Canadian ministers to visit Mexico to discuss trade with Mexican officials
The visit will take place from August 5 to August 6, according to a release from Global Affairs Canada, which represents the Foreign Ministry and the Trade Ministry.
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Reuters
23 minutes ago
- Reuters
From ingredient costs to sagging demand, tariffs further pinch company earnings
Aug 5 (Reuters) - Companies across the corporate spectrum revealed more pain from the cost of U.S. President Donald Trump's tariff war, with bellwethers Caterpillar, Marriott and others on Tuesday noting weaker demand and higher prices. All told, global companies that have reported earnings this quarter are looking at a hit of around $15 billion to profits in 2025, Reuters' global tariff tracker shows. A majority of these come from industrial, manufacturing and automotive sectors, while financial and tech sectors are less affected. Trump has said the tariffs are necessary to resolve U.S. trade imbalances and declining manufacturing power; he has said the levies on imports will bring jobs and investment to the United States. "I think we're just getting started," said Steve Sosnick, chief market analyst at Interactive Brokers in Greenwich, Connecticut. "The tariffs are still in their infancy, especially with major trading partners like Canada, China and India still in flux." Tuesday's round of earnings illustrates the different ways trade policy is affecting companies, from the rising costs of imported materials like metals to the slippage in consumer confidence that has sapped demand. Caterpillar (CAT.N), opens new tab, for instance, saw a 0.7% hit to revenue, while its cost of goods rose by 6.5%, and CEO Joe Creed told investors that tariffs are "likely to be a more significant headwind to profitability in the second half of 2025." Beer maker Molson Coors (TAP.N), opens new tab said it was expecting costs of between $20 million and $35 million in the second half of the year due to a tariff-driven rise in the price of aluminum delivered to the U.S. Midwest . Tariffs on aluminum shipped into the United States were doubled to 50% in June from the previous 25% duty imposed in March. The markets, however, have remained resilient even as Trump's policies continue to change. He said on Tuesday that he would raise tariffs on goods imported from India from the current 25% as part of an ongoing spat with the country over its purchases of oil from Russia. U.S. equities rebounded sharply from their April lows following what Trump deemed "Liberation Day," when he unleashed a wave of global tariffs. The S&P 500 (.SPX), opens new tab hit all-time highs last month on the back of strong earnings, led by the so-called Magnificent Seven, a group of tech companies that have benefited from surging investment in artificial intelligence. Of the 370 companies in the S&P 500 that have reported earnings so far, 80.3% have reported quarterly earnings above analyst estimates, with their earnings growth rate at 11.9%, according to LSEG data. "We are figuring out that some industries may be affected, but they also might gain because (new) markets are open to them that may have been closed in the past. We're going to have to have a couple more quarters to see how this actually plays out," said Kim Forrest, chief investment officer at Bokeh Capital Partners. Several market strategists of late have warned that a correction could be in the offing, but are broadly optimistic about the market. Evercore ISI analysts believe the market could dip between 7% and 15% in the September-October period as growth slows and inflation increases, though the AI-driven bull rally should continue. Higher ingredient costs ate into profits of Taco Bell parent Yum Brands (YUM.N), opens new tab, which, like McDonald's (MCD.N), opens new tab and other fast-food chains, leaned on budget-friendly meal deals to boost demand as U.S. consumers pull back on eating out due to worries about rising costs. Hotel operator Marriott International (MAR.O), opens new tab cut its 2025 forecast on softening travel demand, while agribusiness giant Archer-Daniels Midland (ADM.N), opens new tab posted its lowest profit in five years. While some market participants noted that tariff-led uncertainty was likely to persist this year, with over 100 global companies withdrawing or cutting financial guidance, others said in the longer run, companies and investors would be able to see some green shoots. "It seems that companies themselves are a little more optimistic about the outlook now that the Liberation Day tariffs are in the rearview mirror," said Ross Mayfield, investment strategy analyst at Baird. "Companies are going to have to be really deft in how they navigate this (tariffs), but obviously there's no choice but to pass some of this on to the consumer. We see S&P margins hovering around record highs, and it wouldn't surprise me if that ticked down a little bit in the coming quarters."
Reuters
24 minutes ago
- Reuters
Wall Street turns negative as economic data, tariff uncertainty weigh
Aug 5 (Reuters) - Wall Street's main indexes swung to losses on Tuesday after data showed U.S. services activity unexpectedly stalled and investors considered the impact of U.S. trade policies on corporate profits. At 11:39 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab fell 121.13 points, or 0.27%, to 44,052.51, the S&P 500 (.SPX), opens new tab lost 34.47 points, or 0.54%, to 6,295.47 and the Nasdaq Composite (.IXIC), opens new tab lost 135.41 points, or 0.64%, to 20,918.17. ISM's nonmanufacturing purchasing managers index (PMI) slipped to 50.1 last month from 50.8 in June, as little changes in orders and weaker hiring, alongside rising input costs, highlighted persistent uncertainty from President Donald Trump's tariff policy. Seven of 11 S&P 500 sub-sectors traded in the red, with a 1.1% drop in energy (.SPNY), opens new tab leading the declines. "The ISM services survey highlights the challenges for the Fed in the coming months, with the activity and employment indicators weakening even as the prices paid index rose to a new cyclical high," said Alexandra Brown, North America economist at Capital Economics. Caution also permeated after Trump signaled that the U.S. could soon slap a "small tariff" on pharmaceutical imports before increasing the rate subsequently. The president also suggested announcing tariffs on semiconductors and chips in "next week or so". The technology (.SPLRCT), opens new tab index was down 0.6% and the Philadelphia Semiconductor Index (.SOX), opens new tab declined 1.5%. Tariffs also took a bite out of major corporations' profits, with industrial bellwether Caterpillar (CAT.N), opens new tab warning of an up to $1.5 billion hit in 2025. The construction and mining equipment maker slipped 0.6%. KFC parent Yum Brands (YUM.N), opens new tab fell 4.9% after missing estimates for the second quarter, as steep trade duties restricted consumer spending. Hotel operator Marriott International (MAR.O), opens new tab also fell prey to trade duties as it cut its annual forecast on slowing travel demand, sending its shares down 1.2%. The losses succeeded Wall Street's climb on Monday as disappointing July jobs data and sharp downward revisions to prior months fueled expectations of a Federal Reserve interest rate cut in September. As per CME Group's FedWatch tool, odds of a September cut stand at 89.2%, up sharply from 63.3% just a week ago - and market watchers are eyeing at least two quarter-point cuts by year-end. Meanwhile, Trump's decision to fire the head of the Bureau of Labor Statistics, responsible for past jobs data, stoked investors' fears about the integrity of economic data. Trump in a CNBC interview said he would "shortly" announce his pick for an open seat on the Federal Reserve's board of governors and possibly his nominee for Fed chair as well. Meanwhile, Trump also hinted at progress toward a trade deal with China, suggesting a possible meeting with President Xi Jinping by this year's end if talks succeed. Beyond Friday's jobs data jolt, Wall Street has stayed buoyant. Reflecting the market's upbeat mood, HSBC just boosted its S&P 500 year-end target by more than 800 points to 6,400, citing AI excitement and easing U.S. policy uncertainty. Declining issues outnumbered advancers by a 1.17-to-1 ratio on the NYSE and by a 1.55-to-1 ratio on the Nasdaq. The S&P 500 posted 32 new 52-week highs and six new lows, while the Nasdaq Composite recorded 58 new highs and 60 new lows.
Reuters
24 minutes ago
- Reuters
Mexico reveals plans to address Pemex debt, boost investment
MEXICO CITY, Aug 5 (Reuters) - Mexico's government on Tuesday announced a plan aimed at moving its highly indebted state oil company Pemex toward financial self-sufficiency, and the establishment of a new investment vehicle and efforts to stabilize oil production. President Claudia Sheinbaum told a press conference that by 2027, Pemex "will no longer need the finance ministry's support," referring to the recent support it received from the government to pay down debt. "Pemex is going to have sufficient revenues to be able to pay its debt, its amortizations and have the sufficient budget for the investment it requires," she said. The world's most indebted energy company, Pemex reported last week a financial debt of $98.8 billion. That week, the Mexican government announced a $12 billion debt offering to ease Pemex's short-term financial pressures and support debt refinancing. Speaking after the president, Pemex Chief Executive Victor Rodriguez outlined several operational initiatives to support the plan, including leading the development of the Zama and Trion fields and reactivating other fields with potential. Officials also announced a new government-backed investment vehicle to raise up to 250 billion Mexican pesos ($13 billion) this year in efforts to boost production. In addition, Pemex intends to build three new pipelines. To improve profitability, Rodriguez said that Pemex would adjust its price formulas and eliminate unjustified discounts. ($1 = 18.8228 Mexican pesos)
