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Dow, S&P 500 and Dow decline as White House announces Trump will implement tariffs
S&P 500, Dow and Dow Jones were all slightly lower in Friday's trading. Indexes lost ground after the White House announced that U.S. president Donald Trump would implement tariffs on Saturday of 25% on Canadian imports, 10% on Chinese products and 25% on Mexican imports. Investors are bracing themselves for more tariff news, after Trump repeatedly warned against using this measure. Sources familiar with Trump's tariff plans said earlier that Trump would announce tariffs against Canadian and Mexican imports this Saturday, but defer the collection of duties until March 1. Early in the session, data on the economy reinforced expectations that Federal Reserve would maintain interest rates for longer. As expected, U.S. consumer spending increased in December. It makes perfect sense that the Fed did not do anything in this week and it is also logical (Fed chair) Jay Powell said they aren't in a rush to lower interest rates," said Scott Wren. He's a senior global strategist at Wells Fargo Investment Institute, located in St. Louis. The Dow Jones Industrial Average dropped 257.03 or 0.57% to 44,625.10. The S&P 500 fell 13.92 or 0.23% to 6,057.25 while the Nasdaq Composite rose 6.06 or 0.03% to 19,687.81. In its Wednesday policy announcement, the Fed kept rates at their current levels. Futures that settle at the policy rate of the central bank showed traders were still betting on the Fed delaying rate cuts until June, and reducing them by 70%. Apple was the last to fall. Apple was the last to fall. Chevron's shares dropped after it reported earnings that were below expectations for the fourth quarter.
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Petrobras Brazil raises diesel prices first time since 2023. Shares rise
Petrobras, the state-run Brazilian oil company, announced on Friday that it would increase the price of diesel sold to its distributors for more than a month. This was a much anticipated change in fuel prices, which sent the shares up. Petrobras announced that it will increase the price of diesel at refinery gates by 0.22 reals per liter to an average of 3.72 reais (about $0.6376) starting February 1. This is the first rise since October 2023. Petrobras preferential shares rose by around 2% on the B3 Brazilian stock exchange in the afternoon following news of this hike. Analysts said that the adjustment brings Petrobras' prices into line with the international market. The markets were eagerly anticipating an announcement after local media reported this week that Luiz Inacio Lula had authorized Petrobras to take the action, since its prices are lower than the current international prices. Lula said on Thursday that it wasn't up to him whether Petrobras made any adjustments to the fuel prices. He left the door open for Petrobras if they deemed it "important." Diesel's price increase comes as the government is working to reduce food prices following a recent poll that showed Lula's approval ratings dropping. Petrobras, under Lula's administration, has adopted a pricing strategy designed to protect Brazilian fuel prices from the volatility of international markets, while maintaining a profitable sales model for the company.
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What is worrying US executives about tariffs?
In the early days this quarter's earning season, tariffs were on executives' minds as U.S. president Donald Trump threatened to hit Mexico and Canada with levies against imported goods. The tariffs will now be implemented on March 1 with an announcement made on Saturday. However, it's possible that Trump may back down on his threats or only target specific industries. This quarter, the topic of how companies are navigating this issue will be a major focus on investor events and conference calls. Nearly 200 of the S&P 1000 - a group of large, mid and small cap stocks - mentioned "nearshoring," tariffs or supply chain during the month of January. Many CEOs have made similar remarks to Textron CEO Scott Donnelly who stated on Jan. 22, "we're going to just kind of hold in there and watch how it all plays out." Here are some of what trade executives are talking about: In recent weeks, several companies have talked about the difficulties of moving production. Tariffs may apply to companies that manufacture in both the United States and Mexico or Canada. Brent Yeagy is the CEO of Wabash National, a transportation logistics company. He said: "We have capacity available in our domestic operations that can shift production as required to minimize any tariff impacts." Polaris, a manufacturer of power sports vehicles, spoke about it on its earnings call. It noted that in 2017, Polaris moved quickly to leave China and now faces possible tariffs because of production facilities in Mexico. It also has to deal with increased labor costs in its U.S. operation. Michael Speetzen said, "We have been incredibly under-represented in the powersports industry." This was during a call with investors on January 28. "We are the only U.S. manufacturers, yet we pay tariffs." MOVE SHIPMENTS AROUND Some companies have indicated they may consider moving where they send their shipments. Some large global companies with multiple operations may be able adjust shipments to a different location. William Oplinger, CEO of Alcoa, said on January 22 that the Middle East, India and other countries with lower tariffs could increase imports, while Canadian Aluminum would be diverted to Europe and others. He said that a 25% tax on Canadian aluminum exported to the United States would cost U.S. consumers between $1.5 and $2 billion per year. SALES ACCELERATION In both the previous and current quarters, many companies have already reported that customers are increasing their orders in anticipation of tariffs. General Motors, for example, accelerated delivery to get ahead before tariffs. Some companies anticipate that Trump will announce an accelerated tariff schedule, which would then lead to pre-emptive purchasing. "I don't see any increased pre-buying activity for products. Neil Schrimsher CEO of Applied Industrial Technologies said that most people are taking the stance they will have a notice period if and when these events occur. Inflation and Pricing Many executives have stated that tariffs will be passed onto consumers. Eric Cremers commented during the earnings call of PotlatchDeltic that he knew of a Canadian producer of lumber who would attempt to pass 100% of tariff costs on to their customers. "Now, will they be able get 100% of whatever duty it is or not?" Who knows how things will end up, but they plan to pass this on to the consumers."
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Brava's onshore assets can be purchased through the Fluxus process in Brazil
Fluxus, a Brazilian oil and natural gas company owned by the conglomerate J&F has decided to withdraw its bid to purchase assets onshore owned by Brava Energia. This was announced in a Friday statement. Fluxus was invited to take part in the second phase of the sales process, but after a preliminary review decided to not proceed. This pushed Brava Energia's shares lower. Sources familiar with the issue told the media earlier this month that Fluxus made a non-binding bid for the assets onshore as part of its expansion strategy. However, the interest would depend on the results of further analysis. Sources stated at the time, that Brava was formed by a merger of 3R Petroleum with Enauta in the past year. The assets were valued at approximately $2 billion. Brava said last week that its board had decided which bidders were qualified to continue in the process. They would be receiving letters with guidelines on how to carry out due diligence and make binding offers. The J&F owned company stated that "Fluxus has been invited to participate in the competition process for Brava Energia's onshore assets, and to then proceed to the next round." Fluxus, however, decided to discontinue the process after preliminary analysis. Following the Fluxus announcement, Brava shares in Sao Paulo, which had risen as high as 6.2% on Friday, saw their gains revert to 2%. (Reporting and writing by Leticia Furcuchima, Gabriel Araujo, Christina Fincher, Editing).
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Iran Foreign Minister: Attacking our nuclear sites would 'be one of the biggest mistakes US could do'
In an interview broadcast on Friday, Tehran's Foreign Minister told Al Jazeera TV that Iran would respond quickly and decisively in the event of an attack against its nuclear sites. This would result in a "war in all directions in the region." Abbas Araqchi, a translator for Abbas Araqchi, said that a joint military strike by Israel and the U.S. against Iranian nuclear facilities was "one of the worst historical mistakes" the U.S. can make. Iran's decision makers are increasingly concerned that U.S. president Donald Trump, in his second term, might empower Israeli Prime Minister Benjamin Netanyahu by allowing him to strike Iran’s nuclear sites and tighten U.S. oil sanctions. These concerns, along with growing anger in Iran about economic conditions, may drive Tehran to engage in negotiations with Trump's administration regarding the fate of the rapidly advancing nuclear program. Araqchi suggested the United States release blocked Iranian funds to build confidence between the two countries. The U.S. has frozen Iranian assets and funds at different points, but not in accordance with its earlier promises (to release them). The U.S. government can do these things to build trust between us, Araqchi said. In 2018, the then-President Trump broke the 2015 nuclear agreement between Iran and an international group of powers, and reimposed harsh U.S. Sanctions as part of his policy of "maximum press" against the country. Tehran responded by violating the agreement in multiple ways, including by speeding up its uranium-enrichment. Trump has promised to return to his policy of using economic pressure to force a country to negotiate an agreement on its nuclear program, ballistic missile programmes and regional activities. (Reporting and editing by Hugh Lawson; Additional reporting provided by Dubai newsroom.
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Brazil's carbon trading takes off but agribusiness is not scrutinized
Brazil sets basic rules on its carbon market Largest polluters, farmers escape cap to emissions Protecting natural areas will receive more funding By Andre Cabette Fabio The rules don't limit emissions from agriculture, which is the top sector in the country for carbon pollution, accounting for 74% of all emissions. "We missed the chance to bring agribusiness into a regulated sector, which would not only limit emissions but also promote sustainability," said Gabriela Savian. She is the deputy director of policy at IPAM, the Amazon Environmental Research Institute. According to Natalie Unterstell of Instituto Talanoa in Brazil, a climate policy think tank, with farmers gone, the new cap-and-trade market for carbon emissions will only cover about 16%. The regulation, even though it exempts the largest emitters in the country from any responsibility, is expected to provide legal security and encourage carbon projects which protect forests against the pressure of the agribusiness industry. In cap-and trade systems, the government assigns a limit to each sector's carbon emissions. Companies that exceed this limit can purchase allowances from other companies who still have room. According to the European Commission, in the European Union's largest cap-and trade system by value, approximately 40% of emissions in aviation, industry, and energy sectors are covered. These emissions are mainly connected to the burning of fossil fuels. Brazil is different. Its basic carbon market regulations were signed into law by the Brazilian government in December. The Climate Observatory of the United States reports that its largest source of emissions is its 240-million-strong cattle herd, and the destruction of vast natural areas to make way for pastures and grain fields. The powerful caucus of agribusiness leaders, who dominate the Brazilian congress, demanded that the farming sector be left uncapped. They argued that cap-and-trade does not set a limit for agriculture because counting emissions by producers is a difficult technical task, which critics claimed researchers could overcome. In a statement from 2023, Pedro Lupion, the president of Brazil's Parliamentary Agricultural Front wrote that "no country in the entire world has regulated the agriculture sector due to the lack of a scientifically proven metric". Funding for Forest Protection Savian said that as part of their efforts to reduce emissions, the big polluters will become a greater source of funding to forest protection initiatives. This could ease pressure from farms. She said that, "even though there is no cap on the greatest emitter - deforestation - the cap-and trade system structures the opportunity to fund schemes... that combat deforestation" and "promote regeneration". A growing number of Brazilian companies and state governments are sourcing carbon credits through forest conservation and restoration projects. Carbonext is one of these companies, and it runs 11 projects with the help of farmers and communities. It sources carbon from forests covering 322,000 hectares. These offsets are sold on the voluntary carbon market by companies who wish to compensate their emissions, even if they do not have to. Carbonext CEO Janaina Dallan expects that in the future she will be able sell credits for companies to comply with the cap-and-trade regulations, giving Amazon a non-destructive alternative to income. Tocantins, and Para are two Amazonian states that have made strides on the carbon market. They announced plans to sell jurisdictional offset credit worth more than 600 million dollars. These offsets are sourced from governments who have successfully reduced deforestation within their jurisdictions or captured carbon. Assets are protected from land tenure issues, which have damaged the reputation of Brazilian private projects, who have operated on land that is disputed, embarrassing the buyers. These credits are calculated on the basis of each jurisdiction's ability to reduce their deforestation rate, which is a clear indication. Private projects, however, have been accused of obtaining excessive credits through inflating deforestation risks in the areas in which they intervene. Raul Protazio is the secretary of environment and sustainability for the state of Para. Para hosted the U.N. climate summit COP30 this year. The COP Climate Summit last year laid the foundation for a United Nations-supervised international carbon market. This has raised expectations for this kind of global cooperation.
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EIA reports that US oil production fell in November after reaching a record high in October
The U.S. Energy Information Administration reported in its Petroleum Supply Monthly Report on Friday that U.S. crude production dropped by 122,000 barrels a day in November, to 13,314 million barrels a day, from a record monthly high of 13,436 million barrels bpd set in October. The data revealed that the EIA's measure of demand for crude oil and petroleum fell by 775, 000 bpd, to 20,235 million bpd, in November. This was the lowest level since April 2024. This compares to a record monthly supply of crude oil, and petroleum of 21.666 millions bpd reached in August 2005. The product supply of finished motor gas fell by 260.000 bpd, to 8.808 millions bpd, in November. This is the lowest level since February 2024. Meanwhile, the product supply of distillate fuel fell by 383,000 to 3.676million bpd, which is the lowest level since June 2024. In the top oil producing states, monthly production in November decreased by 1.2% in Texas to 5.761 millions bpd and 1.8% in New Mexico to 2.064million bpd, but increased 3.5% in North Dakota to 1.197million bpd. This compares to monthly record highs in Texas of 5.831 millions bpd, in New Mexico of 2.102 million in October 2024, and in North Dakota of 1.499 in November 2019. According to the 914 report of the U.S. Agency for Natural Gas, the gross natural gas production in Lower 48 States increased by 0.2% to 115.8 billion cubic feet per day (bcfd) in November. This compares to a monthly high of 117.8 billion cubic feet per day in February 2024. In the top producing states of Texas and Pennsylvania, monthly production in November decreased by 0.4% in Texas to 36.1 Bcfd. It increased by 0.8% in Pennsylvania to 20.0 Bcfd. This compares to monthly record highs in Texas of 36.3 Bcfd and Pennsylvania of 21.9 Bcfd, both in December 2021. (Reporting and editing by Rod Nickel, Nia Williams and Scott DiSavino)
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Gold reaches record highs amid Trump tariff uncertainty
Gold prices have reached a new record high due to the geopolitical uncertainty and concern over global economic growth in light of U.S. president Donald Trump's proposed tariffs. This has once again brought $3,000 as a key threshold on investors' radar. On Friday, spot gold reached a new record of $2,817.23 a troy ounce, kicking off 2025 with renewed vigor after its best annual performance since 2010. Phillip Streible is the chief market strategist for Blue Line Futures. He said that there are concerns about the economic growth being affected by the current administration's policies and tariffs. When you have higher inflation and slower growth, then stagflation is the dominant economic theme. In that environment, gold tends to perform very well. Trump reiterated his threat of imposing 25% tariffs on the imports of Mexico and Canada, which are the U.S.'s largest trading partners. The deadline for this action is Saturday. Trump's tariffs plans are perceived by many as inflationary, and have the potential to spark trade wars. This is driving up demand for safe-haven bullion because it has traditionally been seen as a hedge from price pressures and political uncertainty. Bob Haberkorn is a senior market analyst at RJO Futures. He said, "I see gold trying to reach that $2,900 mark at some point in the first quarter. After we breach that level, we'll be setting new levels." Gold could eventually trade above $3,000 at some point in this year. The US Market U.S. Gold Futures have traded at a premium over the spot price in recent months amid concerns about U.S. tariff plans on imports. As a result of these fears, 12.9 millions troy ounces (or 2.2 tons) of gold have been delivered to U.S. COMEX approved warehouses Since late November, stocks have increased by 73.5%, to 30.4 millions ounces, which is the highest level since July 2022. Deliveries came from London and Switzerland, among other major gold trading hubs. The London Bullion Market Association announced on Thursday that they were monitoring the situation, and in contact with CME Group (owner of COMEX) and U.S. Authorities. The London gold market's stocks and liquidity are strong, with an average daily trading volume of 47.1 million ounces since January 1, the association said. Gold and the US Rate Expectations The Federal Reserve's rate cutting cycle, the demand for safe havens, and central bank purchases boosted gold to multiple records last year. In its meeting in January, the Fed kept the benchmark interest rate unchanged, as was widely expected. This follows a full basis-point of easing in 2024. This is the first pause in the Fed's easing cycle since September. In an environment of low interest rates, non-yielding gold bullion is likely to flourish. In terms of central bank purchases, the People's Bank of China was a major driver of demand for gold. It continued to add bullion to reserves despite price increases over the last year - as part of what analysts believe is the PBOC's broader strategic goal to diversify its reserves. Analysts believe that the central bank of China could continue to purchase gold in order to support prices further over the next few months.
Exxon reports mixed Q4 results, with higher oil production but weaker refining profits
Exxon Mobil posted mixed results for the fourth quarter, which showed weakness in its chemicals and refining businesses. However, it exceeded Wall Street's profit estimates with higher oil production.
The shares of the U.S. oil producer No. 1 fell 1.5% to $107.91 in morning trading before recovering some of their losses. The shares of the No.
Over the past year, oil companies have been under pressure from lower prices and margins for refining as global demand has fallen short of expectations. Other oil giants such as Chevron, and
Chevron also suffered from the weaker market.
Loss in its refining businesses
First time since 2020
LSEG data revealed that Exxon’s adjusted profit for fourth quarter was $7.39billion or $1.67 per common share. This beat analyst expectations of $1.56. The earnings from oil and natural gas production increased from $4.15 to $6.28 billion. The production, which includes the Permian Basin and lucrative projects in Guyana has increased from 4,58 million barrels per day in the third quarter to 4.6 million.
Darren Woods, Exxon's CEO, said that the company would be more efficient in its spending and only invest if they were confident of generating high returns. This includes the low-carbon solutions business.
Exxon laid a
Five-year plan
In December, the government will increase spending on projects to boost oil and natural gas production by 18% between 2030.
Woods stated that they would not proceed with the project until they were convinced of their value.
The total adjusted earnings for the year 2024 was $33,46 billion, a decrease from $38.57 milliards in 2023.
Chemical and Refining Sludge
In a research note, Paul Cheng, analyst at Scotiabank said that favorable adjustments for tax and year-end helped Exxon achieve its results. Biraj Borkhataria, an analyst at RBC Capital Markets, stated that the company's profits were also higher than expected due to lower corporate costs.
The earnings from gasoline and diesel production fell by a significant amount from $3.2 billion, which was the figure a year ago. Other companies' opening of oil refineries in Asia and Africa resulted in a higher global fuel supply even though demand for gasoline and Diesel lagged expectations.
Kathryn Mikells, chief financial officer of the company, said that the refining industry is still under pressure due to the increased supply.
She said, "That's what we really watch as we look forward to 2025." The company reported that the adjusted profit from producing chemicals fell 76% to $215 millions from the third quarter due to lower margins and seasonal higher expenses. Borkhataria stated that the figure was the lowest since 2019.
Mikells stated that the company is still expecting a decision in September on its arbitration challenge against Chevron's purchase of oil producer Hess. Chevron would be able to gain a foothold on Guyana's oil project if it proceeds. Exxon, CNOOC and Hess have said that they are entitled to purchase Hess’ stake, even though the deal was approved by U.S. regulatory authorities.
In 2024, the company will return $36 billion to shareholders via dividends and buybacks. This is up from $32 Billion in 2013. The company intends to buy back $20 billion worth of shares each year until 2026.
(source: Reuters)