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Tariff angst is overshadowing soft inflation as stocks fall sharply and bond prices rise
On Thursday, global equities fell and U.S. Treasury yields also did. This was due to concerns about global trade tensions as well as the impact of inflation and economic growth. Trump warned that the EU would not be able to remove the whiskey surcharges imposed by the United States if it did not do so. The increased tariffs were imposed on Wednesday after Trump's new tariffs on steel and aluminum imports from the United States. The Bureau of Labor Statistics, the Labor Department's Bureau of Labor Statistics, released data on Thursday that showed U.S. Producer prices (PPI), which were expected to rise faster than consumer prices (CPI), actually remained unchanged in February. Tim Ghriskey is a senior portfolio strategist with Ingalls & Snyder, New York. He said that if it weren't for the ongoing trade war, the market would have been up strongly on the inflation data. "Traders have their attention on the trade conflict." Ghriskey said, "It appears that the administration (in the U.S.) is very aggressive. They seem to be committed to the long-term and personalities are unlikely to change their minds in the near future." Bill Adams, Chief economist at Comerica Bank, wrote in a note of research that the outlook for inflation depends more on government policy such as tariffs and deportations, or Department of Government Efficiency (DOGE), than "the data released right now which is looking backwards." At 02:47 pm on Wall Street, the Dow Jones Industrial Average dropped 399.18 or 0.97% to 40,951.75. S&P 500 dropped 51.21 points or 0.91% to 5,548.09, while Nasdaq Composite declined 231.66 points or 1.31% to 17,416.75. The MSCI index of global stocks fell by 6.69 points or 0.81% to 824.16. The pan-European STOXX 600 Index closed earlier down 0.15%, after rising by 0.81% the previous session. The U.S. S&P 500 is down nearly 6% this year. However, European stocks have done better thanks to government plans for defense spending and a possible peace agreement with Ukraine. The STOXX Index is up 6.5% for the year, despite recent drops. U.S. Treasury Yields fell on Friday as falling stocks boosted demand to buy safe haven U.S. Government debt. Trade wars between the United States, and its trading partners are escalating and threatening growth and inflation. The yield on the benchmark U.S. 10 year notes dropped 3.6 basis points from 4,316% at late Wednesday to 4.28%. The 30-year bond rate fell by 2.9 basis points, from 4.631% to 4.6016% late on Wednesday. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve (Federal Reserve), fell by 4.2 basis points, to 3.953% from 3.995% at late Wednesday. The U.S. Dollar was mixed in terms of currencies. It weakened against the safe-haven Japanese yen, but gained on the Euro and Canadian dollar. The euro fell 0.28% against the dollar to $1.0855, but the dollar dropped 0.34% against the Japanese yen to 147.74. The Canadian dollar fell 0.39% against the dollar to C$1.44 each. The pound fell 0.06% to 1.2952. Oil prices fell on Thursday after rallying on Wednesday due to a bigger-than-expected withdrawal of gasoline from U.S. stocks. Traders weighed macroeconomic worries and demand versus expectation. U.S. crude oil settled at $66.55 per barrel down $1.13 or 1.67% and Brent settled at $69,88 per barrel down 1.51% or $0.07 for the day. Gold prices soared to record levels on Thursday and were just a few cents away from the $3,000 mark per ounce. The momentum was driven by increased tariff uncertainty as well as bets placed on the Federal Reserve's easing of monetary policy. Spot gold increased 1.71% to 2,981.92 dollars an ounce. U.S. Gold Futures increased by 1.51% to $2.983.50 per ounce.
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The GM CEO and Trump met on Wednesday amid the tariff war -- White House
A White House official said that President Donald Trump and General Motors CEO Mary Barra met on Wednesday to discuss the automaker’s investment plans in light of an ongoing tariff battle. After a phone call with Barra and Ford CEO Jim Farley, as well as Stellantis Chair John Elkann, Trump agreed last week to exempt automakers for a month from his 25% tariffs against Canada and Mexico, as long as the comply with free trade rules. Trump said to reporters that GM visited him on Wednesday and "want to invest $60 billion". GM has not yet commented on the meeting. It is unclear when any new expenditures will occur. The White House has been told by automakers that they need to be certain about the tariffs and vehicle emission policies before they make any significant changes in their North American investment plans. Trump imposed hefty tariffs this week on steel and aluminium, impacting products ranging from bulldozers to cars. As exemptions, exclusions, and quotas expired, the metals tariffs increased to an effective 25% increase. The American Automotive Policy Council (AAPC), a group that represents the Detroit Three automakers noted that domestic automakers purchased the majority of their aluminum and steel in North America or the United States, but expressed concern about "specifically revoking the exemptions for Canada" and "Mexico". Stellantis said to its dealers that it was willing to work with Trump to "support further investment in our U.S. Manufacturing footprint, but we need to give ourselves time to make the changes without negatively affecting our business or our customers." Trump also threatens new reciprocal tariffs for April 2, which could dramatically increase the cost of imported vehicles from Japan, South Korea and Europe. In meetings, Trump and Commerce Secretary Howard Lutnick told automakers that they wanted the industry to shift more assembly and part production to the United States.
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Shares jump as Panama reviews First Quantum mine closure
He told reporters that next week, Panama's president Jose Raul Mulino would begin an investigation into a closed copper mine owned by Canada's First Quantum Minerals. Mulino also ordered the restarting of a power station needed to run a port nearby. The port was used to export mine production. First Quantum was ordered by the predecessor of Mulino to close the open-pit copper mine in 2023 after protests. This led to concerns about the maintenance of Cobre Panama and the 120,000 metric tones of copper concentrate that were stockpiled. First Quantum's shares rose by more than 8% after Mulino made his comments. The mine, which accounted for 1% global copper production, was among the top in the world before it was closed. Mulino said that he has authorized the removal of stranded products of copper from the mine. He argues that it is "wasted", and that Panama will need to be reimbursed after it is processed out-of-country. He said that the power plant will be activated to facilitate exports out of the port at a press conference held every week. Mulino was talking about the Punta Rincon Port, which is located approximately 17 miles (27km) north of mine. The president said that he will review the future of mine in greater detail as early as next week. Mulino stated, "The mine issue will be handled with great care and always keeping in mind the national interest." "We will start next week." First Quantum issued a statement after Mulino's speech expressing satisfaction at the president’s decision to restart power plant, as well as with his comments regarding exports. The statement said, "We welcome President Obama's statements... about the export authorizations for copper concentrate." Reporting by Elida Mehro and Divyarajagopal, Additional reporting by Aida Pelaez-Fernandez, Writing by Daina Elizabeth Solomon; Editing David Alire Garcia
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US Farmers Sue Trump Administration for Withheld IRA Funds
On Thursday, several U.S. nonprofits and farmers filed a suit against the Trump Administration, alleging that it illegally holds back Department of Agriculture grants financed by the Inflation Reduction Act. The USDA has frozen a wide range of grants while it conducts a review of agency spending, including money for farm programs and conservation funded by IRA. Five farmers who were involved in this lawsuit received grants for solar panel installation from the USDA Rural Energy for America Program. Grants were given to the three non-profits involved by the Forest Service. According to the complaint, farmers have contracted with solar installers for which they have incurred costs that may not be recoverable in the event the grants remain frozen. It says that the freeze has forced nonprofits to lay off or furlough staff, or reduce programs. This is not efficiency in government. This is a wasteful expenditure that causes unwarranted financial hardship to small farmers and groups trying to improve the communities in which they live. The USDA didn't immediately respond to our request for a comment. Agriculture Secretary Brooke Rollins said that the agency was beginning to release IRA grants to the farmers. However, the agency did not provide details on how much money had been released or the timetable.
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Canada files a dispute complaint with the WTO over US steel and aluminium tariffs
The trade body announced on Thursday that Canada had requested WTO consultations over the U.S.'s imposition of duties on certain Canadian steel and aluminum products. It said that the request was sent to members of the World Trade Organization on Thursday. The WTO stated that Canada claims the measures which ended Canada's exemptions from additional duties on certain steel and aluminum products and increased duties on aluminium items and took effect on March 23 are in conflict with U.S. commitments under the General Agreement on Tariffs and Trade 1994 (GATT). Donald Trump told reporters on Thursday in the Oval Office that he would not change his mind about tariffs. "We have been ripped of for years, and we won't be ripped-off anymore." "I'm not going bend anything, whether it be aluminium, steel or cars," said he. This move comes after Canada requested on 5 March that the United States consult with it following Trump's new 25% duties on imports from Canada, Mexico and China. Trump declared that the three largest U.S. trading partner failed to do enough in order to stop the flow of fentanyl, and its precursor chemicals, into the United States. (Reporting and additional reporting by Olivia Le Poidevin, editing by Thomas Seythal. Editing by Angus MacSwan).
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Mexico's Ebrard claims that the government is engaged in 'intensive' discussions with US before tariff deadline
Mexico's Economy minister Marcelo Ebrard announced on Thursday that his government is in intensive discussions with the United States about Washington's threat to impose tariffs against goods imported from Mexico. Mexico's Economy Minister Marcelo Ebrard said on Thursday that his government was in intensive talks with the United States over Washington's threats to impose tariffs on goods from its No. The United States has threatened, implemented, and paused tariffs against Mexico. This is expected to have an impact on both economies which have been tightly integrated over the past three decades through free trade agreements. As the uncertainty surrounding the future of their trade relations grows due to President Donald Trump's constant changes in tariff policy, economists are warning of an increased recession risk for the United States. Ebrard, speaking at his regular morning press conference said that he hoped Mexico could reach the date of April 2, in "better" conditions than other countries affected by U.S. Tariffs. Trump granted Mexico and Canada a reprieve on March 6 from the 25% tariffs that were imposed two days prior. He stated that all goods in compliance with the USMCA pact, which is a trade agreement between the three nations, would be exempted from tariffs until the end of April. Ebrard called the recent United States implementation of a global steel and aluminum tariff "a bad idea". He added that the Mexican government would be holding meetings with this sector in order to protect the economy against the trade barriers. Ebrard stated that "many measures are possible, but we won't take them lightly." The Mexican president Claudia Sheinbaum has maintained a calm attitude in the face of the tariffs that have been imposed by the United States. She has stated that her government will not announce any retaliatory actions until after the United States has made its decision on April 2. Ebrard stated, "We will consult with the appropriate authorities and prepare to use our instruments in accordance with the best interests of Mexico." He stressed the importance of keeping a cool mind, saying that it had been a strategy which has so far worked for Mexico. (Reporting Ana Isabel Martinez and Sarah Morland, Editing by Susan Fenton).
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Anglo American consults about job cuts amid business revamp
Anglo American began a consultation in South Africa and the United Kingdom to reduce jobs. This is part of a wider restructuring that aims to refocus its operations on iron ore and copper mining. The company will spin off Anglo American Platinum by the middle of this year as part of its strategic overhaul. The company also sold its nickel and coal assets, and intends to divest the De Beers diamond division. Bloomberg News reported earlier that Anglo planned to cut even more jobs from its corporate office. According to the report, people who have knowledge of the situation said that the company had sent out notices to all employees likely to be affected. In an email, a spokesperson for the company said: "These are clear significant changes in our global business which require adjustments to the resourcing in our corporate offices. We are therefore beginning consultation processes in South Africa and the UK to discuss proposed organizational changes." Anglo American employs about 55,000 people worldwide, according to the company's 2024 annual report. (Reporting and editing by Devika Syamnath, Dhanush Vignesh in Bengaluru, Additional reporting by Shanima A.
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CSN believes that Brazil can negotiate steel quotas in the US with CSN
A Brazilian executive told reporters on Thursday that the Brazilian steelmaker CSN believes there is room to negotiate with the United States a quota system in the months ahead, following the tariffs imposed by U.S. president Donald Trump on imports of steel and aluminum. Brazil, the world's largest steel importer, has announced that it will no longer be importing U.S. seek dialogue Trump's administration, and not immediately retaliate to what it termed "unjustifiable tariffs". Trump imposes 25% tariffs on steel and aluminum imports took effect On Wednesday, the U.S. stepped up its campaign to reorder trade globally in favor of America. Canada and Europe retaliated swiftly. "From what I've heard, I think that it is possible in the next two month for a similar negotiation to the one we had last year to be opened. CSN's Luis Fernando Martinez, the commercial head of CSN, told analysts during an earnings call that a possible quota system could be implemented. Trump, who was sworn in as president in January 2018 for a second term, initially targeted steel and aluminium for tariffs, but then granted exemptions to several countries and struck duty-free deals with Brazil based upon pre-tariff volume. South America had suggested previously Quotes As a "smart device." Martinez pointed out that the U.S. is still a net exporter of steel products such as plates and sheets. Earnings Blocked CSN, Brazil's largest miner and steelmaker, reported a net loss for the fourth quarter of 85 million reais (14.66 millions) due to "still high financial costs," but core earnings exceeded market expectations. According to an LSEG survey, the company reported adjusted earnings before taxes, interest, depreciation, and amortization of 3.33 billion reais. This is down 8% from last year, but still beats analysts' expectations, which were 2.87 billion reais. Analysts had predicted 11.8 billion reais. Shares of the company traded in Sao Paulo rose more than 7.5%. The mining division CSN Mineracao also jumped around 10%. Both companies were among the top gainers in Brazil's Bovespa index, which grew 1.3%. JPMorgan analysts said that CSN Mineracao and CSN exceeded their expectations for the quarter due to better than expected costs. They expressed a positive outlook. They said that "an upward revision of the consensus estimates is anticipated."
Western Hemisphere oil output rises, with a helping hand from OPEC: Kemp
Oil producers in the Western Hemisphere have caught all the boost in global oil usage over the last years, reversing the previous trend towards production ending up being concentrated in the Eastern Hemisphere.
With usage development progressively focused on the Eastern Hemisphere, the predominant east-to-west circulation of petroleum and fine-tuned items throughout the oceans has been reversed, transforming the energy security image.
Western hemisphere output climbed to 31.6 million barrels per day (34% of the world overall) in 2022 from 23.0 million bpd ( 27%) in 2012 ( Statistical evaluation of world energy, Energy Institute, 2023).
Greater production from the Western Hemisphere (+8.7 million b/d) pleased the whole development in worldwide intake (+8.6. million b/d) over the years from 2012 to 2022.
The Western Hemisphere's share will climb even further in. 2023/24 thanks to output cuts by Saudi Arabia and its closest. allies in the Middle East.
Production in the hemisphere has climbed in spite of collapsing. output in Venezuela as an outcome of sanctions, corruption,. mismanagement and lack of financial investment.
Between 2012 and 2022, increases from the United States. ( +8.9 million b/d), Canada (+1.8 million b/d) and Brazil (+1.0. million b/d) more than made up for the loss from Venezuela (-2.0. million b/d).
Given that 2020, Guyana has actually also emerged as a significant new manufacturer,. with output climbing to more than 0.5 million b/d by the end of. 2023, stimulating hemispheric growth even more.
EAST-WEST SPLIT
Venezuela was among the 6 charter member of the. Organization of the Petroleum Exporting Countries (OPEC) in. 1960; the country's oil minister Juan Pablo Perez Alfonso. arguably did more than anyone else to create it.
However Venezuela's function has actually ended up being significantly minimal considering that. the 1990s as its output has actually shrivelled and ended up being unpredictable. The country has not even undergone the system of. production allotments or quotas considering that 2019.
OPEC has actually become progressively controlled by Saudi Arabia and. other producers clustered around the Persian Gulf, with the. expanded OPEC+ group primarily generating former Soviet producers. led by Russia.
OPEC and OPEC+ are basically groups of Eastern Hemisphere. Manufacturers, where they account for over half of all output. with an insignificant footprint in the Western Hemisphere.
U.S. producers are restricted from coordinating formally. with OPEC by antitrust laws, while their counterparts in the. rest of the Western Hemisphere have shown little cravings for. such coordination.
Provided OPEC's supremacy by Eastern Hemisphere manufacturers, the. organisation has actually played an ironic function as midwife to the. revival of output in the Western Hemisphere.
By restricting lower-cost production from the Persian Gulf. and Eurasia to keep prices higher than they would otherwise have. been, OPEC and later on OPEC+ sustained the shale transformation in the. United States.
The entrepreneurship which drove the shale transformation was. home grown, but the incentive came from high oil costs, and OPEC. saved the sector from a financial crisis in 2016/17 and. once again in 2020/21.
OPEC policy likewise nurtured the growth of higher-cost. production from Canada's oil sands, Brazil's ultra-deepwater. offshore fields and more recently from Guyana.
Since the 1970s, long-lasting oil projections have actually shown an. increasing proportion of output originating from low-cost and big. reserves focused in the Middle East.
By voluntarily limiting their output in pursuit of higher. rates, nevertheless, the Middle East manufacturers have negated those. projections.
In between the 1970s and 1990s, the main beneficiaries were. higher-cost manufacturers around the North Sea as well as in Alaska,. China and the previous Soviet Union.
Given that the 2000s and specifically the 2010s, the primary. beneficiaries have been manufacturers throughout the Western Hemisphere.
ENERGY SECURITY
Western Hemisphere manufacturers now represent more than a. third of global output, up from less than a quarter when rates. were surging in 2008.
The Western Hemisphere's share of production is at the. highest level since 1972, before the very first oil shock in 1973/74,. and is still climbing.
Western Hemisphere production has grown much quicker than. usage, which first reduced its import requirements from. the Eastern Hemisphere, then led to an increasing surplus. offered for export.
As an outcome, increasing tanker traffic from the Middle East. throughout the Mediterranean and Atlantic to Western Europe and. The United States and Canada has actually lessened and started to reverse.
In an incorporated global market, the loss of production. anywhere is a risk to customers everywhere - in the type of. greater rates if not physical scarcity.
Greater geographical diversity of production and. an increased share from the Americas has actually minimized war risks and. some other kinds of political threat.
In the 1950s and 1960s, the greatest threats were felt in. Western Europe and Japan, offered their intense reliance on. imports from the Middle East.
From the 1970s and 1980s, these risks were progressively. shared by the United States, as local production fell and the. country became a net importer.
The shale transformation and the rise of other Western. Hemisphere production has actually significantly lessened those dangers. even if it has actually not eliminated them entirely.
In the 2020s and 2030s, it is customers in Asia, particularly. in China and India, who have actually become the most susceptible to any. disturbance in products from the Middle East or the Western. Hemisphere.
From 1945 till around 2010, policymakers in the. Euro-Atlantic area were pre-occupied by concerns associated with oil. security: diplomacy, securing tanker paths, developing. tactical inventories and motivating alternatives to oil.
Now it is the turn of their equivalents in Asia.
John Kemp is a market analyst. The views expressed. are his own. Follow his commentary on X https://twitter.com/JKempEnergy
(source: Reuters)