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Couche-Tard and 7-Eleven's store divestiture plans face an early obstacle
The plan of convenience store giants Couche-Tard & Seven & i to sell thousands of stores in North America, to reduce regulatory concerns before a possible merger, is being tested by rival bidders. According to several antitrust experts and people who are familiar with the situation, it is likely that the two store operators will struggle to attract offers from other convenience stores chains. They may be wary about their own antitrust risks from a potential deal. Seven & i is the owner of the 7-Eleven chain, which operates more than 12,000 convenience stores in the U.S. Sources said that so far, private equity firms have been the most interested in buying the stores. The potential for a headache for Canada’s Couche-Tard, and Japan’s Seven & i is that U.S. regulators frown on private equity firms buying divested stores as they are not likely to be long-term investors. Experts say that the U.S. Federal Trade Commission doesn't view private equity firms as attractive buyers of divested retail stores because the model is based on short-term profits. Michio Suzuki is an antitrust partner with Baker McKenzie, based in Tokyo. From their perspective, the buyer of the divested stores should be strong enough so that they can run them as a competitive unit. The companies have proposed a divestiture package that includes more than 2,000 U.S.-based stores. Experts said that there was no precedent in which private equity ownership of convenience store chains would be created after a large merger. Financial acquirers bought grocery and dollar store divested from larger retail mergers. However, they have had mixed success running these stores. When Dollar Tree bought Family Dollar for $9 billion in 2015, the FTC ordered the companies to divest hundreds stores. Dollar Tree selected investment firm Sycamore as the buyer of 330 stores. But two years later Sycamore sold them to Dollar General as it was no longer able to operate the stores as a standalone business. Sources familiarized with Couche-Tard & Seven & i argue that their divestiture packages consist of competitive stores across many states, which a private equity company can successfully operate. Five sources claim that buyout firms have shown early interest in the companies. They are eager to explore owning scaled-up convenience stores with a national footprint. Three sources stated that some firms are cautious when it comes to bidding for an asset that will be the result of a merger which is still not signed. KROGER ALBERTSONS FALLOUT In recent years, antitrust regulators around the world have been increasingly challenging large retail mergers. In order to avoid the overhang of a failed mega-deal in U.S. groceries, Couche-Tard & Seven & i took the unusual step before merging talks began: they preemptively shrank their combined potential business in North America. Seven & i wants to avoid a repetition of "the disastrous story" of Kroger/Albertsons. Seven & i received a warning from the FTC about an investigation of a possible merger with Couche-Tard - a rare occurrence before a formal deal is signed. The Kroger-Albertsons merger was announced for the first time in 2022. However, despite numerous attempts to convince U.S. Antitrust authorities to approve the deal - such as a $2.9 billion proposed divestiture of C&S Wholesale Grocers' 579 stores - this deal has not been approved. The FTC rejected C&S and called the divestiture packages a "hodgepodge" of unconnected shops. Alex Livshits is a partner with the law firm Fried Frank. He said, "Any target of a large-scale retail-store merger will take notice and become very cautious following that." Since August, 7-Eleven's owner has rejected Couche-Tard takeover attempts out of fear that it will suffer the same fate. The grocers gave up their $25 billion merger in December after significant regulatory opposition. This has been argued before as a cautionary story for retail mergers. Couche-Tard has agreed to the proposal of early joint regulatory work by Seven & I to alleviate potential antitrust concerns. Seven & I is the largest operator of convenience stores in the United States, with approximately 12,650. Couche-Tard is second-largest with about 7,100. Couche-Tard, with approximately 7,100 stores, is the second-largest operator in terms of convenience stores in the United States. The combined company would almost be seven times larger than the next biggest competitor, Casey's. There is a risk when you divest to a third-party that's legally binding, said Kathy O'Neill. She's a partner with Fried Frank and a former member of the Department of Justice's Antitrust Division. She said, "The agency may not like the buyer that you have selected or they might decide to divest more assets or store." Normally, companies seek regulatory approval after signing contracts. Experts said that the failure of the Kroger and Albertsons merger has provided a road map to successful regulatory approval in future retail mergers. It is a lesson on what not do. Experts said that Couche-Tard's and Seven & i's pre-emptive action also gives them the opportunity to get regulators on board with the idea. Reporting by Abigail Summerville and Anton Bridge, New York; Additional reporting by Rocky Swift, Tokyo; Editing and production by Anirban Sen, Edwina G Gibbs and Matthew Lewis.
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Iceland volcano erupts with lava and smoke
The volcano that caused the eruption Tuesday was located to the south-west of Iceland's capital. It erupted in a display of orange, red, and lava, causing some evacuations. However, air traffic continued normally. Since 2021, when long-dormant geological system reactivated, Iceland has seen 11 eruptions in the area south of Reykjavik. Icelandic Meteorological Office issued a warning: "An eruption has started." RUV reported that emergency services evacuated residents of Grindavik, a fishing town, and the Blue Lagoon spa nearby in the hours before the eruption, because geologists warned of its imminent arrival. As a result, there has been no disruption to air traffic due to the eruptions in the Reykjanes Peninsula. Icelandic experts believe that fissure eruptions - characterized by lava flowing from long cracks rather than one single opening in the earth crust - could continue for decades, if not centuries. A volcanic eruption in Grindavik in January 2024 caused damage to homes and roads, prompting a mass exodus at the time. However, some residents have since returned. (Reporting and editing by Terje Solsvik; Louise Rasmussen)
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Solidcore Gold Mines looks to Gulf finance in post-Russian strategy
Solidcore, a Kazakh gold miner, is looking at issuing bonds to fund investment in Kazakhstan, including new projects estimated to cost $350 million. The company's CEO Vitaly Nesis said that Solidcore was considering issuing these bonds to the Gulf region. Solidcore (formerly Polymetal International) is the second largest gold miner of Kazakhstan. In 2024, the company was forced to sell its Russian assets which accounted for 70% of its production. This happened after U.S. sanctioned its operations in Russia. Mercury Investments, a government-owned fund in Oman, was the largest shareholder of this new company. Its five-year investment program had to be designed from scratch by its newly-listed Kazakhstan-based parent. Nesis said that the main strategic result of 2024 will be the launch of a full-fledged Investment Program. He said that they were "very actively" considering the possibility of issuing exchange traded bonds in Gulf countries. Nesis stated that the UAE and Oman exchanges could be a possible option for bond placement. Bank loans and share issuance are also on the table. There is the Muscat stock exchange, Dubai and Abu Dhabi. We are examining different forms including traditional bonds and sukuks (Islamic bonds). "We are actively working together with rating agencies because this direction is very promising," Nesis stated. Nesis estimated that the company's investment into the new Syrymbet Tin project will be around $250 million. Solidcore's Tokhtar Gold Project in Northern Kazakhstan, which is still in the exploration phase, is estimated to be worth $50-100 Million. The company intends to invest over $1 billion, excluding M&A, until 2029. It will focus on the Ertis Pressure Oxidation Hub in Kazakhstan. Solidcore's 2024 net profit almost doubled due to record gold prices, but Nesis says the gold rally might not last. We believe that gold prices are unlikely to remain at their current levels even on a medium-term basis. Nesis stated that they plan conservatively when making plans. Nesis stated that the company was looking at possible acquisitions of production assets both in Uzbekistan as well as Oman. Nesis stated, "We're taking our first steps into the M&A world and laying the foundation for future growth of the company." Nesis said that, despite high gold prices, the company did not plan to pay dividends so long as its shares remained in the National Settlement Depositary of Russia (NSD), a part of the Moscow Stock Exchange.
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Copper returns to its previous high after a two-week slump on the back of positive data from China
The price of copper rose on Tuesday, after four sessions in which it fell, boosted by positive data coming from China, the world's largest metals consumer. However, uncertainty over U.S. Tariffs limited gains. The benchmark three-month copper price on the London Metal Exchange increased 0.4%, to $9,745 a metric ton, by 0930 GMT. This was a rebound from the lowest level in over two weeks, reached in the previous session. Two surveys conducted on Monday and Tuesday revealed that China's manufacturing industry was growing faster than expected. This is in contrast to the weakening activity seen elsewhere in Asia. The Caixin/S&P Global Manufacturing PMI showed a pick-up in activity on Tuesday, as factories raced to deliver goods to their customers before U.S. Tariffs went into effect. A day earlier, a PMI official showed that manufacturing activity was growing at the fastest rate in over a year. Nitesh Sha, commodity strategist with WisdomTree, said: "The PMI data definitely supports the strong momentum that is coming from China." I do believe that China will continue its efforts to push against the wind, and to provide stimulus to its domestic economy in order to stimulate domestic growth in order to counter the loss of possible exports. The market was held back by the reciprocal tariffs that U.S. president Donald Trump said he would introduce this week. He also stated on Sunday that they will be applied to all countries. The copper price was also supported by a lack of copper concentrate. This has led to negative charges for copper concentrate treatment and refining (TC/RCs). The TC/RCs are an indicator of the availability of copper concentrates. They are a major source of income for smelters. Low TC/RCs indicate a tight supply. LME Tin added 0.3% to 36,745 tons, near its highest since June 2022. This was due to fears that supply disruptions could be caused by an earthquake that occurred in Myanmar's tin-rich region last Friday. Other metals include LME aluminium, which fell 0.6% to 2,519 per ton. Zinc also slipped to 2,842, while lead dropped 0.3% to $2,000, and nickel rose 1.1% to 16,100. (Reporting and editing by Janane Vekatraman; Additional reporting in Shanghai by Violet Li)
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Gold reaches record highs as tariff fears boost safe-haven demand
Gold's record-breaking run reached another high on Tuesday. Investors are bracing for President Donald Trump to announce reciprocal tariffs. Gold spot was up 0.3% to $3,131.56 per ounce, at 0914 GMT. It had earlier reached a record-high of $3,148.88. U.S. Gold Futures rose 0.3% to $3,159.10. "Trump's tariff remarks and his increasingly volatile position on Russia's conflict against Ukraine are proving to be the perfect chaos for a new record gold price," surpassing the COVID Pandemic of five years ago. Adrian Ash, the head of research at BullionVault, an online marketplace, confirmed this. Trump announced Sunday that his reciprocal tariffs, which will be announced Wednesday, would apply to all countries and not just a few. Goldman Sachs raised the likelihood of a U.S. economic recession from 20% to 35% on Monday and said that it expects more rate cuts from the Federal Reserve as Trump's Tariffs shake the global economy. This year, gold, which is traditionally seen as an insurance against inflation and uncertainty, has increased by more than 15 percent. In a low-interest rate environment, non-yielding gold tends to perform well. The market is closely watching the Federal Reserve's policy decisions on April 2, as there are many economic indicators that may impact them. If rate reductions are confirmed, it will provide further support to gold's upward trend, said Alexander Zumpfe a precious metals dealer at Heraeus Metals Germany. Bullion's rally has been boosted by the strong demand of central banks and geopolitical unrest in Europe and the Middle East, as well as increased flows into exchange-traded gold funds. Gold closed its strongest quarter in 1986 and rose over $3,100/oz. This is one of the biggest upswings ever seen in the history of precious metals. Investors will also be watching the U.S. data on job openings on Tuesday, and Friday's non-farm payrolls in the U.S. Silver remained at $34.06 per ounce. Platinum fell by 0.4% to $988.35 and palladium rose 0.3% to $985.86.
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Sources: Mercuria's former Beijing head joins China's Rongsheng
According to internal memos and sources, the former head of Mercuria's Beijing office will join China's largest oil refining group Rongsheng Holdings as a senior executive. Li Xinhua will assist Xiang Jingjiong as president of Rongsheng Holdings. Li will be responsible for Rongsheng’s coal, petrochemical and oil trading businesses in Singapore, according to sources who declined to name themselves as the move had not yet been announced. Rongsheng has not yet commented. Li has been with Mercuria in Geneva for 17 years, one of the top four commodities and energy traders on the planet. Li's new role is to grow and manage Rongsheng’s expanding business. Two sources have described a period of challenges including an overcapacity of China's refinery industry, a lacklustre petrochemicals global market, and geopolitical uncertainties. Rongsheng Singapore's trading desk is populated with former Chinese state oil traders. The firm also recently hired an Ex-PetroChina trader as the head of its Canadian crude oil trading. Li, who joined Mercuria from the Chinese state-run Sinochem in 2008, was instrumental in expanding its China oil business. This included dealing with independent refineries in China. "During his tenure at Xinhua, he has played a major role in the growth and transformation of the company." Mercuria's memo stated that he actively developed the independent refiners market in Shandong. This laid a solid basis for the oil trading business of the company. Li Shuirong's son-in law, Xiang is Li Shuirong's new boss. Li Shuirong was the founder and chairman of Rongsheng, which he built from a small factory in the 1980s. Rongsheng controls China’s largest private refiner Zhejiang Petrochemical Corp. It was also the first Chinese refiner to receive a significant investment from Saudi Aramco. Mercuria memo stated that Wang Tiezheng will replace Li as the head of Mercuria Beijing. Wang is a senior iron-ore trader. Mercuria has not responded to requests for comment. Siyi Liu contributed additional reporting from Singapore. Tony Munroe, Mark Potter and Tony Munroe edited the article.
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CNPC's think tank predicts that China's oil demand will increase by 1.1% by 2025.
China's oil demand will increase by 1.1% to 765 millions metric tons in 2025, a think-tank affiliated with the state energy company China National Petroleum Corp. (CNPC) announced on Tuesday. This is due to a better than expected growth of the economy and an increasing demand for petrochemicals. According to Wu Mouyuan of the CNPC Economics and Technology Research Institute, China's plastic consumption per capita is still around 60% less than that of developed nations. Wu said that China's booming electric vehicles (EV) sector will also drive the consumption of plastics. Plastics are used more in EVs than gasoline vehicles. Wu stated that the use of transportation fuels has reached its peak. He said that alternative energy sources would grow faster than was previously believed, and electric vehicles and LNG trucks will be owned by more people than they are now. By 2030, the rates of ownership for both these technologies will rise from less than 10% today to over 30% and 15% respectively. According to CNPC, Brent oil prices are expected to fall from $79 per barrel in 2024 to a range between $65 and $75 this year due to a slowdown in the global economy. Brent will be between $60 and $70 in the base scenario from 2026 until 2030. The policies of U.S. president Donald Trump could have a major impact on the global market and tighten supply. The Trump factor is the biggest uncertainty on the oil market, Wu said. He cited Trump's harsher sanctions against Iran and his threat of 25% tariffs for countries that buy oil from Venezuela or Russia. Reporting by Siyi Liu from Singapore and Colleen Waye in Beijing, with editing by Muralikumar Anantharaman & Kim Coghill
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Demand for French spots eases as supply increases
The European power price fell on Tuesday, as wind volumes are expected to increase in the coming days and demand is also expected to decrease due to rising temperatures. LSEG analyst Florine Eengi predicted net exports for Germany. She also mentioned an increase in solar power. By 0810 GMT the French baseload electricity contract for Wednesday had reached 34.3 euros ($37.06 per megawatt-hour (MWh), while at that time, the German day-ahead power contract had not been traded after closing at 97.3 euro/MWh. LSEG data shows that the German wind power production is expected to double on Wednesday to 22.2 gigawatts from 11.0 GW, according to LSEG. The power consumption in Germany is expected to drop by 400 MW, to 56.5 GW. In France, the demand was predicted to fall to 51.5 GW compared to 51.7 GW. The French nuclear capacity has increased by two percentage points, to 73%. The German baseload year-ahead power contract rose 0.1% to 85,4 euros/MWh. Its French counterpart was not traded after closing at 62.3 euro. The benchmark contract on the European carbon markets was little changed, hovering at 67.92 Euros per metric ton following a close of 67.98 Euros. Henry Lush, Veyt analyst, saw few immediate negative factors in the carbon markets from policy makers and supply. Prices were above technical support levels. Data from the ship-tracking company Kpler revealed that the world's biggest thermal coal buyers have slowed down imports in the first quarter 2025. This has led to the lowest quarterly purchase total for three years. A business survey revealed that Germany's manufacturing sector has shown signs of improvement in March. It was the first time in almost two years that production had increased. $1 = 0.9256 Euros (Reporting and editing by Janane Vekatraman).
Wall Street is ready for Trump's tariff announcement; the fog of uncertainty continues to envelop Wall Street
The scheduled announcement of U.S. President Donald Trump on April 2, 2019 could remove the fog of uncertainty that has engulfed financial markets in this year. However, few investors expect definitive guidance.
Investors were optimistic about the pro-growth policies of Trump's government in 2025, but since his inauguration, the stock market has plummeted. Wall Street was thrown into turmoil by headlines about tariffs, which caused the S&P to fall as much as 10 percent earlier this month.
The benchmark index will likely finish the first quarter with a decline of about 5%. This is its largest drop for the first three-month period since 2020.
Mark Malek is Chief Investment Officer of Siebert Financial. He said: "I am an eternal bull but I believe that there are more downsides than upsides between now and the end of next week and certainly at the start earnings season."
The benchmark index fell about 2% Friday, after data revealed that U.S. consumers spent more in February despite rising prices of goods and services. The market's slide shows how investors are sensitive to any indication that Trump's trade protectionist agenda may reignite inflation.
The announcement of tariffs on April 2 should reveal the countries and sectors that Trump's administration is targeting as it attempts to reduce a global goods trade surplus of $1.2 trillion.
Stock prices are expected to be volatile, and will fluctuate wildly depending on a number of factors, including the amount and duration of tariffs, which sectors and countries they will target, and any retaliatory actions from trading partners.
Michael Arone is the chief investment strategist at State Street Global Advisors.
Arone stated that there is a possibility of more volatility after April 2nd.
The threat of retaliation was made by governments in Ottawa and Paris on Thursday after Trump announced a 25% tariff for imported vehicles. This slashed auto stocks, testing the already strained relations with allies.
Angelo Kourkafas is a senior investment strategist with Edward Jones. He said that the announcement on April 2 will likely not be a "one-and-done" event.
Kourkafas stated that "it is an important landmark, but it does not completely remove all of the uncertainty which could still exist."
All Spinach and No Candy
Matthew Aks is a senior strategist with Evercore ISI. He said that the market's reaction on April 2, "will heavily depend" on future tariffs and sectoral tariffs. It will also depend on how quickly other countries can retaliate against reciprocal tariffs.
He said that if other countries retaliated, it could create an escalatory loop that would dampen any sense of relief.
Barclays strategists lowered their target price of S&P500 for 2025 to 5,900, from 6,600. They did this because they expect earnings to be hit by tariffs, which will cause a slowdown in U.S. economic activity, but not a recession.
The bank reduced its estimate of 2025 S&P500 EPS to $262, from $271. This implies a growth that is slightly below trend, as a result of tariffs. Discretionary stocks are among the most susceptible.
UBS Global Wealth Management lowered its S&P500 2025 forecast to $6,400 from 6,600. It also lowered the 2025 S&P500 EPS forecast to $265 by $5.
There are also upside risks. If the Trump administration's proposed tariffs are not as bad as the market fears, the recent stock drop could be a buying opportunity.
Jamie Cox, Managing Partner of Harris Financial Group, said that he did not expect anything to happen that would shock the market on the downside. Jamie Cox would see any new bout of weakness in the market as an opportunity to buy.
Some people said that the deadline for tariffs could allow Trump to switch to market-friendly policies such as tax cuts.
Robert Pavlik is a senior portfolio manager with Dakota Wealth. He said, "I believe they will start to shift gears and move away from tariffs."
"That won't disappear completely, but the focus will be on tax issues." "That's what I hope for."
This could lead to a resurgence in the appetite of investors for risky assets.
Arone, from State Street, said: "It has been all spinach so far and no candy. But I think candy will likely come later in the season."
During Trump's initial term, the S&P 500 lost 18% of its value between January and December 2018, as a U.S. - China trade war intensified. As trade war fears eased, the index recovered all of its lost ground in about three months.
Investors worry, however, that a prolonged back and forth on tariffs increases the chances of lasting damage to U.S. economic growth. Investors worried about tariffs and a possible recession, which could lead to a drop in consumer confidence.
Malek, a Siebert employee, said: "I've never seen a confidence movement like this without a negative impact somewhere." John Canavan is the lead analyst at Oxford Economics. He said that recent stock market nervousness was largely due to fears of tariffs causing a significant economic slowdown. Canavan believes that some recent weakness may spill over into the second quarter.
Investors have been discouraged from buying stocks at a discount after Wall Street's decline in the last quarter due to uncertainty over tariffs.
Arone, from State Street, said that a greater level of clarity would allow the markets to rise.
He said, "I'm still sceptical that we will achieve that clarity... but we'll see."
(source: Reuters)