Latest news with #MorningBidU.S.
Reuters
03-04-2025
- Business
- Reuters
Investors dive for cover as Trump tariffs skittle stocks
LONDON, April 3 (Reuters) - World stock markets and oil prices tumbled and investors dashed to the relative safety of bonds, gold and the yen on Thursday, as President Donald Trump's drastic U.S. trade tariffs stirred widespread fears of a global recession. A new baseline 10% tariff on imported goods plus some eye-watering additional 'reciprocal' tariffs on countries Trump said put high trade barriers on the U.S., left traders clearly rattled. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. In Europe, where the 27 country EU bloc now faces a 20% reciprocal levy, bourses lurched between 1.3% and 2% lower early on as Brussels and other capitals in the region were left in uproar. Tokyo (.N225), opens new tab had slumped 2.7% in Asia overnight to leave it on course for its worst week in nearly two years. Wall Street futures were down 3%, while the dollar (.DXY), opens new tab dropped more that 1% to a six-month low. /FRX Analysts at JPMorgan said the tariffs were, "significantly higher than the realistic worst-case scenario" they have been envisaging. Credit rating agency Fitch warned they were a "game-changer" for both the U.S. and global economy, while Deutsche Bank called them a "once-in-a-lifetime" event that could easily knock between 1%-1.5% off U.S. growth this year. "Many countries will likely end up in a recession," Fitch's Olu Sonola said. "You can throw most forecasts out the door if this tariff rate stays on for an extended period of time." The scramble for ultra-safe government bonds that provide a guaranteed income drove U.S. Treasury yields down towards 4% and Germany's 10-year yield , the European benchmark borrowing rate, went 8.5 basis points lower to 2.64%. The sweeping tariffs will raise effective import taxes in the world's largest economy to the highest levels in a century. If they do trigger recessions, central banks around the world are likely to slash interest rates which benefits bonds. Nasdaq futures were down 3.2% ahead of what was expected to be a turbulent U.S. restart. Apple's (AAPL.O), opens new tab market capitalisation had dropped by more than $240 billion as its shares slid 7% in after-hours trade on Wednesday. Nvidia's (NVDA.O), opens new tab market cap dropped 5.6% or $153 billion, adding to the trillions wiped off the 'Magnificent Seven' tech giants already this year. Trump levies hit Asia particularly hard. China was slapped with a 34% levy, Japan got 24%, South Korea 25% and Vietnam 46%. Vietnamese stocks (.VNI), opens new tab tumbled 6.7% in response. Australian shares and the Aussie dollar also fell as the country was hit too. CHINA FOCUS With countries from China and Canada to Europe all promising countermeasures, investors were selling exposure to global growth. Oil, a proxy for economic activity, dropped as much 3% to put benchmark Brent futures back below $73 a barrel and on course for its worst day of the year so far. Gold hit a record high above $3,160 an ounce before running out of steam while Japan's yen jumped more than 1.5% to 147.01 per dollar as foreign exchange traders looked for safety outside the U.S. dollar. The Swiss franc , another traditional safety play, touched its strongest level in four months as the euro jumped 1% too to $1.0970. "Eye-watering tariffs on a country-by-country basis scream 'negotiation tactic', which will keep markets on edge for the foreseeable future," said Adam Hetts, global head of multi-asset and portfolio manager at Janus Henderson Investors. China held its currency relatively steady, containing the yuan's drop to about 0.4% despite total tariffs of above 50% on Chinese exports and the hit to Vietnam seen as shutting down a popular work-around route. China's big domestic economy and the hope of support from Beijing limited losses in Hong Kong stocks (.HSI), opens new tab to about 1.5% and in Shanghai (.SSEC), opens new tab to around 0.5%. "The key focus over the next few days should clearly be China," said Deutsche Bank strategist George Saravelos. "How willing will China be to wait for trade negotiations ... or to absorb this?," he said. "Or will it try to 'export' the shock ... via a devaluation of the yuan."
Reuters
03-04-2025
- Business
- Reuters
Trump tariffs: List of global responses and countermeasures
April 2 (Reuters) - Governments around the world pledged counter measures on the U.S. after President Donald Trump unveiled on Wednesday a new baseline 10% tariff on goods from all countries plus reciprocal tariffs on those that his administration says have high barriers to U.S. imports. Here is what some governments said about what they would - and would not - do in response. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. CHINA China's commerce ministry said Beijing "firmly opposes" the reciprocal tariffs and "will take countermeasures to safeguard its own rights and interests," after Trump imposed a 34% reciprocal tariff on the country. JAPAN Japanese Trade Minister Yoji Muto called the reciprocal tariffs "extremely regrettable" and said Tokyo would urge the U.S. to exempt Japan from tariff measures. Tokyo faces a 24% reciprocal tariff. SOUTH KOREA Acting President Han Duck-soo ordered emergency support measures for affected businesses, including automobiles, the industry ministry said, after Trump's tariff announcement included a 25% rate on South Korea. CANADA Prime Minister Mark Carney said Canada was "going to fight these tariffs with countermeasures" and would "act with purpose and with force." Goods from Canada and Mexico are not currently subject to reciprocal tariffs because Trump's prior 25% fentanyl-related duties remain in place on their goods, along with 10% for Canadian energy and potash. A tariff exemption for goods compliant with the U.S.-Mexico-Canada Agreement on trade will continue indefinitely. MEXICO President Claudia Sheinbaum said on Wednesday that Mexico would not pursue a "tit-for-tat on tariffs" but would rather announce a "comprehensive program" on Thursday. AUSTRALIA Prime Minister Anthony Albanese said Australia would seek to negotiate with the U.S. to remove the tariffs without resorting to a dispute resolution mechanism in the two countries' Free Trade Agreement. He said his government would not impose reciprocal tariffs as this would increase prices for Australian households. "We will not join a race to the bottom that leads to higher prices and slower growth," Albanese said. EUROPEAN UNION Bernd Lange, chairman of the European Parliament's international trade committee, said the EU would response "through legal, legitimate, proportionate and decisive measures." "I hope that our arguments and the firmness of our response will provide sufficient incentives to bring the US to the negotiating table," Lange said. Ireland's trade minister, Simon Harris, said the EU "will have to respond in a proportionate manner which protects our citizens, our workers and our businesses," while Portugal's Economy Minister Pedros Reis called for a "firm, but also very intelligent" response. BRAZIL The government of Latin America's largest economy Brazil, which Trump slapped with a 10% tariff, said it was "evaluating all possible actions to ensure reciprocity in bilateral trade, including resorting to the World Trade Organization." Earlier in the day, Brazil's Congress approved a bill that establishes a legal framework for Brazil to respond to potential unilateral trade measures targeting its goods and services, including countermeasures such as tariffs.
Reuters
02-04-2025
- Business
- Reuters
Trading Day: T-Day arrives, markets rise
ORLANDO, Florida, April 2 (Reuters) - TRADING DAY Making sense of the forces driving global markets Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. By Jamie McGeever, Markets Columnist New reality about to dawn U.S. markets on Wednesday were determined to put on a brave face ahead of U.S. President Donald Trump's announcement of sweeping tariffs that will escalate a global trade war and threaten to upend the entire international trading system. Stocks rose sharply and Treasuries and the dollar ended notably weaker. Buoyed by hope or expectation that the tariffs wouldn't be as draconian as feared, U.S. indices closed in the green. The deeper analysis of the tariff fallout - lower growth and higher inflation - will be for tomorrow and beyond. Fed policymakers and other central bankers are in a bind - do they respond to the weaker growth impulse, or higher inflation? More on that below, but first, a round up of today's main market moves. I'd love to hear from you, so please reach out to me with comments at You can also follow me at @ReutersJamie, opens new tab and @ opens new tab. Today's Key Market Moves The S&P 500 rises 0.7% and the Nasdaq climbs 0.9%. Tesla shares leap 5.3% after Politico reports that Trump has told members of his Cabinet that Tesla CEO Elon Musk will soon step back from his government role. Shares had been down as much as 6.4% after quarterly sales plunged 13% to the weakest in nearly three years. U.S. stock futures sink as much as 2.5%, pointing to a bleak open on Thursday. Global stocks are mixed. China's benchmark indexes are essentially flat, Chinese tech rises 0.35%, and Japan is up 0.2%, while European benchmark indexes fall as much as 0.5%. Japanese equity futures point to a fall of 2% at the open on Thursday. The euro hits a two-week high of $1.0870, rising 0.5% for its best day in three weeks. Technicals remain bullish - that's almost a month above the 200-day moving average. It's an exact mirror image for the dollar index - at a two-week low, biggest fall in three weeks, and now almost a month below its 200-day moving average. T-Day arrives, markets rise So, 'Tariff Man' has shown his hand, and now markets nervously await the response from the rest of the world. Most countries will probably play their cards cautiously and carefully, which is what Britain's finance minister Rachel Reeves and Mexican President Claudia Sheinbaum on Wednesday indicated they will do. Trump's tariff salvo adds to the long list of protectionist shots fired since his inauguration in January. The extent of the pain and damage remains to be seen, and earlier on Wednesday European Central Bank President Christine Lagarde said it will be "negative the world over" while Bank of Japan Governor Kazuo Ueda said the hit to global trade could be huge. Few would argue, although the latest global readout points to a mixed picture in the first quarter as economies grappled with historically high levels of uncertainty and braced for impact - factory activity in India expanded at the fastest pace in eight months, while industrial production in Brazil unexpectedly fell; Mexico's government on Tuesday lowered its 2025 GDP growth forecast, but to a still rosy 1.5%-2.3%. The most recent U.S. economic indicators suggest activity and the labor market have held up pretty well ahead of "T-Day" - durable goods orders rose solidly in February and ADP private sector payrolls growth in March beat expectations. Although the economist consensus is still for GDP expansion in the first quarter and beyond, forecasts are being cut across the board - JP Morgan's Michael Feroli, for example, slashed his Q1 forecast to 0.0% from 1.0% and his 2025 call to 1.3% from 1.6%. Still, these and most forecasts are significantly brighter than the Atlanta Fed GDPNow model's gloomy estimate of 1.4% GDP contraction in the first quarter when adjusted for outsized gold imports. Thursday is the first day in the new world of Trump's tariffs, and there's huge uncertainty and risk for investors to navigate. Let's see if their optimism from the previous day spills over. Optimal Fed response to tariffs? Ease policy Focus on the "stag". Ride out the "flation". That may be the Federal Reserve's optimal plan for handling the new wave of tariffs coming from the Trump administration. With details of U.S. President Donald Trump's sweeping tariffs now emerging, all eyes will soon turn to the Fed's and other central banks' response to the president's "liberation day" duties that could leave them in quite a bind. It's generally agreed that tariffs are damaging to growth and inflationary, initially at least. So how should central bankers react? Do they cut interest rates to prop up a stagnating economy or raise them to cool fiery price pressures? According to a Minneapolis Fed working paper, opens new tab published last month, the answer is clearly the former. The authors find that the "optimal" policy response to tariffs is not just to look through the inflationary impact and keep rates steady, but to go even further and ease policy. "The optimal monetary response is to stimulate the economy, raising aggregate income and boosting demand for imported goods," wrote Minneapolis Fed economist Javier Bianchi and University of Wisconsin-Madison assistant professor Louphou Coulibaly. The optimal response, they argue, "is expansionary, letting inflation rise above and beyond the direct effects of tariffs. This result holds regardless of whether tariffs apply to consumption goods or intermediate inputs, whether the shock is temporary or permanent." ADVERSE EFFECTS This all runs counter to the commonly held belief that pouring fuel on an inflationary fire is essentially the most dangerous thing a central banker can do, as it risks "unanchoring" inflation expectations. But the authors argue that history simply doesn't show this to be the case. Instead, the data suggests that to mitigate the slump in imports as tariffs bite, the central bank must stimulate economic activity, lift employment and boost income. Policymakers must be prepared to "tolerate some overheating," the authors contend. This conclusion reflects another important lesson from economic history: tariffs are pretty bad for growth. A 2020 study using aggregated data for 151 countries, opens new tab from 1963 through 2014 found that tariffs have "economically- and statistically-significant adverse effects" on growth. The impact is "persistent" and increases over time, the researchers found. Their baseline model suggests that a 3.6 percentage points increase in tariffs results in a 0.4% decline in economic output five years later. They actually found that the projected longer-term effect of tariffs on GDP was higher than the estimated medium-term impacts, but they limited their study to a five-year time horizon "in an effort to be conservative." PROCEED WITH CAUTION Right now, Fed officials are also erring on the side of caution. In their revised economic projections released last month, they maintained their forecast for two quarter-point rate cuts this year, although a hawkish underlying shift in the "dot plot" of officials' individual projections moved the median closer to one cut. And Fed Chair Jerome Powell has been at pains to be neutral and non-committal on the question of tariffs, insisting that, before acting, he and his colleagues must wait and see what the actual impact is on activity, prices and employment. Fed Governor Chris Waller, however, was a bit bolder in a speech to the OECD in Paris in January, stating: "If, as I expect, tariffs do not have a significant or persistent effect on inflation, they are unlikely to affect my view of appropriate monetary policy." The market is certainly focusing on the "stag" more than the "flation". U.S. businesses are reporting the highest factory gate prices in years and consumer inflation expectations are the highest in decades, according to some measures, yet bond yields are falling and interest rate futures are pricing in multiple cuts this year and into 2026. Investors appear to be betting that, if the tariff push comes to the recession shove, the Fed will focus on stimulating growth. History suggests they're right. What could move markets tomorrow? Japan services PMI (March) China 'Caixin' services PMI (March) UK services PMI (March) ECB board member Isabel Schnabel speaks U.S. weekly jobless claims U.S. services ISM (March) If you have more time to read today, here are a few articles I recommend to help you make sense of what happened in markets today. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias. Trading Day is also sent by email every weekday morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here.
Reuters
02-04-2025
- Business
- Reuters
PIMCO steps up private lending to emerging market governments
LONDON, April 2 (Reuters) - Bond giant PIMCO has privately lent nearly $6 billion to emerging market borrowers, mostly governments, this year alone, securing higher returns and better lender protections, its head of emerging markets portfolio management said on Wednesday. That is already nearing the roughly $8.5 billion PIMCO lent last year in 27 deals, Pramol Dhawan told Reuters, out of a total of around $25 billion it has provided in recent years. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. For emerging markets wary of being caught out by unfavourable changes in broader sentiment, private credit - which is also booming in developed economies - is seen as a more flexible but also less visible way to borrow. Countries PIMCO has lent to include Panama, the Dominican Republic, Saudi Arabia and Qatar, Dhawan said on the sidelines of a conference in London. The asset manager lends through loans or private bonds as well as trades where PIMCO buys existing public bonds at a discounted price that is not disclosed, Dhawan said. The firm prefers lending to borrowers with low investment-grade or high sub-investment grade ratings, he added. "We've got both inflows as an asset manager, and we have a large private credit team. We can leverage those two together, find bespoke solutions," Dhawan said. He said PIMCO could secure a 150 basis-point pick up relative to public investment-grade bonds from the same borrowers, while for the high-quality end of the high-yield market, that can reach as high as 300 bps. The other advantage of the off-market deals is that PIMCO can write its own lender protection terms known as covenants, which offer it more protection than those on public deals. Emerging market governments were choosing to pay up for the private debt to secure optionality, particularly following the experience of the COVID-19 pandemic where some emerging markets, especially smaller, riskier frontier markets, were locked out of capital markets, Dhawan said. Some issuers also do not want to mark down their Eurobonds with a public debt sale, he added. Giving the examples of Panama and Egypt, Dhawan said the higher-cost private credit extension was a very small share of their debt stack, however, at around 3%. Demand to lend to investment-grade governments in this way was coming predominantly from insurers, Dhawan added. "Pretty much every U.S. insurance company that we pitch this to is like: sure. Why not?," he said, as they grow worried about U.S. equity market volatility.
Reuters
31-03-2025
- Business
- Reuters
TRADING DAY Wall Street shakes off tariff trepidation
NEW YORK, March 31 (Reuters) - Making sense of the forces driving global markets Jamie is enjoying some well-deserved time off, but the Reuters markets team will still keep you up to date on what moved markets today. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. Today's Key Market Moves Wall Street shakes off tariff trepidation Investors' aversion to uncertainty was the theme across global markets on Monday in the run-up to U.S. President Donald Trump's promised April 2 "Liberation Day" tariff announcements. After sharp share falls in Asia and Europe, the risk-off contagion hit Wall Street in early trade, while safe-haven Treasuries were bought and gold topped $3,100 an ounce for the first time. However, the S&P 500 and the Dow clawed their way back into the green even as Treasury yields stayed slightly lower on the day amid worries about how Trump's trade war will impact U.S. and overseas growth. Goldman Sachs increased the probability of a U.S. recession this year to 35%, also lowering its U.S. GDP growth forecast and year-end target for the S&P 500, establishing itself as the most bearish big firm so far. Month-end and quarter-end adjustments were also afoot, so the choppiness was not a surprise. What could move markets tomorrow? Japan February unemployment Reserve Bank of Australia monetary policy meeting U.S. Job Opening and Labor Turnover Survey for February U.S. March ISM Manufacturing PMI If you have more time to read today, here are a few articles I recommend to help you make sense of what happened in markets today. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias. Trading Day is also sent by email every weekday morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here. Written by Alden Bentley; Editing by Nia Williams Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
