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Stocks drop as nervous markets await Fed decision, rates outlook
Investors worried about the direction U.S. interest rates could take next year amid fears about a divided Central Bank. Asian stocks dropped while the dollar remained steady on Tuesday. Investor sentiment was cautious after a shaky start to the week, with key central bank meetings. Markets are looking for clarity on the outlook of global interest rates. Reserve Bank of Australia kept rates unchanged as expected on February 2, ruling out any further policy easing. They warned that the next step could be an increase if inflation pressures remain stubborn. The Australian dollar traded just below a three-month high. Bank of Canada, Swiss National Bank, and the Federal Reserve are expected to keep rates unchanged this week. Many Wall Street banks predict that the Fed will not cut interest rates as much in 2026 due to lingering concerns about inflation and expectations for a stronger U.S. economic recovery. MSCI's broadest Asia-Pacific share index outside Japan fell by 0.65% after a weak session overnight on Wall Street. European futures point to a subdued opening as a cautious air grips the markets. Prashant Nnewnaha, senior Asia-Pacific rate strategist at TD Securities, said that "the low-hanging fruits from risk management reductions are likely over" and that Chair Powell's upcoming press conference is likely to reflect a more conservative approach in the future regarding policy recalibration. The dot plot is likely to show a single cut in 2026. If the dot plot indicates two cuts next year, this would be considered dovish. According to LSEG, traders are pricing in 77 basis point of easing at the end of the next year. Some strategists believe that the Fed's Policy Committee could be deeply divided. The meeting is also being held in the context of increased market interest about who will replace Powell as Fed chair when his current term ends next May. Kevin Hassett, White House Economic Advisor and leading contender for the Fed chair role, said in an exclusive interview that the Fed should continue to reduce interest rates. Xiao Cui is a senior U.S. economics from Pictet Wealth Management. He expects that a solid economy, inflation above target, and a slowing labor market will increase the internal divisions within the FOMC, making 2026 a challenging year for policymakers. We see risks that Fed reductions are delayed until the second half 2026. Asian chip stocks sank after U.S. president Donald Trump announced that the United States would allow Nvidia to export its H200 processors -?its second best artificial intelligence chips - to China, and charge a 25% tax on these sales. China's CSI Semiconductor Industry Index fell 0.5%, while the broader CSI300 Index dropped 0.47%. The dollar was stable on Tuesday. The euro was last trading at $1.1649, while the pound sterling was up 0.11% to $1.3336. The Aussie dollar was up 0.33% at $0.6646. It is hovering near its highest level since September after RBA Governor Michele Bullock warned of the possibility of an increase in interest rates due to inflationary forces. The yen remained unchanged at 155.91 to the dollar, after a sharp decline immediately following a powerful earthquake in Japan. The Japanese authorities lifted the tsunami warnings Tuesday, hours after a powerful 7.5-magnitude quake shook Japan's northeastern region, injuring 30 people at least and forcing 90,000 residents from their homes. Oil prices continued to fall in commodities after a 2% drop in the previous session, as traders kept an eye on the peace talks that were taking place in Ukraine to end Russia's conflict. Brent crude futures fell 0.3% to $62.32 per barrel. U.S. West Texas Intermediate Crude was down by 0.41% at $58.64. (Reporting and editing by Shri Navaratnam in Singapore)
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US military develops small refineries for critical mineral substances
The U.S. Military said it plans to build a fleet small-scale refineries that will produce the critical minerals needed to manufacture bullets, armor, and other types of weaponry. This is a step to create domestic sources of niche materials, which Chinese miners have 'long controlled. Plans, not previously announced, are being developed jointly by the U.S. Army, the Idaho National Laboratory, and the antimony and gold mining company Perpetua Resources. Antimony is the first mineral that the military wants to refine. The Army has said that it will not produce large quantities of minerals for private consumption. However, a small-scale approach could provide a constant stream of building blocks, without having to rely on commercial refineries which are often much larger and primarily focused on bulk commodities, such as copper and iron ore. Washington hopes to refine other minerals, such as?tungsten and rare earths, which the U.S. government considers critical. Mark Mezger is a U.S. Army munitions adviser. He said, "We must find a way of making our own critical minerals that we can control and monitor within our borders." The Army spent $30,000,000 over several years developing the refinery programme for antimony. Westpro Machinery, a private company, designed a refinery which can be transported within four shipping containers. The refinery is able to produce between 7 and 10 metric tons of trisulfide (a type of antimony) annually, which is far less than what a commercial refinery could produce. However, it's enough to supply the Army in peacetime. Mezger stated that if a conflict breaks out, the Army could expand processing by adding more mini-refineries for ore from Perpetua’s Idaho mine. He added that the Army was in discussions with other U.S. Antimony Projects to source additional antimony. Primers, which are the explosive caps at the base of a bullet, are made from antimony trisulfide. The United States hasn't produced this version of antimony since the 1960s. "You can't make primers without antimony trisulfide." Without primers you cannot make bullets. "An army without bullets would be a mere parade," Mezger said. Idaho National Laboratory is testing the facility over the next six-months and if it passes muster will be operating it for Perpetua and the Army. Perpetua is backed both by JPMorgan Chase and the billionaire investor John Paulson. Officials said that refineries for other minerals could be situated on military bases or government properties. In March, was the first to report that the Trump Administration was considering placing metal refining plants on U.S. Military bases. The portable refinery will perform steps that are common in larger facilities, such as crushing rock. The type of mineral produced will determine the chemicals that are used. INL will also be involved in ensuring that the facility is not only a copy of existing refinery standards, but is also cleaner and more efficient. In 2021, the Army learned that China had stopped shipping Trisulfide. This triggered a rapid drawdown of its one-year supply and a rush to find alternative supplies in India. Mezger explained that the refinery plan was borne out of a recognition that a domestic alternative was essential. Jon Cherry, Perpetua CEO, said that the development of the plant should "pave a way for sustainable American mineral independence and resilient." (Reporting and editing by Ernest Scheyder)
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Bezos Earth Fund increases marine conservation by $24.5 million
Head of Nature of the world's largest climate philanthropy, gave $24.5 million for coastal ecosystem protection as part of a plan that aims to create a cross-border marine Biosphere Reserve. The Bezos Earth Fund has awarded four grants to local communities in Costa Rica and Panama. Colombia and Ecuador will also receive a grant. The grants are part of a $1 billion plan to protect 30% of the land and oceans of the planet by 2030. The group of donors aims to contribute $5 billion in the same time period as part of the "Protecting Our Planet Challenge" with 10 other philanthropies. The Bezos?Earth?Fund, and the wider coalition have deployed more than $3.5 billion of the $5 billion total. Re:wild, an organization that helps partners establish and strengthen coastal reserves for turtles, hammerheads sharks and other marine species. Cristian Samper, the Bezos Earth Fund’s director of nature, stated that "it's an extremely important area for species migration." "The only way to protect this area is by doing it transboundary." He said that in two years, the four countries tripled the size?of the protected seas, to more than 600,00 square kilometres (231,660 square miles), across 10 different areas. The goal now is to create a biosphere reserve. "That'll be the first of its kind in the world," said Samper, adding that the Fund is also examining a similar?"reserve" in the Pacific which would be five times as large as the continental United States. The fund agreed to spend 100?million dollars helping the Pacific Region implement the global biodiversity goals and would announce the second set of grant in 2026. This is the kind of work that you should be doing to move the needle toward 30 by 30. (Reporting and editing by William Maclean, Simon Jessop)
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Saudi crude oil supplies to China in January are set to reach a three-month high following price drops
Sources said that Saudi Arabia's crude oil exports to China are set to reach a record high in January, after it lowered its official selling prices for Asia. Saudi Aramco, the state oil company, will send about 49.5 millions barrels or 1.60 million barrels a day to China in January, according to a list of allotments to Chinese refiners. According to records, the allocation volume is up from the two previous months when it was?under 40 millions barrels. It's also the highest since last October. Sources said that PetroChina, Rongsheng Petrochemical, and Shenghong Petrochemical were among the companies who planned to increase Saudi crude shipments next month. CNOOC, Hengli Petrochemical and others will lift less this month than the previous month. Saudi Aramco has not yet commented on the allocation of January to China. Last week, the state-owned producer released its official January selling prices. The price of the Arab Light crude oil to Asia was cut by 60 cents per barrel, compared with the average for Oman/Dubai, which is the lowest in five years. Two sources stated that the lower price attracted term buyers to lift more. OSPs were also cheaper than spot benchmarks, which also boosted demand. Late November, Chinese independent refiners received their first shipment of import quotas for 2026.
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MORNING BID EUROPE: Markets racked with anxiety as we approach the day of Fed
Ankur Banerjee gives us a look at what the future holds for European and global markets Investors are on edge about the U.S. financial policy outlook, ahead of the?expected Federal Reserve rate cut this week. A divided central 'bank and the prospect that a dovish Fed Chair will replace?Jerome Powell have investors worried. Welcome to the almost-Fed Day! The traders are almost certain that the Fed will cut rates by 25 basis points on Wednesday. Let's face it, most traders are focused on what Powell says and how many rate reductions the dot plot for 2026 will show. The markets are predicting 77 basis point easing by the end of 2026. This means that two more price cuts will remain after December. This week, the Fed is expected to adopt a semihawkish tone and warn that the next rate cut bar will be raised. Anything that sounds even vaguely dovish is a surprise, and could cause a lot of volatility. Bond investors are preparing for a short-term easing cycle by reducing their exposure to Treasuries with long maturities and rotating into intermediate maturities in order to get a better return. White House economist Kevin Hassett said that the Fed should lower interest rates in an interview. This added yet another layer to a likely complex Fed decision-making day. Jamie McGeever, Open Interest Markets columnist, writes that the markets aren't so sure. Stocks are largely trading sideways in the'skittish' mood. European futures suggest a lacklustre start to the year. However, chip stocks may be worth watching. Donald Trump announced on Monday that the United States would allow Nvidia H200 processors to be exported to China, and charge a 25%?fee? for such sales. The Australian dollar also fluctuated after the central bank of Australia kept interest rates the same as expected. After a brief period of weakness, the yen remained steady as soon as news of a powerful quake in Japan began to filter through. The impact of the earthquake has been minimal, as Japanese authorities have lifted tsunami warnings. The following are key developments that may influence the markets on Tuesday. Exports and imports of Germany for October
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Orangutans in danger as Indonesia floods destroy habitat
Amran Siagian (39), a resident of Sipirok in North Sumatra province, met Tapanuli Orangutans frequently on a hill. Siagian who has been working at the Orangutan Center (OIC), as a ranger, to protect this endangered animal for at least five year, recalls that the orangutans loved eating durians and other fruits grown in the surrounding area. Orangutans have disappeared from Sipirok after the landslides. As of Tuesday, 962 people had died from the cyclone-induced flooding and landslides. 291 are still missing. Storms in southern Thailand and Malaysia also claimed the lives of?about 200 other people. "They must have gone further and farther away." I could not hear their voices," Siagian said. Local leaders and green groups have said that?deforestation caused by mining and logging has exacerbated the impact of floods and land slides. Large trees were cut down in Sipirok, which is a village located in South Tapanuli, and was one of the worst hit areas by the disaster. Siagian claimed that a company has been logging the area for more than a year. He said that the deforestation affected orangutans before the floods. Orangutans live by moving from branch to branch between the forest canopy. Siagian stated that if the forest was sparse, they would have a difficult time. OIC founder Panud Hadisiswoyo stated that there were approximately 760 orangutans living in the Tapanuli Region. He said that the biggest threat to forests is due to plantations, and extractive industries. According to World Wildlife Fund, there are 119,000 orangutans in Indonesia and Malaysia. Orangutans may become extinct in this area if the government does not step up. Siagian added that the deforestation was a major factor. (Reporting and writing by Ahmad Luqman Ismail in South Tapanuli, Ananda Teresia, Editing by Stephen Coates.
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Gold prices stable as markets prepare for Fed's hawkish tone
The price of gold was flat on Tuesday, as investors had already priced in a Federal Reserve rate cut. They were also preparing for signs that the U.S. Central Bank may adopt a more moderate easing cycle than expected at its two-day meeting beginning later that day. As of 0444 GMT, spot gold was flat at $4,189.17 an ounce. U.S. Gold futures for December delivery were flat at $4.218.50 an ounce. Kelvin Wong, senior market analyst at OANDA, said that investors are repositioning themselves largely ahead of the Federal Reserve's policy-setting meeting. Powell had given a hawkish rate cut guidance in his press conference earlier this month. Investors in the U.S. Treasury Market are now adjusting their positions. The benchmark 'U.S. The 10-year Treasury yields remained near the 2-1/2 month high reached on Monday. Analysts expect to see a "hawkish" cut this week, accompanied by forecasts and guidance that indicate a high threshold of further easing next year. The U.S. The Fed's preferred inflation indicator, the Personal Consumption Expenditures Price Index (PCE), was in line with expectations. Consumer sentiment also improved in December. The private payrolls in November showed a sharpest decline since more than two-and-a half years. However, jobless claims dropped to a 3-year low during the week ending November 28. According to CME’s FedWatch Tool, the markets now give an 89% chance of a quarter point cut at the Fed’s meeting on December 9-10. Gold is a non-yielding asset that tends to be favoured by lower interest rates. Silver rose by?0.2%, to $58.24 an ounce. This is not far off the record high of $59.32 per ounce that was reached on Friday. Wong said that silver was a more risky play than gold, due to its low inventories and strong industrial demand. He also added that the Fed's rate cut expectations and low inventory levels are pushing silver into a high-risk mode. Palladium rose 0.7%, to $1475.38, and platinum gained 0.4%, to $1649.10. (Reporting and editing by Sumana Aich, Rashmia Aich, and Ishaan arora in Bengaluru)
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The US rate decision and peace talks with Ukraine have a positive impact on oil prices.
The oil prices fell a little more?on Tuesday. This was a continuation of the 2% decline in the previous session. Markets are keeping a close watch on the peace talks that will end the war between Russia and Ukraine, as well as the imminent decision by the U.S. Federal Reserve on interest rates. Brent crude futures fell 8 cents or 0.1% to $62.41 per barrel at 0409 GMT. U.S. West Texas Intermediate Crude was trading at $58.75 - down 13 cents or 0.2%. Both contracts dropped by more than $1 per barrel on Monday, after Iraq restored production of Lukoil’s West Qurna 2 Oilfield, which is one of the largest in the world. Priyanka Sahdeva, senior market analyst at Phillip Nova, said that Brent's move back?towards the $62 level (aligns) seamlessly with the broader narrative for December. The noise about potential Iraqi disruptions faded overnight and the market quickly returned to its core theme: ample supply and conservative demand expectations. After talks between the President of Ukraine Volodymyr Zelenskiy and leaders from?France Germany and Britain in London, Ukraine will share its revised peace plan with the U.S. Tim Waterer, KCM Trade's chief market analyst, said that oil is "keeping to a narrow trading range" until we know the outcome of the peace talks. He added that if the talks fail, oil prices will likely rise. If progress is made and it is possible for Russian energy to be supplied to the global market again, the price is expected to drop. Sources familiar with the issue claim that the Group of Seven and the European Union have been in discussions to replace the price cap on Russian oil exports by a complete ban on maritime services in an effort to reduce Russia's revenue from oil. The Federal Reserve policy decision is due on Wednesday. Markets have priced in a 87% chance of a rate cut by a quarter point. Low interest rates are typically a positive factor for oil demand, given that they reduce the cost of borrowing. However, some analysts remain cautious as to how this will affect oil prices in the near future. Sachdeva, of Phillip Nova, said that although markets are heavily invested in the FED's policy decision for Wednesday, which could result in a 25bp cut and provide short-term support to the lower end 60-65 range, the price structure is still anchored on the expectation of an oversupplied oil market by 2026. Reporting by Ashitha Shivprasad from Bengaluru, and Trixie Yap from Singapore. Editing by Thomas Derpinghaus & Jamie Freed.
Trump's trade tariffs and threats
Since returning to office in January, Donald Trump has issued numerous tariff threats. These range from a duty on all imports to tariffs targeted at specific countries or sectors.
Trump's threats changed over time. This left other nations and business unclear as to what was next. It also created uncertainty for consumers and triggered a recent stock-market sell-off.
Here's a summary of Trump’s threats and actions in relation to trade.
BROAD TARIFFS
Trump's vision is based on a gradual rollout of tariffs that will apply to all U.S. imported goods.
Last month, Trump asked his team of economists to devise plans for reciprocal duties on all countries that tax U.S. imports. They also had to come up with ways to combat non-tariff barriers, such as vehicle safety regulations that exclude U.S. automobiles and value added taxes that raise their costs.
In the past, tariffs were the primary source of tax revenue in the United States. However, they have been reduced to a small fraction over the last few decades. Economists claim that Trump's policies are inflationary, as businesses who import goods and pay tariffs will pass on the costs to consumers.
The potential counter-tariffs imposed by global trading partners on U.S. agricultural and energy exports, as well as machinery and equipment, could escalate into a world trade war and create uncertainty for investors and businesses.
Specific COUNTRIES
Trump's tariff proposal targets several key trading partners.
MEXICO AND CANADA : Mexico and Canada were the two largest trading partners of the U.S. from 2024 to November. Trump's new tariffs of 25% on imports from Mexico, Canada and the European Union took effect on 4 March as a response to migration and fentanyl.
Tariffs were imposed on the majority of goods imported from Mexico and Canada. A 10% tax was also imposed on Canadian energy imports. Canada exports mainly crude oil, other energy products and cars and auto components within the North American automotive manufacturing chain. Mexico exports a variety of goods to the U.S., including industrial and automotive products.
Canada retaliated with 25% tariffs against US imports worth C$30 billion (US$20.7 billion), including orange juice and peanut butter. Other products include beer, coffee, motorcycles, appliances, and motorbikes.
The Canadian government said that it would add additional tariffs to C$125 billion worth of U.S. products if Trump's Tariffs remained in effect in 21 days. This could include vehicles, steel and aircraft, as well as beef and pork.
In his address to Congress on March 4, Trump said that further tariffs will be implemented by April 2, including "reciprocal duties" and non-tariff measures to address trade imbalances.
U.S. Commerce secretary Howard Lutnick stated that U.S. officials could still work out a partial solution with the two neighboring countries, and added that they need to do more in the fentanyl arena.
Trump retracted his planned tariffs of 50% on Canadian steel and aluminum after a Canadian official backed down from plans to impose a 25% surcharge for electricity exported to the United States.
Canada, which is the largest foreign supplier of aluminum and steel to the United States (C$29.8 Billion), announced on March 12 that it would impose retaliatory duties on U.S. imports worth C$29.8 Billion ($20 Billion) as a response to Trump’s steel and aluminium tariffs.
CHINA: Trump imposed 10% tariffs on all Chinese imports to the U.S. effective February 4, after repeatedly warning Beijing that it was not taking enough measures to stop the flow of illegal drugs into the United States.
Trump then added another 10% tariff on Chinese products, which took effect on March 4. This is on top of the 25% tariffs that were imposed during Trump's initial term on Chinese imports.
China announced additional tariffs between 10% and 15% on some U.S. Imports starting March 10, as well as a number of new export restrictions for certain U.S. Entities. It then complained to the World Trade Organization about the U.S. Tariffs.
China announced on March 12, that it will take all measures necessary to protect its rights and interest, following the increase in tariffs by U.S. president Donald Trump on U.S. imports of steel and aluminum.
Trump has said that the EU, and other countries, have alarming trade surpluses against the United States. He said that the products of the other countries will be subject to tariffs, or he would demand they purchase more oil and natural gas from the U.S. despite the fact that U.S. export capacity for gas is close to its limit.
In a statement released on 14 February, the European Commission stated that the "reciprocal trade policy" was a step backwards.
Trump has threatened to impose a "reciprocal rate" of 25% on European goods. Pharmaceuticals are among the industries that could be affected, since U.S. companies such as Johnson & Johnson, Pfizer, and others have large facilities in Ireland. Ireland is also a leading exporter of medical equipment.
In response to the U.S. blanket tariffs on aluminum and steel, the European Union announced on March 12 that it would begin imposing counter-tariffs next month on goods worth 26 billion euros.
Trump announced on March 13 that he would impose a tariff of 200% on European wines and spirits as a response to the EU's plan to levy tariffs on American whisky and other products in April.
PRODUCTS
AUTOMOBILES: Trump announced on March 5, that he would exempt certain automakers, such as the Detroit Three - Ford, General Motors, and Jeep owner Stellantis - from his 25% tariffs against Canada and Mexico if they comply with a free trade agreement.
According to these rules, vehicles must contain 75% North American components to be eligible for duty-free entry into the U.S.
Some foreign automakers, such as Honda and Toyota with large U.S. manufacturing footprints would also benefit from the exemption, while others who don't comply will have to pay 25% of tariffs.
Trump also floated the idea that tariffs of up to 100% would be imposed on other vehicles including EVs. In 2024, the automobile industry will account for more than $200 billion in imports from Canada and Mexico.
METALS: Trump announced on February 9 that he would impose tariffs on all imports of steel and aluminum used by automakers and aerospace companies as well as in construction and infrastructure.
More than half of the U.S.'s aluminum and steel imports come from Canada, Mexico, and Brazil.
Trump ordered on February 25, a new investigation into the possibility of new tariffs on imports of copper to rebuild U.S. manufacturing of this metal, which is critical for electric vehicles, military equipment, semiconductors, and a variety of consumer goods.
Just over half of the refined copper that America consumes every year is produced domestically.
SEMICONDUCTORS : Trump stated that tariffs would start at "25%" or more, and increase substantially over a period of one year. However, he did not specify when they will be implemented.
Taiwan Semiconductor Manufacturing Co., the largest contract chipmaker in the world, produces semiconductors for Nvidia and Apple, among other U.S. customers. In 2024, it will generate 70% of its revenues from North American clients.
LUMBER: On March 1, Trump ordered a new investigation into trade that could add more tariffs to imported lumber. This would be in addition to the existing duties on Canadian Softwood Lumber and 25% tariffs for all Canadian and Mexican products.
ALCOHOL: Trump threatened on March 13 to slap 200% tariffs in response to the European Union's plan to impose tariffs next month on American whiskey, and other products. This is itself a retaliation for Trump's 25% tariffs that went into effect on steel and aluminium imports. Reporting by Anjana Anil in Bengaluru, Seher Dareen in London, Puyaan, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, An Mol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmo, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol, Anmol
(source: Reuters)