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German Embassy asks Italy's Banking Union about M&A Battles
The German embassy in Italy asked the main Italian banking union Fabi on Tuesday to explain the takeover wars that are roiling the sector. Fabi released a statement saying that during a meeting requested by the embassy in Rome, Fabi's Lando Maria Sileoni, and Benedikt Grdau, the embassy's advisor for financial affairs, discussed ongoing deals, bank regulation, the role of the unions, and political implications. Fabi stated that Germany closely monitors the rapidly changing Italian finance sector and its impact on cross-border trade. Current M&A activity Italian banking includes UniCredit and Monte dei Paschi di Siena bidding respectively for Banco BPM and Mediobanca. Last year, UniCredit announced that it had acquired a large stake in Commerzbank. It then began to press for a merger. A source at the meeting said that the Italian bank's bid to acquire Commerzbank, was one of the topics discussed. The source did not provide any further details. UniCredit has to wait for approval from the European Central Bank for the 28% stake that it built up in the German lender - largely using derivatives. (Reporting and editing by Gavin Jones, Andrea Mandala)
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After Powell's comments, US yields are higher and stocks flat.
Investors reacted to the latest U.S. trade war and Federal Reserve Chairman Jerome Powell's signal of a cautious approach for rate reductions as they assessed the latest U.S. Tariff salvo. Donald Trump raised the tariffs on imports of steel and aluminum to 25%, up from 10%. He also eliminated product-specific exemptions and country exclusions. Trump said that he would consider an exemption for Australia, and that the steel-and-aluminum measures will only come into effect on March 4. This has led some investors to believe that the duties were being used as a negotiation tool. Mexico, Canada, and the European Union condemned the move on Tuesday, the EU saying that the 27-nation block would take "firm, proportionate countermeasures". Wall Street saw the S&P 500 almost unchanged, as the benchmark index reversed its previous declines. Powell said the Fed was not in a hurry to change its policy and that it would only react to the impact of tariffs or trade policies on the economy. Helen Given, FX Trader at Monex USA, Washington, said: "It appears that he is trying to encourage people not to trade on these headlines, not to make moves based on those headlines, and to wait and see what happens." In the last two week, we've seen headlines about tariffs become more volatile. What we are seeing is that headlines and announcements do not always indicate that tariffs will be imposed, or at least at the time we expect. Coca-Cola's quarterly results were reported and the Dow Industrials gained nearly 4%. The Dow Jones Industrial Average increased 39.40 points or 0.09% to 44,511.24. The S&P 500 dropped 0.64 points or 0.01% to 6,065.80. And the Nasdaq Composite declined 43.80 points or 0.22% to 19,670.47. The MSCI index of global stocks fell by 0.28 points or 0.03% to 873.51. The pan-European STOXX 600 rose by 0.23%, closing at a new record high. Bank stocks were the main contributors. Investors' attention now turns to Wednesday's latest consumer price reading, which will provide the latest information on Treasury yields. The yield on the benchmark 10-year U.S. notes increased 3.4 basis points, to 4.529%. The markets have been reducing their expectations of rate cuts by the U.S. Central Bank this year. They are largely expecting that the Fed will hold rates at its meetings in March and May. According to CME's FedWatch tool, the markets have priced in a 51% probability of a rate cut in June. This is down from 63.6% one week ago. The dollar index which measures the greenback against a basket currencies fell by 0.28%, to 108.06; the euro rose 0.38%, at $1.0345. The dollar gained 0.3% against the Japanese yen to 152.45, while the pound rose 0.47% to 1.2422. The oil price rose to its highest level in two weeks on the back of Russian and Iranian supply worries, but the announcement about tariffs curtailed gains a little. U.S. crude climbed 1.31% to $73.27 per barrel. Brent rose to $76.95 a barrel, an increase of 1.42% for the day.
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ArcelorMittal is considering shifting European support to India
ArcelorMittal, the second largest steelmaker in the world, said that it is looking at a possible shift of some European business support to India as the steel sector of the region faces increasing pressure due to high costs and increased imports. However, the company said that no steel production would be transferred from Europe to India. The steel industry in Europe has struggled against the oversupply of steel from China. Now, like all other exporters, they face 25% tariffs on imports of steel and aluminum that President Donald Trump announced on Monday "without any exceptions or exclusions". Officials from the government said that India, whom Trump referred to as a "very large abuser" of trade, plans to offer tariff reductions in different sectors, which could increase U.S. exports and earn tariff concessions. The Prime Minister Narendra Modi is visiting the United States for talks with Trump this month. In an email statement, ArceloMittal said that the steel industry in Europe faces several major challenges. These are threatening to the future of the steelmaking on the continental continent. It said that it had been studying the expansion and centralisation of certain support functions in India. This was revealed during a European Works Council meeting held on Tuesday. The group said that the initiative was part of its ongoing efforts to optimize processes and align itself with similar moves made by companies in various industries. ArcelorMittal spokesperson said it is too early to give details about which functions or jobs might be affected. The European unit of the company is increasing efforts to reduce non-production costs in response to mounting pressures on the region’s steel industry. Already strained by China’s overcapacity, this sector faces an increased level of stress. Eurofer, Europe's largest steel industry group, has requested a 50% reduction in steel import quotas as part of the EU's protection system. (Reporting and editing by Emelia Sithole Matarise; Anna Peverieri)
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Citadel's Griffin believes tariffs pose a risk to US economic growth
Ken Griffin, the founder and CEO at Citadel Investments, stated on Tuesday that President Donald Trump’s tariff policy was a threat to economic growth, and could force other countries into new trade alliances. He also criticized Trump’s "bombastic speech." He told a UBS Group conference that the uncertainty and chaos caused by the tariff dynamics created between the United States and its allies was a barrier to growth. It is difficult for multinationals to plan ahead for the next 5, 10, 15, or 20 years. Trump increased tariffs for steel and aluminum imports to 25% on Monday, "without any exceptions or exclusions," and added 10% on all Chinese goods. He also threatened Canada and Mexico. Griffin, who is a Republican and voted for Trump during the November election, criticizes some of Trump's policy, including tariffs and immigration. He believes that these policies could increase the U.S. debt and make American companies less productive and competitive. Griffin said that a tariff imposed on Canada's energy product could force Canada to diversify their customer base and look for new trading partners such as China. From my perspective, the damage is already done by the bombastic language. This is a terrible mistake when trying to negotiate a deal. It hammers into the heads of CEOs, and policymakers alike, that "we cannot depend on America as our trading partners." He said.
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EIA raises US oil production forecast for 2025
The U.S. Energy Information Administration's (EIA) Short-Term Energy Outlook Report, released on Tuesday, said that the U.S. production of oil is expected to be higher than previous estimates. However, it did not change its forecast for growth in demand. The EIA now expects U.S. oil production will average 13,59 million barrels per daily (bpd) by 2025. This is up from the previous estimate of 13,55 million bpd. The agency maintained its estimate of U.S. petroleum and liquid fuel consumption at 20.5 millions bpd by 2025. Donald Trump, the president of the United States, has pledged to maximize U.S. production while energy executives insist on capital discipline as a priority. The agency predicted that Brent crude prices will average $74 by 2025 but fall to $66 by 2026 due to a gradual increase in production and a relatively slow global demand growth. The EIA stated that OPEC+ will cut production to reduce global oil stocks and maintain crude oil prices at current levels until the first quarter 2025. OPEC+ is expected to increase their production of liquid fuels by 100,000 bpd. EIA reported that the group's production will rise by 600,000 barrels per day (bpd) in 2026, as it unwinds voluntary production cuts. However, they will still remain below their target levels to try and limit global oil inventory increases. Through 2026, the U.S.A., Canada Brazil and Guyana will drive output growth outside OPEC+. EIA stated that the global liquid fuels demand will increase by 1.4m bpd by 2025, and by 1m bpd by 2026. India and China are expected to lead this growth. The EIA stated that the growth is expected to continue at a slower pace than before the pandemic. EIA stated that any future tariffs imposed by Trump on Canada or Mexico are not expected to have a significant impact on global oil supplies. The agency also said the new U.S. Sanctions on Russia and tariffs were a source of uncertainty in oil prices. The EIA stated that the closing of two U.S. refining plants will result in a decrease in net U.S. fuel imports to meet domestic demand. Reporting by Arathy S. Somasekhar, Houston; Editing and rewriting by Mark Porter & David Gregorio
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Pentagon's Hegseth sees growth in defense spending despite Musk review
U.S. Secretary of Defense Pete Hegseth stated on Tuesday that he wished to increase the overall U.S. military spending. He also played down any concerns about an audit pending by Elon Musk, which is aimed at identifying billions in waste within the Pentagon. Hegseth, speaking in Germany on his first overseas trip, said that he was already in contact with Musk. He also expressed confidence in efforts to cut costs by billions of dollars and make the Pentagon more effective. Hegseth, speaking of Musk's Department of Government Efficiency, said: "There are plenty of places at the Pentagon where we would like the DOGE to keep a keen eye on things. But we will do this in coordination." We won't do anything that would compromise the operational or tactical capability of America. Hegseth, however, said that he had already been "intimately involved" with key committees of Congress regarding the bolstering of the U.S. Military. Musk's companies like SpaceX also have major contracts with Pentagon, raising significant concerns about conflict of interest. Donald Trump, the U.S. president, has stated that Musk's DOGE will target the Pentagon first. The DOGE will then review U.S. defence spending after it completes cutting spending at the Department of Education. Musk is expected to uncover hundreds of billions in fraud and abuse within the Pentagon, according to Trump. Leaders across the political spectrum criticize the waste and inefficiency of the Defense Department. Democrats and civil servant unions claim that Musk does not have the expertise needed to restructure Pentagon and that their efforts could expose classified programs. Hegseth downplayed concerns about broad cuts to Pentagon agencies like those seen in the U.S. Agency for International Development by saying: "The Defense Department does not U.S. AID." "U.S. AID is having a lot problems... pursuing globalist policies that have no connection with America First. This is not the Defense Department." Hegseth said Musk could target Pentagon efforts related climate change without providing specifics. Hegseth stated, "I look forward to welcoming Elon at the Pentagon in the near future." Look at all the climate programs the Defense Department has pursued. The Defense Department's business is not to solve the problem of global warming. "We're in business to deter and win wars." Mike Waltz, Trump's National Security Advisor, suggested over the weekend that DOGE could have a particular interest in the Pentagon's processes for shipbuilding. The Pentagon budget is close to $1 trillion per annum. In December, the then-President Joe Biden approved $895 billion of defense spending for fiscal year ending on September 30. Hegseth said that defense spending should be increased, but he also acknowledged his concerns about the growing U.S. national debt which he called "a liability for national security." Hegseth stated, "I believe the U.S. should spend more than what the Biden Administration was willing to do. They historically underinvested into the capabilities of our Military." "The president, just as he did in his first term, is committed to investing in America's military." Hegseth stated that the U.S. defence spending should at least not fall below 3% GDP. According to the World Bank, which cites data from the Stockholm International Peace Research Institute (SIPRI), the United States will spend about 3.4% on defense by 2023. (Reporting and editing by Franklin Paul, Marguerita Choy and Idrees Al)
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US Treasury Secretary visits Ukraine to discuss rare earth minerals
Donald Trump announced on Twitter that U.S. Treasury secretary Scott Bessent would be traveling to Ukraine in the next few days. This is the latest of a number of U.S. government officials who will be visiting Europe in the near future. Bessent will be the first cabinet level official from Trump's administration who visits Ukraine. He is expected to discuss the potential U.S. accessibility to Ukraine's rare-earth mineral resources. Both Trump and Ukrainian President Volodymyr Zelenskiy have expressed an interest in a deal that would allow the United States to receive rare earths in exchange for continuing support in repelling invasions by Russia. Other U.S. officials who are traveling to Europe will be discussing the Ukraine War with Kyiv, and other European Allies. The group includes Secretary of State Marco Rubio as well as Vice President JDVance, Defense Sec Pete Hegseth, and Keith Kellogg the U.S. Special Envoy for Ukraine. Trump said in a Truth Social posting announcing Bessent’s visit that the U.S. had spent billions of dollars globally, but with little to show for it. Rare earths is a grouping of metals that are used to produce magnets for electric cars, cell phones and missile systems. There are no substitutes and the demand is expected to increase. This week, it was reported that the Trump Administration plans to pressure European allies to purchase more American weapons for Ukraine in advance of possible peace talks with Moscow. (Reporting and editing by Don Durfee and Frances Kerry, Ni Williams and Nissa Williams.)
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Trump's tariffs are expected to have a 10% impact on the value of Spain’s steel and aluminium exports.
According to a Tuesday estimate by the Spanish Chamber of Commerce, the total value of Spanish exports of steel and aluminum to the United States may fall by 10.4% as a result of the new tariffs imposed on metals by President Donald Trump. The lobby stated in a note that "the change in the current trading scheme for aluminum and steel would be detrimental in aggregate terms to the productive fabric," adding that Spain's cast iron and steel total exports to the U.S. will reach 944 million euro ($977 millions) in 2023. The report states that a uniform 25% tariff on all countries and regions exporting goods - which Trump has indicated so far – would not be as damaging for Spain because the relative prices of commodities wouldn't change much. It cautioned, however, that "this wouldn't be the case if tariff increases were discriminatory by country or bloc". The 10.4% value reduction was also its initial estimate. Steel and aluminum tariffs will be in effect from March 12.
Europe's moderate winter season leaves gas stocks at record high: Kemp
Europe is on track to end the winter season with a record volume of gas in storage, which has Once inflation, pressed futures rates back to precrisis levels is taken into consideration.
The supply photo has actually been changed from 2 years back, when traders and policymakers were worried about possible gas scarcities following Russia's invasion of Ukraine.
Storage facilities across the European Union and the United Kingdom were 62% complete on March 5 compared with an average of 41%. full on the very same date between 2011 and 2020.
Stocks amounted to 707 terawatt-hours (TWh), which was. 277 TWh (+64% or +2.14 basic variances) above the previous. ten-year seasonal average.
The surplus had actually swelled from 167 TWh (+18% or +1.70 requirement. deviations) at the start of the winter heating season on October. 1.
Winter season 2023/24 has mainly been characterised by a strong. positive North Atlantic Oscillation, directing strong westerly. winds from throughout the Atlantic into Northwest Europe.
Pressure differentials in between the Greenland-Iceland. low-pressure location and the Bermuda-Azores high-pressure location have. been higher than regular, accelerating warm, wet air into. Northwest Europe.
The outcome has been greater temperatures and wind speeds than. average, minimizing heating demand and at the same time improving. wind generation, creating a double cut to gas consumption.
Far this winter, heating need has been 14% below the. long-lasting average in London and 25% below the average at. Frankfurt in Germany.
Stocks are on track to end winter around 664 TWh,. setting a record and beating previous highs of 629 TWh at the. end of winter season 2022/23 and 609 TWh at the end of winter 2019/20.
Northwest Europe has to do with 80% through the heating season so. any cold snaps are not likely to make a considerable distinction to. the result at this point.
It is the region's second moderate winter season in a row. Europe has. been fortunate along with clever.
High costs and government policies to reduce gas and. electrical power usage have contributed preventing lacks,. however back-to-back moderate winters have played a bigger role protecting. energy materials.
Chartbook: Europe gas inventories and rates
Because October 2023, futures prices have decreased progressively to. encourage more consumption and limit build-up of excess. stocks.
Inflation-adjusted front-month futures prices was up to an. average of just 26 euros ($ 28.40) per megawatt-hour in February. below 46 euros in October 2023 and a record 245 euros in. August 2022.
Front-month prices have actually gone back close to the pre-crisis. ten-year average between 2011 and 2020 of 23 euros in genuine. terms.
Lower prices must ultimately motivate energy-intensive. producing markets that idled plants in 2022 and 2023 to. reboot a few of them.
Major industrial users mainly hedge gas purchases in the. forward market, where year-ahead costs have actually fallen to an. average of around 30-31 euros per megawatt-hour up until now in 2024.
Year-ahead costs are not vastly greater than the pre-crisis. Once changed for core, average for 2011-2020 of 26 euros. inflation.
It will take longer for the decline in wholesale expenses to. Filter through to retail prices for gas and electrical power. homes and small businesses must see prices decline previously. winter 2024/25.
Lower rates are currently directing more liquefied natural. gas freights to price-sensitive customers in East and South Asia. that were reluctant or unable to take on wealthier users in. Europe throughout 2022/23.
Costs need to fall far enough for long enough to purge some. excess stock and make room in the storage system for the. build-up of stocks throughout the summer season of 2024.
Associated columns:
- Europe's swollen gas stocks drive prices lower (February. 13, 2024)
- Europe's gas rate is up to encourage more commercial use. ( January 4, 2024)
- Europe's energy crisis is over (November 28, 2023)
John Kemp is a market analyst. The views revealed. are his own. Follow his commentary on X https://twitter.com/JKempEnergy.
(source: Reuters)