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The Wall Street most at risk from lost trust is MORNING BID EUROPE
Wayne Cole gives us a look at what the future holds for European and global markets. The Nikkei has dropped 3% today and 9.6% this week. This is the largest drop since March 2020 when the pandemic began. Wall St futures began steady, but have since fallen around 0.7%. European stock futures have also dropped between 0.3% and 0.6%. The dollar has lost 2.7% against the yen, 3.0% versus the Swissy and 2.4% versus the euro. The USD is not benefiting from tariffs. Investors are not surprised by the sudden changes in U.S. foreign policy. If you wage a trade war without provocation on your allies or opponents, with no apparent goal other than to extract money and favours, you shouldn't be shocked when you don't make it onto their Christmas cards. Analysts have noted that for decades, global investors have allocated 70 percent of their equity funds to U.S. shares, far above the 26% of global GDP that is accounted for by this economy. Money could flow in the opposite direction if this preferred status was lost, for example, by starting a trade war on a global scale. The amount involved dwarfs any dollar boost from the U.S. purchasing fewer imports. It also squeezes foreign investors who have unhedged Wall Street positions - which is most of them. What firm would be willing to risk its capital in order to encourage more investment in U.S. Manufacturing when the White House has the power and ability change the rules at any time? The problem is exacerbated by the notion that the punishing tariffs are a bargaining tactic that can be moderated as long as countries pay Trump enough. It's fine to be unpredictable in game theory, but it is not acceptable when you are a company investing billions in a long-term investment. Apple is a good example. Apple's supply chain is deeply embedded in Asia where tariffs range between 24% and 54%. If it were to move some manufacturing to the States - a huge ask - the iPhones that resulted would be priced at multiples of their current price. Apple's large profit margins make it better equipped than others to absorb tariffs in the short term. But it is those margins, which are comparable to Kobe beef, that have pushed the stock price so high. Spare a thought for Fed, which is caught between a nearly certain rise in consumer prices as well as the growing risk of recession due to the reductions made by consumers and business. Fed fund futures have risen 9 basis points today for December, which implies 99 basis points in cuts this year. This is a sure sign that the markets believe rising unemployment will overshadow (sorry!) the rise in inflation, and force the Fed into easing. Bet Fed Chair Powell really looks forward to his speech about the economy that will be delivered later today. The following are key developments that may influence the markets on Friday. - EU construction PMI, German industrial orders, UK PMI - Addresses of Fed Chair Powell and Governors Waller & Barr US payrolls report - March
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PMI data shows that the growth of non-oil businesses in UAE slowed down in March.
A survey released on Friday showed that growth in the UAE’s non-oil sector slowed in March. This is a sign of a softerening in demand in the most diversified economy in the Gulf. The S&P Global Purchasing Managers' Index slipped from 55.0 to 54.0 in February. This is the lowest growth rate since September. The new order index fell to 56.3 from 57.3 in the previous month. This is the lowest reading since October. David Owen, S&P Global Market Intelligence's senior economist, said that some firms may be having difficulty meeting their sales goals. In spite of the slowdown, companies increased their input purchases to the highest rate since July 2019 in order to reduce backlogs. The employment rate has fallen to its lowest level in almost three years, as businesses struggle to find qualified candidates. Some firms reported higher costs for materials, while others saw lower transport prices. Dubai's private non-oil sector experienced a similar slowdown in march, with the headline PMI dropping to 53.2 in March from 54.3 in Feb. The number of new orders increased sharply, but at a slower pace. This led to a rare decrease in employment. The UAE's firms are optimistic about the future, thanks to strong pipelines and infrastructure development. Hugh Lawson, Editor and Reporter (Reporting)
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Norway and Spain Form Steel Collaboration for Offshore Wind
Norway’s offshore wind association Norwegian Offshore Wind has signed a memorandum of understanding (MoU) with the Galician Association of Metal Industries and Related Technologies (ASIME) to explore joint opportunities in offshore wind.The MoU states that Spain and Norway have distinct but complementary strengths in floating offshore wind, creating opportunities for collaboration.Their supply chains can work together by combining Spain’s strong industrial manufacturing, steel production, turbine expertise, and logistics infrastructure with Norway’s expertise in offshore engineering, floating structures, marine operations experience, and harsh-environment operations.The main objectives of the MoU are exploring opportunities for joint projects and networking activities where mutually beneficial and promoting sustainability, cost reduction, and efficiency improvements in offshore wind projects through advanced metal technologies.“This collaboration will be aimed specifically at the steel industry, which is instrumental both for floating and bottom fixed offshore wind,” says Einar Tollaksvik, leader of the Working Group for Spain in Norwegian Offshore Wind.“Galicia is one of the best positioned European regions for the implementation and development of the offshore wind industry, because we have the necessary experience throughout the value chain, while we have a unique installed port capacity.“Our companies are very well positioned internationally; in fact, of the only five floating wind farms implemented in Europe, three have Galician components and technology. This agreement is one more step to continue positioning our region as an international offshore wind hub.“The synergies that we will be able to develop with our Norwegian partners will be of great interest for both parties to deepen the development of projects and new business opportunities in both territories,” added Enrique Mallón, Secretary General of ASIME.
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ASCO Gets Repsol’s Base and Logistics Services Contract in Norway
Global integrated logistics and materials management specialist ASCO has been awarded a three-year contract, with options, to provide base and logistics services for Repsol Norge in Tananger and Farsund in Norway.The agreement covers a comprehensive range of services, including warehouse management, cargo handling, waste services, transport and customs clearance, as well as personnel support for logistics, materials management, and helicopter coordination."We are grateful to Repsol for continuing to trust ASCO with its base and logistics services. This contract reinforces our strong partnership and allows us to further develop as a company while remaining a preferred and proud supplier to Repsol.WIt also strengthens our existing operations in Norway, providing a solid foundation for continued collaboration. We remain committed to simplifying, streamlining, and digitising logistics delivery to enhance efficiency and service quality."Repsol has been a key customer for ASCO in Norway since 2011, and this new contract ensures job security at ASCO’s bases in Tananger and Farsund, reinforcing ASCO’s position as a leading logistics provider in the region,” said Øyvind Salte, Commercial Director at ASCO Norge.
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Gold drops as risk appetite wanes on Trump's tariff clarification
Gold prices dropped on Friday, as investors reassessed risk in light of U.S. president Donald Trump's new tariffs. These measures have clarified market trends and raised concerns about economic slowdown. As of 0305 GMT, spot gold was down by 0.5%, at $3,097.99 per ounce. Gold was still on course for a five-week gain. Its safe-haven appeal helped gold reach three records this week. U.S. Gold Futures declined by 0.1% to $3.118.90. Gold dropped by more than 2% in the previous session as traders were weighed down by a wider market decline sparked Trump's tariffs on imports. This sharp drop came only hours after the record-breaking gold price of $3167.57. Ilya Spirak, global macro head at Tastylive, said that gold tends rally during times of uncertainty and difficulty in pricing. However, once the markets have learned how to value the risks involved the support tends to fade. The Trump administration has chosen a path that is less contested and more visible. It's also easier to price. This is reducing some of the "market confusion premium" on gold. Trump announced that he would impose an initial 10% tariff on all imports into the U.S., and a higher duty on some of America's largest trading partners. Tariffs sparked fears that prices would rise dramatically in the largest consumer market. Analysts said that Federal Reserve officials who were seeking more information on Trump's plans for trade got more than they expected when he announced sweeping tariffs. They noted that this could drastically reshuffle the outlook of the country's economy. The market is now awaiting the U.S. Non-Farm Payrolls Report, which may provide insight into the Fed's rate path. Spot silver fell 1% to $11.56 per ounce. Platinum dropped 0.6% at $946.40 and palladium declined 0.8% at $920.75.
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London copper to suffer its biggest weekly loss for nearly five months due to US tariffs
After U.S. president Donald Trump announced an extensive set of tariffs that dampened the outlook for global metal demand, copper prices fell in London on Friday. The London Metal Exchange's three-month copper contract fell 0.75%, to $9296.5 per ton at 0234 GMT. The contract is on track for its largest weekly loss since early November. It has lost 5% thus far. ANZ analysts wrote in a report that the prospect of a trade war around the world and a weaker economy should continue to put downward pressure on commodities markets. ANZ warned that these concerns would worsen if the countries impacted retaliated with their own tariffs, resulting in a global war of trade. Trump announced a set of tariffs that targeted China and other major trading partners. Beijing announced on Thursday that it would take countermeasures against the new tariff of 34%. This will bring the total to 54%. The White House did not include copper. For this metal, the U.S. Administration is conducting a separate investigation into possible new tariffs. The reciprocal tariffs will not apply to certain minerals not available in the U.S. The exclusions included zinc and tin. ING analysts said that despite the fact that base metals are exempt from the new tariffs, the concern about how the new tariffs will affect the demand for raw materials has weighed on the sentiment. Other metals include LME aluminium, which fell by 0.37%, to $2.439 per ton. Lead also dropped 0.23%, to $1.951. Zinc edged lower by 0.07%, to $2.711.5. Tin was down 1.64%, at $36,720, and nickel eased 0.8%, at $15.720 per ton. China's financial market is closed for the public holiday on Friday. Trading will resume Monday, April 7. Click here to see the latest news in metals, and other topics. (Reporting by Michele Pek. Editing by Eileen Soreng).
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Rio Tinto and BHP give in to union pressure over benefits for Pilbara workers
A mining union in Australia said that it had secured important financial benefits for its employees working in the iron rich Pilbara region, including compensation for flight delays and bonuses. The Mining and Energy Union said that Rio Tinto will compensate "Fly-In-Fly-Out" workers who are heading home for delays of more than four hours with A$500 (313.55) and A$1,000 (for delays over 12 hours). The amendment was made after more than 400 Rio Tinto workers from the Paraburdoo Iron Ore Project signed a petition of the Western Mine Workers Alliance to begin bargaining for a new collective agreement. This is the first time that has been done in over 20 years. The website of Rio Tinto revealed that the Paraburdoo Mine is part Rio Tinto’s Western Australian operations and has around 16,000 workers. The WMWA was created by the Australian Workers' Union in conjunction with the MEU. It said that the Fair Work Commission, the industrial relations tribunal was currently assessing the support petition. Rio Tinto would be forced to negotiate if the FWC granted orders for collective bargaining. The iron ore miner has also agreed to fully fund national FIFO up to 30 percent of their rail crew employees and to increase the on-the-job training allowance to A$7.500 per year from A$5.600. It said that the MEU had also negotiated retention bonuses of A$10 500 for all BHP rail crew, regardless of their class. Rio Tinto and BHP have not responded to requests for comment. ($1 = 1.5946 Australian dollars) (Reporting by Rajasik Mukherjee in Bengaluru; Editing by Rashmi Aich)
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Oil to have worst week for months due to Trump's new tariffs
Oil prices continued to fall in early Asian trading on Friday. They were on course for their worst week in several months due to U.S. president Donald Trump's tariffs. This stoked concerns about a possible global trade war, which could impact oil demand. Brent futures were down 31 cents or 0.4% to $69.83 per barrel at 0157 GMT. U.S. West Texas Intermediate Crude Futures fell 32 cents or 0.5% to $66.63. Brent is on track to suffer its largest weekly percentage loss since the week ending October 14 and WTI since January 21. The Organisation of Petroleum Exporting Countries (OPEC+), which is a group of oil-producing countries and their allies, has decided to move forward with their plan to increase the amount of oil produced. They now aim to return 411, 000 barrels per day in May instead of the 135,000 bpd originally planned. This brings forward the surplus we expect to see on the oil market in this year. Analysts at ING stated on Friday that more OPEC+ production should lead to a greater medium sour crude and a larger Brent-Dubai differential. This spread has been at a discount unusual for most of the year. Since Trump's Wednesday afternoon news conference, which he called 'Liberation Day' as he announced an initial 10% tariff on all imported goods to the United States along with higher duties for dozens of its biggest trading partners, both benchmarks have started falling. The new tariffs on imports of refined products, oil and gas were not applied to these products. However, the policy could increase inflation, slow down economic growth, and intensify trade conflicts, which would impact oil prices. Reporting by Sudarshan Varadhan. Gerry Doyle edited the story.
Sources say that OPEC+ Ministers are seen to be sticking to their plans for further increases in oil production.
Two OPEC+ sources told reporters on Thursday that a meeting of eight top ministers in OPEC+ is likely to keep the oil production policy unchanged. This calls for gradual increases in oil output from April.
One source said that the talks started shortly after 0900 GMT. One source stated that the ministers will likely emphasize the importance of adhering to the oil production targets.
Record Kazakhstan output
Sources have said that the move has angered other members, including Saudi Arabia, which is the top producer in the group. OPEC+ has urged the Central Asian nation, as well as other members of the group, to cut further to compensate for excessive production.
In May, eight members of OPEC+ (Organization of Petroleum Exporting Countries plus allies, led by Russia) are expected to increase oil production by 135,000 barrels a day.
Both sources said that the group was expected to move forward with this plan. This follows similar comments made by other OPEC+ delegates on Tuesday and on Wednesday.
The May increase is part of a plan that Russia, Saudi Arabia and the UAE have agreed to implement in order to slowly unwind their latest output cut of 2,2 million bpd. This was implemented this month.
OPEC+ has also agreed to cut 3.65 million bpd in other production until the end next year. Reporting by Alex Lawler and Olesya Astakhova. Editing by Louise Heavens.
(source: Reuters)