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Investors flee as Trump tariffs slash stocks
Investors rushed to gold, bonds and the yen as they feared a global economic recession following President Donald Trump’s draconian U.S. tariffs. The traders were clearly shaken by the new 10% baseline tariff on imported products plus additional, eye-watering'reciprocal tariffs' on countries Trump claimed imposed high trade barriers against the U.S. Brussels and other capitals of the region were in a frenzy as the EU 27 countries faced a reciprocal 20% levy. The bourses fell between 1.3% to 2% in the early going. Tokyo's stock market fell 2.7% overnight in Asia, putting it on track for its worst weekly performance in almost two years. Wall Street futures fell 3% while the dollar hit a six-month high. JPMorgan analysts said that the tariffs are "significantly higher" than what they had imagined as the worst-case scenario. Fitch, a credit rating agency, warned that they would be a game-changer for the U.S. economy and global economies. Deutsche Bank said it was a once-in-a lifetime event which could knock 1%-1.5% of U.S. economic growth in this year. Olu Sonola, a Fitch analyst, said that "many countries are likely to end up in recession." If this tariff rate is maintained for a long time, you can forget about most forecasts. The rush for ultra-safe government securities that guarantee income has driven U.S. Treasury rates down to around 4%. Germany's 10-year rate, the European benchmark, fell by 8.5 basis points to 2.64%. The tariffs are likely to raise import taxes to levels not seen in over a century in the largest economy in the world. In the event that they trigger recessions, it is likely that central banks will cut interest rates around the globe. This benefits bonds. Nasdaq Futures fell 3.2% before what was expected to a be a turbulent U.S. start. Apple's market cap dropped by over $240 billion after its shares fell 7% on Wednesday. Nvidia's share price dropped by 5.6%, or $153 billion. This is a further addition to the trillions of dollars that have been wiped from the market capitalisations of the "Magnificent 7" tech giants this year. Trump's levies are particularly harsh on Asia. China received a 34% tax, Japan 24%, South Korea 25 and Vietnam 46%. Vietnamese shares fell 6.7% as a result. Australian shares and the Aussie Dollar also fell, as the country too was affected. CHINA FOCUS Investors sold exposure to global growth as countries such as China, Canada and Europe promised countermeasures. Brent futures, which are a good proxy for economic activity and the state of the economy, fell as much as 3%, dropping Brent prices below $73 per barrel. This is likely to be its worst day this year. The gold price reached a record-high of $3,160 per ounce but then slowed down. Meanwhile, the Japanese yen rose more than 1.5 percent to 147.01 dollars as traders sought safety outside the U.S. Dollar. The Swiss Franc, another safe haven, reached its highest level in four month as the euro also jumped 1% to $1.0970. Adam Hetts is the global head of Multi-assets and Portfolio Manager at Janus Henderson Investors. He said: "Eyewatering tariffs country by country screams 'negotiation tactics' which will keep markets in a state of tension for foreseeable future." China's currency remained relatively stable, with the yuan dropping only 0.4% in spite of tariffs on Chinese exports exceeding 50% and Vietnam being hit as a result. The Chinese economy is large and there's a hope that Beijing will support Hong Kong and Shanghai stocks. Losses in Hong Kong were limited to 1.5%, and Shanghai losses to 0.5%. George Saravelos, strategist at Deutsche Bank, said that China should be the main focus of attention in the coming days. He asked: "Will China wait for trade talks... or will it absorb this shock? "Or will China try to 'export the shock'... via devaluation of yuan?"
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Trump's tariffs dim the safe-haven shine of the dollar
Investors are avoiding the dollar as a safe place to store money during turbulent times. They are worried about tariffs, and their effect on U.S. economic growth. U.S. president Donald Trump announced on Wednesday far more extensive and larger tariffs against roughly 60 countries. These included massive tariffs against China and its biggest trading partners. As equity markets trembled over the tariff news, the dollar fell broadly. Take a look at how the dollar compares to other safe havens. 1/ GREENBACK TAKS BACKSEAT Dollar has lost its luster as a safe investment option, mainly because of domestic turmoil caused by Trump's tariffs. These have increased the risk of an American recession. Both the S&P 500 and the dollar have been falling recently. This is a sign that the dollar has not benefited from the safe-haven flow. Van Luu is the Russell Investments' head of currency strategy and fixed income. He said, "I used to think that the yen, the Swiss franc, and the dollar were the safest currencies. Now I am beginning to change my mind." The dollar index is down nearly 4% and has had the worst year start since 2016, according to LSEG. It seems investors are yet to price in recession risk, which is why dollar weakness persists as capital continues to flow out of U.S. investments amid the fading economic exceptionalalism, said Rong Ren Goh. He is a portfolio manager at Eastspring Investments, Singapore's fixed income team. While Trump's loose economic policies have hurt the dollar's reputation as a safe-haven currency, some investors believe it will eventually regain its appeal as global growth slows. GOLDEN HISTORY Gold has been a safe haven asset since before any financial system. Gold tends to increase in value as investor anxieties rise. The 1970s energy crises, 1980 U.S. economic recession, 2007-08 global financial crash, and the COVID pandemic of 2020 have all seen a rise of the price of gold. Gold has almost doubled over the last two-and-a half years, reaching all time highs of $3,000 per ounce. Central banks, retail investors and portfolio managers have all bought gold to protect themselves against inflation spikes that were caused by the COVID crises and the subsequent global energy crisis. They continued to buy gold even when inflation began to ease. With Trump's isolationist policies, many are buying gold to replace the dollar. FIGHTING BACK The yen, the Japanese currency, is one of the most popular currencies that benefits from safe-haven flows. It usually performs well during times when stock prices are falling. The yen had its best day ever against the dollar on Wednesday. It has risen almost 7% this year. Meanwhile, another safe haven, the Swiss Franc, has gained more than 4%. Justin Onuekwusi is chief investment officer of investment firm St. James's Place. He said, "The yen gains if the S&P index is volatile. That's something we've been more inclined to tilt towards." 4/ GET DEFENSIVE Stocks are often hard hit by recessions and financial crises. Investors make money by grabbing their cash and running for safety. Most investors cannot give up on the equity market, and so they will tend to buy stocks that are expected to weather recessions well. These include drugmakers, utilities, and food and beverage companies. Over the past 25 years, defensive stocks, those that are more closely tied to the global economy such as technology and mining stocks, have consistently outperformed cyclical shares. Even though there is no immediate recession in sight, a global basket of defensive stocks has dropped less since Trump's election victory than a basket cyclicals that had been boosted by expensive tech and AI shares, reflecting investor caution. 5/ BETTING BONDS For now, renewed tariff anxiety has reduced the pressure on government bonds, which typically benefit from flows to safe-haven assets during times of global stress. Germany's benchmark Bund yield has dropped from the five-month highs reached last month. This is due to expectations that an increase in German spending would lead to a rise in bond sales. The 10-year Treasury yields in the United States are set to have their largest weekly decline in five weeks, with yields down by more than 10 basis point on Wednesday alone. But it's true that not all of this has been driven by a desire for safety. Tariff concerns have also increased recession risks, and the likelihood of further global rate cuts. This is a background that usually benefits bonds. Eric Clark, portfolio director at Alpha Brands, San Diego, said that he still believes this chaos was created to create panic. The uncertainty is driving yields lower at a time when demand is high for our debt, allowing us refinance $4 trillion to 5 trillion dollars at better rates.
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Rafael Devers and the Red Sox win series against Orioles
Boston Red Sox have worked out a few kinks in their first week of play, but they should have a positive attitude going into Thursday's game. After snapping a losing streak of four games, the Red Sox will face the Baltimore Orioles at the final game of a three-game set. Rafael Devers, Boston's designated hitter, said that there was no need to worry even though he had started the season with a 0-for-19 record through Tuesday. He started the game Wednesday at Baltimore 0-for-2, but then added a run scoring double in the 5th inning. Boston won 3-0. Devers stated, "I knew that it would come." "I received many texts from worried people, but I was fine." His teammates were enthused by his performance. Dever stated, "It's a great feeling to see that reaction." Dever said, "It makes me happy to see that they are paying attention to my at bat and supporting me." Trevor Story scored the first run of the game, which was his first RBI this season. He went 3-for-4, raising his average from.133 up to.263. Devers stated, "We know what type of players and team we are." "We knew that everything would change." Story stated that there are signs that Boston has "a really strong lineup". On Wednesday, the Orioles did not have a single extra-base run. They only had four singles. The Red Sox's Garrett Crochet started the first eight innings and Aroldischapman took over the ninth. Brandon Hyde, Baltimore's manager, said: "We had a hard time putting them under pressure." The Orioles' lineup could be drastically different for the final game of the series. Gunnar Henderson, a shortstop with a right intercostal injury, played his fourth rehab game with Triple-A Norfolk on Wednesday, and went 0-for-3 against Charlotte. He now has accumulated five home runs, four RBIs, and.263 (.263) in 19 games. It was possible that he could be listed on Baltimore's lineup Thursday afternoon. Jackson Holliday should be back in the Orioles lineup following his Wednesday night rest. Hyde said that the 21-year old infielder may sit out certain left-handed pitchers. Tanner Houck (1-0, 6.35 ERA), will be the pitcher for Boston on Thursday. In his debut season, the right-hander allowed four runs in 5 2/3 innings -- including two homers -- to Texas on Friday. Houck has a 4-3 career record with a 3.50 ERA against the Orioles in nine appearances, five of which were starts. Charlie Morton, the Baltimore Orioles' right-hander (0-1, 10.80 ERA), will be looking to rebound from a poor first outing in Toronto on Friday, when he lasted only 3 1/3 innings. Morton has a record of 8-2 and a 4.21 ERA over 15 career starts. In 83 1/3 innings, he has struck out 88 Boston batters. Eight wins are his second-most against any team. Baltimore's first six games have been a mix of wins and losses. The Orioles scored 29 runs across their three wins, which means they can still have a breakout season despite Wednesday's sluggish offensive performance. Zach Eflin said, "Show up Thursday and win the Series," after he took the loss Wednesday. He had allowed three runs in 6 innings. The Red Sox will play their first home game on Friday, against the St. Louis Cardinals. Field Level Media
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Floods 'generational in nature' to hit US Midwest and South
The National Weather Service issued a warning on Thursday about "generational" flooding in the Southern and Midwestern United States. Storms tore across the country, from Texas up to Michigan, dropping hail and causing tornadoes. On Wednesday, at least 19 tornadoes hit, destroying houses and businesses and injuring eight people. Hundreds of thousands were left without power. The NWS stated that this was only "the beginning" of a potentially historic and multi-day heavy rain event. Arkansas, Missouri Tennessee and Mississippi are facing the threat of "generational flooding event". Some locations could see up to 15 inches (38cm) of rain before the weekend. This could cause rivers burst. As of early Thursday, no fatalities had been reported. Local officials reported that four people were injured, one of them critically, in Craighead County, Arkansas. Four others were also injured, including one in a church in Ballard County, Kentucky. The railroad company BNSF has announced that it received a Reportage The cause of the derailment of a train near Bay, Arkansas was not specified. Arkansas, Kentucky, and Tennessee declared an emergency late Wednesday. The National Weather Service warned that parts of Arkansas and Missouri, Indiana, Illinois and Texas, were at high risk for severe thunderstorms Thursday. They also warned of further tornadoes, large hail and dangerous flooding. Scott Kleebauer said that the word for Wednesday was "chaotic." This is a wide area of storms moving slowly eastward, extending from southeast Michigan to southeastern Arkansas. The Missouri Emergency Management Agency reported that a tornado which hit Nevada, Missouri had caused "major damages to several businesses. Power poles were snapped, and several empty train cars were flipped on their side by the powerful storm!" According to PowerOutage.us, more than 400,000 customers lost power in the storm-hit region. Reporting by Brad Brooks, Colorado; Surbhi misra, Bengaluru; Editing by Peter Graff
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The Trump tariffs have caused a drop in the price of Bourses in the Gulf
The Gulf stock markets fell on Thursday morning, amid concerns that the U.S.'s reciprocal tariffs could worsen trade tensions globally and tip the world towards recession. On Wednesday, U.S. president Donald Trump announced a 10% tariff as a baseline on all imports and increased duties on dozens countries, including its largest trading partners. Saudi Arabia's benchmark stock index fell by 0.4% after the return to trading following a four-session Eid holiday. Saudi National Bank, the country's largest lender, fell 1.5%. Saudi Aramco, the oil giant in Saudi Arabia was down by 0.8%. Oil prices, which are a major factor in the Gulf financial markets, have fallen by up to 3% amid fears that trade tensions will limit economic growth and reduce fuel demand. Dubai, the Middle East's tourism and travel hub, saw its main stock index fall by 1.8%. Blue-chip developer Emaar Properties plunged 8.9% in one day, its largest intraday drop since November 2021. Meanwhile, Emaar Development slipped 2.4%. The index in Abu Dhabi fell 0.8% while the Qatari Stock Exchange remained closed due to Eid holidays.
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South Africa seeks new US trade deal after tariff hike, says presidency
South Africa's Presidency said Thursday that new U.S. Tariffs highlight the need for a bilateral trade agreement with Washington in order to guarantee long-term trading certainty. On Wednesday, U.S. president Donald Trump announced global reciprocal tariffs for most imports to the United States. Trump imposed an 8% rate on South Africa. The Presidency issued a statement saying that "the tariffs confirm the urgency of negotiating a new bilateral trade agreement with the U.S. as an essential step in order to ensure long-term trading certainty." These latest tariffs will be in addition to 25% on all cars and auto parts imported into the U.S. that will take effect from Thursday. The levies could have a serious impact on South Africa's exports to the United States of parts and vehicles worth over $2 billion. The President's Office added: "While South Africa remains committed towards a mutually-beneficial trade relationship with the United States... unilaterally imposed punitive tariffs serve as a hurdle to trade and shared prosper," (Reporting and editing by Olivia Kumwenda Mtmabo, Sharon Singleton, and Nqobile Dudla)
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South Africa seeks new US trade deal after tariff hike, says presidency
South Africa's Presidency said Thursday that new U.S. Tariffs highlight the need for a bilateral trade agreement with Washington in order to guarantee long-term trading certainty. On Wednesday, U.S. president Donald Trump announced global reciprocal tariffs for most imports to the United States. Trump imposed an 8% rate on South Africa. The Presidency issued a statement saying that "the tariffs confirm the urgency of negotiating a new bilateral trade agreement that is mutually beneficial with the U.S. as an essential step in order to ensure long-term trading certainty." These latest tariffs will be in addition to 25% on all cars and auto parts imported into the U.S. that will take effect from Thursday. The levies could have a serious impact on South Africa's exports to the United States of parts and vehicles worth over $2 billion. The President's Office added: "While South Africa remains committed towards a mutually-beneficial trade relationship with the United States... unilaterally imposed punitive tariffs serve as a hurdle to trade and shared prosper," (Reporting and editing by Olivia Kumwenda Mtmabo, Sharon Singleton and Nqobile Dudla)
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Iron ore prices fall due to US tariffs but steel demand remains resilient.
Iron ore futures dipped slightly on Thursday, after U.S. president Donald Trump announced a wide range of reciprocal tariffs. However, seasonal demand for this steelmaking ingredient helped to cushion the downward trend. The May contract for iron ore on China's Dalian Commodity Exchange ended the daytime trading 0.32% lower, at 788.5 Yuan ($108.05). As of 0707 GMT, the benchmark May iron ore traded on Singapore Exchange was down 0.84% at $101.95 per ton. Broker Galaxy Futures stated in a report that U.S. Tariffs were more aggressive than anticipated and will have a negative impact on the ferrous market. Trump announced a minimum 10% tariff on goods imported into the United States on Wednesday, and much higher duties for products from dozens countries. This is a worsening of a trade conflict that could drive inflation up and slow down U.S. economic growth. The new tariff will total 54% on Chinese imports. Beijing on Thursday called for the United States' latest tariffs to be immediately canceled and promised countermeasures in order to protect its own interests. Steelmakers increased production during the construction peak season of March and April to cushion the price fall. The recovery in steel consumption will encourage steelmakers in China to increase their hot metal production, according to a report by Mysteel. ANZ analysts said that iron ore exports were down 17% on a year-over-year basis during the current Australian cyclone seasons. Coking coal and coke, which are both steelmaking ingredients, were down by 0.2% and 0.64% respectively. The Shanghai Futures Exchange saw a loss in most steel benchmarks. Rebar fell by 0.19%, stainless steel dropped 0.92% and hot-rolled coils were down 0.63%. Wire rod was up almost 0.4%. China's financial market will be closed for the public holiday on Friday. Trading will resume Monday, April 7.
INSIGHT - While Trump and Zelenskiy are discussing a mineral deal, the production of minerals in Ukraine is still years away
A small team of eco-consultants dropped sensors into the ground to measure the water level in a snow-covered field in central Ukraine. This is where the largest lithium deposits in the country are found.
The small Ukrainian mining company UkrLithiumMining that has the license contracted the environmental survey years before any mining operations on the undeveloped site.
This shows how much more work needs to be done for a mineral deal between Ukraine, the United States and other countries before it generates any significant revenue. The President Donald Trump views the minerals deal, which he will clinch with President Volodymyr Zelenskiy on Friday in Washington, as America's means of recouping some of the money that it has given Ukraine in financial aid and weapons to fight Russia which invaded Ukraine three years ago.
Denys Alyoshin, Chief Strategy Officer of UkrLithiumMining said that the Washington agreement was a positive step because it makes Ukraine more resilient to Russian aggression over the long term.
He said that without a Western security guarantee, it would be difficult to develop the Polokhivske Lithium deposit. The deposit, one of Europe's largest, is only 240 km from the Russian border.
Alyoshin said, "Before war broke out I had many commercial negotiations with... investors interested in the project." "But once the war broke out, a rational CEO wouldn't go to a place where there was a war. They would go to Zimbabwe or Canada. There are many places where there isn't a war.
The Trump administration, despite Zelenskiy's repeated requests, has not offered Kyiv any security guarantees. This has led to doubts about the commercial viability of developing rare mineral deposits, which are used in high-tech gadgets and batteries. Even if Russia agrees to a ceasefire this year, there is still the risk of war. The draft minerals agreement, which was reviewed by, included reassuring words but did not guarantee security. The focus was on creating a U.S. and Ukraine-managed "Reconstruction Investment Fund", to which Kyiv would contribute 50% of the future revenues from monetization state-owned resources.
The terms of the agreement are very broad, and more negotiations will be required to nail down the details.
Four experts have told
Alyoshin stated that even if peace is restored to Ukraine, UkrLithiumMining will need to raise $350 millions and conduct a feasibility report for at least 1.5 years before they can begin building a mine or enrichment plant.
"It will mean that we can reach a steady stage production...it could be in 2029." The next U.S. Presidential elections will take place in 2028. Trump, who has championed minerals cooperation to secure peace, is constitutionally prohibited from running for another term.
Seven mining executives and analysts said that Alyoshin’s timeline was optimistic. The typical exploration period is four years. A feasibility study will take an additional year to complete before construction can begin. "The truth is that the majority of the lithium deposits in Ukraine have been identified during the Soviet period and we haven’t had any updates or exploration in many years," Federico Gay, an analyst at Benchmark Mineral Intelligence in London.
He said that even if all the pieces fall into place, it will take at least eight years to develop the Polokhivske Deposit to the point where it produces usable lithium. Gay said that the deposit was deep and could require as much as $800 million to build the concentrator and mine. He added that an additional $1 billion would be required to produce the compounds for batteries.
Alyoshin stated that his company planned to eventually produce 1.5 million tonnes per year of raw ore and then process it into 300,000 tons of petalite concentrat - a lithium-rich substance.
Alyoshin said that with additional investment the lithium carbonate concentrate could be refined further to produce 22,000 tons of battery-grade Lithium Carbonate.
It has not been previously reported the specifics of production and processing timetables planned at the Polokhivske Deposit.
Classified Reserves
The demand for these minerals is very high. Rare earths and lithium are both used to make electric vehicle batteries. Lithium can also be found in auto motors, wind turbines, and advanced military weapon systems. According to mining experts and analysts, it is a huge undertaking to convert Ukraine's lithium and rare-earth reserves into mines that can be operated and processing facilities built.
The economy ministry of Ukraine and the Prime Minister's Office did not respond immediately to requests for comments for this article. Ukraine does not produce rare earths, but according to the Institute of Geology of Ukraine, it has large deposits of these minerals including lanthanum. cerium, and neodymium. The detailed data on these reserves is classified. Investors might be leery of a deal where the U.S. receives mined minerals as a return for security assurances, protection against future Russian attacks, and aid. Mining companies would use royalty agreements to secure financing from investors. They receive a percentage of sales revenue once production starts.
While Trump is in office, any deal he makes to gain access to Ukraine's vital minerals will not allow the United States to challenge China's huge advantage in these key minerals. Julian Kettle, Vice-Chair Metals and Mining of Wood Mackenzie, said that while it is a counter to China it still poses the issue of where and how the minerals will be processed.
The country is a producer of titanium, and has large graphite and Lithium deposits. You can increase production in existing mines. "But when it comes to new frontier development, the time from discovery to delivery of materials could be up to ten years."
China is the third largest lithium producer in the world, behind Australia and Chile. China is the top producer of rare-earth elements in the world, including neodymium, used to produce strong, lightweight, powerful permanent magnetic materials used in military equipment.
The U.S. Geological Survey, a government agency does not disclose details about lithium production in the United States. The USGS estimated that 45,000 metric tonnes of rare earth oxides contained in mineral concentrates was produced last year, making the U.S. second largest concentrate producer behind China.
The gap is huge. USGS reports that China mined 270,000 tons of rare earths last year, or 69% of global production. It has even more control over rare earth processing, a complex process that is highly polluting.
Beijing produces 90% of all rare earth elements.
NEGOTIATIONS TO BE CONTINUED
Dominic Raab is the head of global affairs for Appian Capital Advisor, a firm that invests into mining companies. He said the deal between Ukraine and the U.S. was a step in the right direction in terms of helping to fund Ukraine's development.
Raab said that there was still a lot of due diligence and negotiations to be conducted. He previously served as the former British deputy prime minister and secretary of state for foreign affairs.
Raab stated that Appian is interested in investing in Ukraine’s mineral projects if there was more information about the geological potential of the country.
According to BMI, Ukraine is home to significant amounts of rare earth elements and lithium, graphite titanium, graphite used in nuclear power generation, as well as uranium. "Ukraine's not been mapped for 30 years." Gracelin Baskaran is the director of the Center for Strategic and International Studies' critical minerals security program.
She said, however, that the mining industry - which uses around one-fifth as much energy worldwide - requires a robust electrical infrastructure: "Ukraine was bombed out." The state of the infrastructure in Ukraine and the security risks are too high to consider it a serious competitor. (Reporting from Pratima Deai in London, and Olena Harma in Kyiv. Additional reporting by Thomas Peter at Kopanky, and Ernest Scheyder at Houston. Editing by Veronica Brown and Mike Collett White.
(source: Reuters)