell 6.9%. As worries have grown, the losses are on top of trillions already lost by the "Magnificent Seven", tech giants. CBOE Volatility Index, also known as Wall Street’s fear gauge, reached a new three-week high of 26.91 points. Oil prices dropped and the S&P 500's energy sector fell more than 6%. Bruce Zaro is the managing director of Granite Wealth Management, Plymouth, Massachusetts. Investors adjust their outlook based in part on the possible impact of tariffs, said he, adding that "we have seen and will continue to see drastic reductions in earning estimates." This is going to take a while. The Dow Jones Industrial Average dropped 1,317.59 or 3.12% to 40,909.33. The S&P 500 declined 227.17 or 4.01% to 5,443.80. And the Nasdaq Composite was down 912.44 or 5.18% to 16,688.61. The MSCI index of global stocks fell by 23.64 points or 2.83% to 812.47. RECIPROCAL LEVY The 27-country EU block in Europe now faces a reciprocal 20% levy. The pan-European STOXX 600 Index fell by 2.57%. Trump's tariffs were particularly harsh on Asia. China received a reciprocal tariff of 34%, Japan was hit by 24%, South Korea with 25%, and Vietnam with 46%. In response, Vietnamese stocks fell 6.7%. The Nikkei 225 index fell 2.8%. Nigel Green is the CEO of deVere Group, a global financial advisory firm. He said: "This is what you do when you claim to supercharge the economic engine of the world." Pham Minh Chinh, the Vietnamese Prime Minister, has pledged that the country will maintain its economic growth goal of at least 8 percent for this year despite the U.S. placing a heavy tariff on Vietnam's exports. The rush to buy ultra-safe government securities that guarantee a steady income has driven down U.S. Treasury rates. The yield on the benchmark 10-year Treasury bill in the United States fell by 15.3 basis points, to 4.042%. It had previously fallen to 4.004%. This was its lowest level since October 16. The yield of the 10-year Treasury note is on course for its largest daily decline since August 2. The yields on government bonds in the Eurozone fell. Germany's benchmark 10-year yield dropped 7.5 basis points to 2.65% after reaching 2.625%. This was its lowest level since March 4. If tariffs cause recessions, the central banks of the world will likely lower interest rates. This is good for bonds. Fitch, a credit rating agency, warned that they could be a game-changer for the U.S. economy and global economies. Deutsche Bank said it was a moment "once in a life time" which could reduce U.S. economic growth by between 1%-1.5% this year. Olu Sonola, Fitch's director of U.S. Economic Research, said that many countries would likely be in a state of recession. If this tariff rate is maintained for a long time, you can forget about most forecasts. Fitch soon downgraded China’s credit rating citing steep U.S. Tariffs as the reason. The oil prices fell, with U.S. Crude down 6.5% to $67.05 per barrel and Brent down 6.24% at $70.27 a barrel. Gold reached a record-high above $3,160 per ounce but then lost steam. Spot gold fell 0.85% to $3,106.99 per ounce.
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Ecotourism helps revive mangroves in a Filipino surfing location
Del Carmen Mangrove Reserve is a new Ramsar Site Siargao is awash with illegal fishing and mangrove cutting Ecotourism and behaviour change are key to protecting the mangroves By Mariejo Ramos He was once an illegal fisher, who cut down tropical woody trees for fuel. Now he protects them in a civilian patrol force. We were forced to sell and cut mangroves because life was hard back then. "We couldn't find another job," Longos said. Workers like Longos are now part of the solution because the local government has been working to provide job training and cultivate an ecotourism enterprise. He proudly pointed out a mangrove baby he planted along the water. The mangroves in the area were reduced for decades by destructive fishing techniques like dynamite use and illegal deforestation to make wood for bread or charcoal. According to the local authorities, through replanting, the Del Carmen Mangrove Reserve has grown from 4,200 ha of mangroves to more than 4,800 ha. The Ramsar Convention on Wetlands (an international treaty named for the city in Iran, where it was signed, in 1971) that guides conservation of wetlands throughout the world, designated the reserve as a Wetland Reserve of International Importance in August 2024. Longos patrols the mangrove reserve from its viewing platform, earning him an honorarium each month of 9,000 pesos ($158). He uses his fishing boat to give paid tours of the mangrove reserve in his spare time. Del Carmen Mayor Alfred Coro says the stories of small town fishermen like Longos shows that even communities with limited resources can stop environmental destruction. He said that gaining the support of people through education, ecotourism opportunities and training is more important than policing. Coro said that for a long time, previous leaders in Del Carmen had been told it was impossible to persuade people to stop illegal mangrove harvesting and illegal fishing. He said that it took a decade for them to convince people of the importance of mangroves and to stop using illegal methods. He said that he was limited in financial resources and the majority of his efforts were done through dialogues between fishermen at their homes, as well as community-based campaigns to inform people about mangrove conservation. The local government started the tours, and now they are run by fishing groups. The tour fee is divided between the fisherman and his group, which amounts to about 600 pesos per trip. The town has been preparing for growth in tourism and development since last year when it was awarded the Ramsar certification. In 2023, more than half a millon tourists will visit Siargao, the highest number ever recorded. They are attracted to the impressive waves and surf spots in the area, which have been popular since the 1980s, when the sport began gaining popularity. SUSTAINABLE TOURISM Researchers fear that more visitors to Siargao could put strain on the natural resources of the island and cause waste problems such as plastic and marine debris. The Asian Development Bank found that an increase in Siargao waste is "attributable" to the surge of tourists. The study found that sustainable tourism could be implemented to protect marine life and support local incomes. Del Carmen's municipality has encouraged its residents to make money through eco-tours, and to take care of mangroves to ensure that tourism will support the community for a long time. Longos, a fisherman from the Philippines, was taught about mangroves' science and encouraged to participate in campaigns and replantings for their protection. Coro said that when they first started, "they had doubts." Since 2014, hundreds of illegal fishermen and mangrove cutters have become tourism operators. The town offers 100 ecotrips a day, says a local tourism official. These tours are staffed by guides, boat captains, and assistants. Coro said, "You can tell how much their lives have improved." The mayor stated that developing alternative sources of income has ripple effects on the local economy. Del Carmen, which was a town of the Philippines with the lowest level of income as a fifth-class municipality, became a third class municipality this year. Local government data revealed that the average monthly family income in Del Carmen increased from 2,000 pesos (34.95 USD) in 2010 up to 17,000 pesos (297.05 USD) in 2024. The poverty rate also decreased from 69% to 21% in 2010. The income of the town from tourism grew from 1.2 millions pesos (about $21,000) in 2020, to 9.2million pesos (about 160,381) by 2024. Longos says that by fishing legally and guiding ecotours he has been able to send all four of his children to school. Gina Barquilla said ecotours prevent overfishing, which may destroy mangroves habitats, because the income from tours encourages people to spend less money catching fish. A Task for the Community Barquilla said that mangroves in Siargao (a teardrop-shaped island) helped to protect the area from a powerful typhoon 2021. They also lessened the impact of strong waves and the rising sea level for coastal fishing villages. She has spent more than 10 years educating illegal fishermen and mangrove cutters at home and chasing dynamite fishing boats on the sea, despite threats and harassment. In rare cases, such as in February, fishermen have been arrested for using dynamite against schools of fish. She said that the best strategy is to go out and educate the local communities about the importance of mangroves, conservation and science. She and other ecotourism activists said that generations of families have survived off the money made from cutting mangroves. Therefore, educating youth is crucial, they said.
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Conagra, the tomato producer owned by Hunt's, may raise prices to offset tariffs.
Conagra Brands, the maker of Chef Boyardee, may need to raise prices to offset tariffs on cocoa, olive, palm and steel products used in its canned food, said CEO Sean Connolly on Thursday. Connolly said in an interview that the possible increases are meant to protect Conagra's profit margins so it can continue investing in its Chicago-based business and in new products. Connolly stated that he would "look at everything, from (seeing) whether there is an alternative supply source which is cheaper" to getting the most out of productivity programs. We'll also consider targeted pricing, because at the end, we need to protect our margins. On Wednesday, U.S. president Donald Trump announced new tariffs that will increase the cost of many consumer purchases. These include cars, wine, and electronics. Trump already imposed tariffs on aluminum and steel. Connolly stated that Conagra sources the majority of its tin-mill steel from overseas for their canned tomatoes and chili. Connolly stated that this type of steel was exempted from the tariffs Trump imposed during his first term because it is not commonly manufactured in the United States. The CEO stated, "We are a large canning business." All of them use tin-mill steel that is sourced outside the U.S. from different countries. Connolly confirmed that Conagra buys vegetables in Mexico. However, these purchases could be exempted from tariffs due to a separate agreement. Connolly stated that it was still too early to predict the size of price increases on food products. The Consumer Brands Association (a trade group that represents companies like Conagra) has been pressing the Trump administration to waive import tariffs for products such as tin-mill steel, which aren't available in the United States. (Reporting from Jessica DiNapoli, New York; and Ananya Marym Rajesh, Bengaluru. Editing by Bill Berkrot.)
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PBF restarts certain units at Martinez refinery following February fire. Fire-damaged units are still closed
PBF Energy said that it is restarting several refinery units at its Martinez facility, which were closed after an fire in February. According to the announcement, the units will restart on Thursday. The process should take two weeks. The company stated that any damaged units or those involved in the fire of February, such as the catalytic hydrotreater and the catalytic fuel plant, will be shut down and the restarting process will not start until the fourth quarter. A fire broke out on February 1 at the 157,000 barrels per day (bpd), Martinez, California refinery. The fire started near the 77.500 bpd hydrotreater catalytic feed, which uses hydrogen for removing sulfur from gas oil in order to produce unfinished gasoline using the 70,000 bpd cracker catalytic. The company's investigation team has been working to determine the cause of fire. It is expected to be completed by the end this month. A portable air compressor caught fire at the Martinez refinery on Wednesday night while it was being refueled. One person was injured. The fire was put out and had nothing to do with any of the refinery's process units. Reporting by Nicole Jao, New York; Editing by Franklin Paul and Elaine Hardcastle
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New York's precious metals are less expensive than London because they are not subject to Trump's tariffs
The Comex futures that are most active for precious metals have reduced their premiums over London spot prices after Washington removed the metals' import tariffs. This will encourage more metals to be flown to the United States. On Wednesday night, President Donald Trump announced reciprocal import tariffs that raised effective import taxes to levels not seen in the past century. However, there were some exclusions, including gold, silver, and platinum group metals. Last week, the premium between Comex futures and London spot prices stood at about $20 per troy-ounce compared to $43 on Tuesday. It is usually below $10. Silver and platinum futures premiums over London spot prices also dropped sharply. Few in the industry believed that bullion would end up attracting tariffs. The New York-London Arbitrage still moved a large amount of metals across the Atlantic, as speculators placed bets on the dislocation," said Adrian Ash. Now that metal looks like it is no longer needed. In December-March, gold and silver worth over $80 billion were delivered in Comex's warehouses. Import tariffs were a threat. The latest data from Comex (part of CME Group) shows that gold in U.S. warehouses has reached a record high of 44.5 millions troy ounces, worth $138 billion, compared to 17.1 million in Nov. when Donald Trump became U.S. president. Comex stocks currently equal five years' worth of U.S. gold and silver consumption. The price spread that the market measures through the exchange futures for physicals (EFPs) will not further decrease the premium until then. Robert Gottlieb is an industry expert and a former head of precious-metals at Koch Supply and Trading. He said that for the shipments reversed, EFPs had to go negative. This would allow one to sell London and purchase the futures contracts at a cheaper price. (Reporting and editing by David Evans; Polina Devlin)
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Citi lowers its 2025 price forecasts for base metals due to Trump's trade tariffs
Citi Research revised its 2025 price forecast for base metals on Thursday. The company cited significant headwinds in demand due to tariffs announced by Trump's administration and their immediate implementation. Trump announced Wednesday a 10% tariff for most U.S. imported goods, as well as higher levies against dozens of trading partners. Global markets were shaken by the move, which sparked fears of stagnant economic growth and rising prices. Citi analysts said that copper, zinc and aluminum were the metals most vulnerable to a fall in price due to their elevated positions. Citi has reduced its copper price forecast for 2025 to $8,860/t, down from $9,100/t. Benchmark three-month Copper on the London Metal Exchange was down 3.3% to $9,378 per kilogram at 1605 GMT after hitting $9,353 earlier, its lowest level since March 4. The bank expects Section 232 tariffs to be implemented on copper in the second quarter, despite the fact that metals are generally exempted. The bank has also reduced its forecasts on aluminum (from $2.615/t), Nickel (from $15,500/t), Zinc (from 2.750/t), Lead (from 1.975/t), Tin (from 33,700/t).
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Six reported dead in Bolivia's wildcat mining conflict
Six people were killed and others are missing after a violent clash between two groups in Bolivia who were disputing the exploitation small gold deposits, said a representative of a mining cooperative on Thursday. According to an initial Bolivian Police report, the incident began early in the morning, in the municipality Sorata, located 150 km north of the capital La Paz. Police and firefighters deployed in the area caused severe damage as well. "They've blown up diesel tanks and even machinery with dynamite." Six people have been reported dead, and more are missing", Jhonny Silva said. He is a representative of Hijos de Ingenio Mining Cooperative. Gunther Agudo, departmental police chief, told the media that the conflict involved the Senor de Mayo mine cooperative and the Hijos de Ingenio co-operative. He added that the clash had "caused a great explosion." The mining industry in Bolivia is divided into three different divisions: the state-owned sector, the private sector and the cooperative. The last has been criticized for its illegal exploitation, which harms the environment while causing constant conflict with other rural communities and miners.
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Sources say that EU countries are considering changing their 2025 gas storage goals.
EU diplomats said that if the changes to the future EU gas storage goals are approved by European Union member countries quickly enough, they could also ease this year's storage requirements. The EU is negotiating changes in the future obligations of filling gas storage for 2026-2027. This includes swapping out their current binding goal to fill storage by 90% on November 1, for a target to reach that same level at any time between October 1-December 1. The EU diplomats stated that these changes may also be applicable to the November 1st target for this year, if rules are finalised before then and published. Gas storage regulations were introduced in the EU in 2022, after Russia cut deliveries due to its invasion of Ukraine. This was done to provide a buffer for winter fuels. Poland, which currently holds the rotating EU presidency and is responsible for negotiations between its member states, published a document on Wednesday that confirmed planned changes to gas storage regulations would be effective the day following their publication in the EU official journal of law. The EU hopes to reach a consensus on rules and regulations next week. After that, they will negotiate the final law in conjunction with the European parliament. One EU diplomat said that it could take several months for the rules to be agreed upon and published as EU law. This would likely mean they would only affect the November filling goal, but not the other goals the countries have in the months prior. EU has also set gas storage targets for the months of February, May and July. In future years, these targets would be voluntary according to the countries' proposal. Negotiations are still ongoing and the impact of the 2025 target, as well as other changes that countries may propose to future targets, could change. The European Commission originally wanted to extend for two years the current system of binding goals that must be achieved by certain dates. This idea was met with resistance by governments such as Germany, France and The Netherlands. The countries want to loosen the rules due to concerns that the targets will inflate the gas prices because they indicate to the market European buyers need to buy large quantities of fuel within a fixed time frame, giving them an opportunity to manipulate the prices. In the latest document, it was revealed that member states could deviate up to five percentage points from their obligation to fill storage with gas by 90% in the event of "unfavourable market conditions". (Reporting and editing by Nia William in Brussels, Kate Abnett)
INSTANT VIEW: Trump's hefty tariffs shock markets and cause S&P futures to fall
U.S. president Donald Trump escalated the trade war by announcing on Wednesday that he would impose reciprocal duties to match duties placed on U.S. products by other countries.
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%."
The rates for China will be 34% while those for the European Union, Japan and Canada would be 20% and 24% respectively.
S&P futures fell 3%, indicating that investors are expecting deep losses on Wall Street when it opens Thursday. S&P 500 Futures fell 3%. This suggests investors will suffer heavy losses on Wall Street when it opens Thursday. Nasdaq Futures, which reflect tech companies like Apple, Nvidia, and Microsoft, fell almost 4%. S&P 500 futures tumbled 3%, suggesting investors expect deep losses when Wall Street opens on Thursday.
COMMENTS:
SARAH KETTERER CEO, CAUSEWAY CAPITAL MANAGEMENT LOS ANGELES: "This is a salvo. This isn't a final list. It's only another round in what will be countless 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
"We're back at the inflection points for Treasury yields. We're basically at the average of the previous two years. The bond market initially reacted as we had expected, namely by selling off. Did we receive reciprocal tariffs? The market is also not sure. "If we can get some moderation in today's market, it will be crucial to the bond scenario. It will also help calm down the markets." "Reciprocal Tariffs will eventually be 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 softer. Expect volatility as certain countries continue to defend their status quo."
NANCY TENGLER is CEO and CIO of LAFFER TENGLER Investments, SCOTTSDALE (ARIZONA). "The Administration prided itself in being the administration for the common man. The common man is employed by the automotive industry. If the auto tariffs are imposed, the demand for automobiles will decrease. You can stop there. As purchasing managers tried to stay ahead of tariffs, we have seen a pull-forward in economic numbers. Imports are up, which puts downward pressure on the GDP. The decline in manufacturing PMIs is most puzzling, as they printed contractionary readings last months due to the drop in new orders and employment. Carvana surged in after-hour trading on Trump tariffs. Tesla (mostly made in the U.S.A.) is also trading up. Ford and GM are both flat. Carvana will profit from the increased demand for used vehicles."
ADAM HETTS GLOBAL HEAD, MULTI ASSET, JANUS HENDERSON INVESTOR, DENVER: "Eye watering tariffs, country by country, scream negotiation tactics, and will keep the markets on edge in the near future. This means that there is room to lower tariffs, even though a baseline of 10% has been set. The administration has shown a surprising tolerance for market pain. Now the question is, how much tolerance does it have for real economic pain during negotiations? The S&P 500's recovery after a positive ADP jobs report was a reminder of the broader economic focus. The ISM nonfarm payrolls and services data this week will be closely scrutinized, as any weakness will fuel recession fears."
JOHN HARDY CHIEF MACRO STRATEGIST SAXO BANK COPENHAGEN : "I was shocked at how negative or heavy these tariffs are. This will lead to a lot of tit for tat negotiations. What concessions can the U.S. make to lower these tariffs, what leverage they use to convince other countries to reduce these levels, be it defense concerns in Europe or Japan. China, I suspect, sticks. The Chinese response may be interesting." The market's reaction is expected to be negative. Treasuries are a safe-haven trade, particularly at the low end of the yield spectrum. 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 safe-keeping. You can also use it as a wildcard for long-term investments."
WALTER TODD CHIEF INVESTOR, GREENWOOD CAPITAL GREENWOOD SOUTH CAROLINA WALTER: "We only have one side to the story. That's what we do. The other side is how other countries react to what we do. This is a major factor in how the market will ultimately respond to what's being said.
The other part of the puzzle is how individual countries or groups of countries react to what's being said... Depending on what other countries are doing, I still feel like the market is looking to use the 5,500 level of the S&P 500 as a springboard.
JASON BRITTON CHIEF INVESTMENT OFFICER REFLECTION ASSET MANAGEMENT CHARLESTON SOUTH CAROLINA 'I see this as 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, parse out the details and see that it is at best a mixed bag. "I am looking at the large technology companies who have huge piles of cash. 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."
JOHN LUKE TYNER, APTUS CAPITAL AFFILIATES, FAIRHOPE ALABAMA Many other countries have imposed tariffs on the U.S. and, from Trump's and many other people's perspectives, it is unfair to offer more free trade while we are being pillaged by other countries. These tariffs are not temporary, they seem to be here to stay. The rhetoric has caused a decrease in consumer spending and corporate spending. It has created a bad feeling about the future which is slowing down things. "You've seen the slowdown in capital projects and CEOs' comments on markets and economy." You cannot kill the market and tax revenue and squash the economy at the same time. In many ways, the market is the economic system. So, the biggest risk is that, if the economy is really messed up in one spot, even for a short time, where does the debt to GDP end up in such an environment? "What happens to fiscal deficits if there is a 10% or 5% decline in GDP and other economic indicators? That's when things get really scary."
CHRIS ZACCARELLI CHIEF INVESTMENT OFFICER NORTHLIGHT ASSESSMENT, CHARLOTTE N.C.
Tariffs will increase corporate costs and decrease profits. "If we see a change in the economy, the markets will react differently, but for now, the knee-jerk reaction to price increases is the first one."
PETER CARDILLO CHIEF MARKET ECONOMIST, SPARTAN CAPITALSECURITIES, NEW YORK Now, it depends on the trading partners. Will they negotiate at the table or will they retaliate?" The effects of inflation could worsen and we could be heading toward recession."
The markets are under severe pressure, and one could say that they have reached an oversold state. "I think the markets will rally."
FREDERIQUE CARRIIER, HEAD of INVESTMENT STRATEGY, RBC Wealth Management "We expect the EU will retaliate quickly." "Europe will face steep blanket tariffs of up to 20%, which is higher than what was feared."
Profit taking on the European equity market could continue tomorrow. The impact of tariffs is unlikely to be as painful on European economies, because Europe doesn't trade with the US enough. However, it could be more severe depending on the way the situation develops, the EU response, and the extent to which tariffs harm business and consumer confidence.
(source: Reuters)