2025-09-11 23:00

China introduced new refined oil market rules aligned with anti-involution plan Research firms say 30%–40% of diesel and gasoline sales evaded tax Smaller refiners rely on tax dodges to meet margins as demand plummets Many will struggle to make money after the changes BEIJING, Sept 11 (Reuters) - China's independent teapot refiners are staring down a fresh hit to profits because of new rules introduced this month to crack down on untaxed refined oil, analysts say, as the sector struggles with tepid fuel demand and overcapacity. Refiners are required to pay consumption taxes both when they import feedstock such as fuel oil and also on the refined products they produce, but evasion is widespread. Sign up here. Industry estimates suggest 30-40% of all gasoline and diesel refined is sold tax-free, according to calculations cited by state oil giant Sinopec and Chinese consulting firm GL Consulting. New rules implemented by the Ministry of Commerce will scrap paper ledgers and require refiners, petrol stations and other operators to report purchases, sales and inventories online each month. The State Council, China's cabinet, flagged the changes in February. Many independent refiners, especially smaller players, rely in part on tax dodges to pad out margins under pressure from falling demand and will be hit hardest, China-based GL Consulting said. Removing that competitive edge over larger or state-owned refiners that are tax compliant will in turn spur consolidation, dovetailing with Beijing's push to reduce overcapacity, said Dongyuan Cao, associate law professor at the University of Science and Technology Beijing. "The regulation is a vital component of the broader 'anti-involution' governance push for a refining sector experiencing 'low-price competition'," explained Cao. Involution is a buzz word in China that refers to competition so fierce it becomes self destructive. The goal of the changes is to collect more tax revenue and eliminate illegal petroleum products, Sinopec researcher Qi Mengdi wrote in Petroleum Business News. The Ministry of Commerce and the State Taxation Administration did not immediately respond to questions. OPERATING AT A LOSS China has launched campaigns against tax evasion in the teapot hub of Shandong province before but refiners backslid when inspections ended, Sinopec said in a report published in September. Experts said the new rule will be more effective because it introduces a system, not a one-off campaign. The stakes are highest for the smallest teapots, which the government has been slowly squeezing for years with higher taxes. The teapot sector ran at less than half its capacity in the first half of this year as a weak economy and the rapid adoption of electric vehicles hit fuel demand. Some smaller teapots will start operating at a loss as a result of the change, Li Xiang, a researcher with state oil company CNPC wrote in an article this month. For refiners, skirting the consumption tax can lift margins on diesel by about 600 yuan ($84.26) per ton (7.45 barrels), said two sales managers, one at a refined product sales company and another at a private refinery. For gasoline, the lift is around 1,900 to 2,000 yuan, they said. Shandong independent refineries processing imported crude oil earned profit averaging 177 yuan ($24.86) per ton in the first half of 2025, Chinese consultancy JLC estimated. ($1 = 7.1207 Chinese yuan renminbi) https://www.reuters.com/business/energy/chinas-teapot-refiners-face-fresh-test-crackdown-tax-evasion-2025-09-11/

2025-09-11 21:35

Canada considers scrapping oil emissions cap for climate strategy Alberta must commit to emissions reduction for cap removal Oil sector's emissions rise, risking climate goals by 2030 CALGARY, Sept 11 (Reuters) - Canada's government is in discussions with energy companies and the oil-producing province Alberta about eliminating a federal cap on emissions from the country's oil and gas sector if the industry and province reduce their carbon footprint in other ways, three sources with knowledge of the talks said. Canada's emissions cap has not yet been implemented through legislation. But the prospect of it has been broadly condemned by Canadian oil and gas companies who have said it will force them to cut production. Sign up here. Prime Minister Mark Carney, who won the April election promising to protect Canada's economy from U.S. tariffs, has faced some criticism for stepping away from his Liberal Party's previous emphasis on the environment. His government's tone has changed significantly from a few weeks ago, sources said, adding officials had until recently suggested the emissions cap would stay in place. The sources were not authorized to speak publicly about the discussions. Carney said during the election campaign he would keep the emissions cap, which is not scheduled to take effect until 2030. His predecessor, Justin Trudeau, published draft regulations for the cap in November. The sources said the current talks could lead to the emissions cap being scrapped as part of a broader new "climate competitiveness strategy," which the federal government aims to unveil later this autumn. GOVERNMENT REVIEWING FEEDBACK ON CAP Carney's office referred Reuters to the federal Environment Department, which said the government is reviewing feedback on the emissions cap. While mechanisms like caps can play a role in building a future that reduces emissions, "we are not going to get there through regulation alone," an Environment Department spokesperson said in a statement. "Canada’s new government is committed to climate policy that is unifying, credible, and predictable; that reduces emissions, drives investment, and builds the economy of the future," the statement said. Canada's Natural Resources Minister Tim Hodgson declined to discuss details of the negotiations, but said in an interview on Thursday the federal government is committed to delivering clean and conventional energy in an environmentally responsible way. "Our government is focused on results, not how we get there," Hodgson said. Any move to eliminate the cap would be contingent on Alberta and the oil sector making renewed, serious commitments to emissions reduction, including, but not limited to, moving ahead with the Pathways carbon capture and storage project, two of the sources said. Canada's new climate competitiveness strategy will focus on "results over objectives and investments over prohibition," Carney said this week at a meeting of the ruling Liberal Party in Edmonton. Oil and gas is Canada's highest-emitting industry, and its emissions continue to rise due to rising production in the country's oil sands region. Ottawa will likely fall short of its international climate commitment to reduce greenhouse emissions by 40-45% from 2005 levels by 2030 unless the oil and gas sector intensifies efforts to decarbonize. "It would be a tragic mistake for the Liberal government to back off on climate action while wildfires are still burning across this country," Greenpeace Canada strategist Keith Stewart said. Under the terms of the cap, the federal government would require its oil and gas sector to cut emissions to 137 million metric tons, 37% below 2022 levels, by 2030. Carney promised to make Canada the "world's leading energy superpower," forging ahead with clean energy development while making the conventional oil and gas sector more competitive. He has also sought to mend federal relations with Alberta, which under Trudeau had become increasingly rocky due to that government's heavy focus on environmental issues. Canadian oil and gas companies have repeatedly said other Trudeau-era legislation, including a ban on oil tankers off British Columbia's north coast, must be repealed to significantly jump-start private investment. https://www.reuters.com/sustainability/climate-energy/canada-may-drop-oil-emissions-cap-part-new-climate-plan-sources-say-2025-09-11/

2025-09-11 21:03

ORLANDO, Florida, Sept 11 (Reuters) - TRADING DAY Making sense of the forces driving global markets Sign up here. By Jamie McGeever, Markets Columnist A surge in U.S. jobless claims to a four-year high on Thursday cemented investors' bets for a Fed rate cut next week, weighing on the dollar , opens new tab and bond yields, and lifting Wall Street's three main indices to new highs. For now at least, expectations of easy monetary policy are clearly trumping growth worries. More on that below. In my column today I look at how the extraordinary rise in Oracle's share price on Wednesday has reignited the already fiery debate over whether U.S. tech and AI stocks are in a bubble. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Today's Talking Points: * The claim game The only debate now around U.S. interest rates, surely, is how fast they will come down. That's the upshot from the shock jump in jobless claims figures, which trumped worries over slower growth and simmering inflation numbers - claims surged the most in a year to the highest level in nearly four years. Remember, a record downward benchmark annual revision to payrolls growth was announced earlier this week too. The labor market is clearly softening, but enough for a half-percentage point rate cut next week? That's still an outside bet, but the probability traders are attaching to it is creeping up. * Fed vs the world The European Central Bank kept rates on hold at 2% on Thursday and bank president Christine Lagarde signaled its rate-cutting cycle is over, saying the bank remains in a "good place" and that risks to the economy have become more balanced. Traders agree. What's more, other central banks are at or close to the end of their easing cycles too. Rates futures pricing suggests that, of the nine non-U.S. G10 central banks, only Canada's is fully expected to cut rates 50 bps by the end of next year, three are unlikely to cut at all, and one - Japan - will raise rates. * Dollar doldrums The Fed's relative dovishness - or playing catch-up with many of its peers, if you prefer - is weighing heavily on the dollar. While the broad dollar index isn't making new lows right now, pockets of weakness continue to pop up. On Thursday the greenback fell to 2025 lows against the Australian dollar, Mexican peso, Brazilian real and Colombian peso. The last time the dollar was this weak against these last two currencies was June last year. Oracle surge pours fuel on fiery AI bubble debate The eye-watering surge in U.S. tech giant Oracle's share price on Wednesday added fuel to a fiery debate: is the U.S. artificial intelligence stock boom a bubble destined to burst? This is a question that has dogged Wall Street for months, as AI euphoria has helped the S&P 500 and tech-heavy Nasdaq hit new highs seemingly every day, swatting away the chaos and uncertainty surrounding tariffs, Washington politics and Fed independence. But Wednesday felt different. It's not every day that one of the country's biggest tech companies sees its share price skyrocket by as much as 43%. Oracle is not a penny stock, startup or meme stock. A surge of this magnitude should make everyone reassess where markets are, and whether this boom is moving into unsustainable territory. Below are five charts that suggest what former Federal Reserve Chair Alan Greenspan termed "irrational exuberance" may be engulfing AI and tech. 1. Oracle's soaring valuation Oracle, the cloud computing giant, saw its stock trade at nearly 50x estimated 12-month forward earnings on Wednesday, the highest since the dotcom crash when its forward PE topped 120. Its share price rose as much as 43% on the day, causing it to virtually double since June. Oracle did say it expects cloud revenue to exceed half a trillion dollars and announced four new multi-billion contracts, so some optimism is warranted. But should the company truly be worth twice as much as it was only three months ago? 2. The Nvidia juggernaut Nvidia's share price has doubled since April, rising an eye-popping 300% in the last two years. The AI chip superpower is now the world's most valuable company with a market cap of $4.3 trillion, larger than every country's listed stock exchange apart from the U.S., China, Japan and India, according to Deutsche Bank. Sure, Nvidia continues to churn out cash, but just two customers made up 39% of its revenue in the last quarter. Is that sustainable? 3. Record-high concentration The combined weighting of the top five companies in the S&P 500 is nearing 30%, higher than the 'Nifty Fifty' in the late 1960s/early 1970s and much higher than tech companies in 2000 before the dotcom bust. This doesn't automatically mean we're in a bubble, but the market is in unchartered territory and heavily dependent on a handful of companies - all of them in one industry. History suggests this level of concentration rarely ends well. 4. Lofty valuations The S&P 500 tech sector is nearing its most expensive levels since 2002 when the dust from the dotcom bust was still settling. Of course, this can be sustained as long as the cash keeps rolling in. But the amount of AI-related capex needed to develop the industry – an estimated $6.7 trillion worldwide by 2030, according to McKinsey - means the amount of cash that will need to keep coming in is enormous. When the bar is that high, even sound companies might struggle to meet it. 5. Stretched positioning Bank of America's August fund manager survey showed that the most crowded trade in world markets currently is once again "long Magnificent 7", according to 45% of those polled. A majority, 52%, say they see no AI bubble, suggesting this packed trade could get even more crowded before it unwinds. Investors have little incentive to go against this trade as long as it remains a winning one. But when a crowded trade reverses it can be sudden, and not everyone gets out the exit door in time. A lot of investors could lose a lot of money. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. 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. https://www.reuters.com/business/global-markets-trading-day-graphic-2025-09-11/

2025-09-11 20:56

TSX ends up 0.8% at 29,407.89 Eclipses Wednesday's record closing high Industrials rise 1.6%, financials add 1% Aecon Group shares jump 9.6% Sept 11 (Reuters) - Canada's major stock index rose to another record high on Thursday as U.S. data supported bets on Federal Reserve interest rate cuts and after Canadian Prime Minister Mark Carney announced five major projects that would be eligible for fast-track approval. The S&P/TSX composite index (.GSPTSE) , opens new tab ended up 228.50 points, or 0.8%, at 29,407.89, eclipsing Wednesday's record closing high. Sign up here. U.S. consumer prices rose more than expected in August, but a surge in first-time applications for unemployment aid last week kept the Fed on track to cut interest rates next Wednesday. "You are seeing strength in (U.S. stock market) sectors that are rate-sensitive, like financials, discretionary, materials," said Ian Chong, a portfolio manager at First Avenue Investment Counsel. "Canada is piggybacking on a lot of that movement, but also we've had some pretty important announcements from Mark Carney today." Among the five projects announced by Carney is a plan to double production of liquefied natural gas at the Shell-led (SHEL.L) , opens new tab LNG Canada plant in the western province of British Columbia, as part of a campaign to diversify the economy and reduce reliance on the United States. "There is a large opportunity for job creation with those initiatives ... but it also signals that Canada is open for business, which should attract significant foreign investment," Chong said, adding that natural gas producers, major lenders, as well as engineering and construction companies could be among the sectors to benefit. Shares of construction and infrastructure development company Aecon Group Inc (ARE.TO) , opens new tab jumped 9.6% and Bird Construction Inc (BDT.TO) , opens new tab shares ended 6.9% higher. The industrials sector gained 1.6% and heavily weighted financials were up 1%. Consumer discretionary rose 1.4%, with shares of Magna International (MG.TO) , opens new tab adding 2%. The auto parts supplier said it had appointed Philip D. Fracassa as its new chief financial officer. https://www.reuters.com/markets/europe/tsx-hits-all-time-high-investors-cheer-canadas-plan-fast-track-major-projects-2025-09-11/

2025-09-11 20:55

While US inflation rises, jobless claims overshadow Bets solidify for three rate cuts this year ECB holds rates at 2% as expected Oil settles down more than $1/barrel NEW YORK/LONDON, Sept 11 (Reuters) - MSCI's global equities gauge hit a record high on Thursday while U.S. Treasury yields fell along with the dollar due to growing expectations for interest rate cuts, as softer labor market data overshadowed a higher-than-expected U.S. inflation reading. The Consumer Price Index increased by 0.4% in August, the most in seven months and following a 0.2% rise in July, driven by a 0.4% jump in housing costs and a 0.5% increase in food prices. The cost of food consumed at home jumped 0.6%. Sign up here. But in a separate report, the Labor Department said initial claims for state unemployment benefits jumped 27,000 to a seasonally adjusted 263,000 for the week ended September 6, which was the highest level since October 2021 and surpassed economist estimates for 235,000 claims. The higher-than-expected claims numbers solidified expectations that the Federal Reserve will cut U.S. interest rates next Wednesday and increased bets for more cuts in October and in December. "It feels like markets are focused on the softening labor market. That implies a Fed that is going to embark on a rate-cutting cycle," said Mona Mahajan, head of investment strategy at Edward Jones. "After next week, they'll be looking to see how both the inflation and labor market play out." Traders were betting on a 100% probability for a rate cut at the Fed meeting next week with a roughly 5% chance for a super-sized half percentage point cut. Bets for another quarter percentage point cut in October rose to about 86% from Wednesday's 74%, while the probability for a third cut in December rose to roughly 79% from 68%, according to the CME Group's FedWatch , opens new tab tool. "The focus shifted away from the CPI print to the jobless claim number. The claims number was a little bit higher than expected, so it is a potential indicator we're seeing further weakness in the labor market," said Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions. "What you're getting is this tug of war between data that's pointing to slowing in the economy, but at the same time the reaction is to price-in additional Fed easing, which is giving support to the market," Janasiewicz added. On Wall Street, the three major indexes registered record closing highs. The Dow Jones Industrial Average (.DJI) , opens new tab rose 617.08 points, or 1.36%, to 46,108.00, the S&P 500 (.SPX) , opens new tab rose 55.43 points, or 0.85%, to 6,587.47, and the Nasdaq Composite (.IXIC) , opens new tab rose 157.01 points, or 0.72%, to 22,043.08. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab rose 6.92 points, or 0.72%, to 971.72, after hitting a record high for the second day in a row. Earlier, the pan-European STOXX 600 (.STOXX) , opens new tab index closed up 0.6% after the European Central Bank kept its interest rates steady at 2%, as expected, and trimmed its inflation forecasts but offered no clues about its next move, while investors continued to bet more support will be needed. In U.S. Treasuries, the yield on the benchmark 10-year Treasury note dipped below 4% a few times in the session, marking five-month lows, after the inflation and jobless claims data. The yield on benchmark U.S. 10-year notes fell 0.8 basis point to 4.024%, from 4.032% late on Wednesday. The 30-year bond yield fell 1.9 basis points to 4.6583% from 4.677% late on Wednesday. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 1.1 basis points to 3.544%, from 3.533% late on Wednesday. In currencies, the dollar weakened against major currencies including the euro and the yen on the prospect of more rate cuts. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.28% to 97.51. The euro was up 0.38% at $1.1738, while against the Japanese yen the dollar weakened 0.21% to 147.15. Sterling strengthened 0.37% to $1.3579 while the Mexican peso rose 0.74% versus the dollar to 18.455 and the Canadian dollar strengthened 0.21% versus the greenback to C$1.38. In commodity markets, oil prices fell more than $1, snapping three days of gains, on concerns over softening U.S. demand and global oversupply, which offset worries about output due to conflict in the Middle East and the Russian war in Ukraine. On Wednesday, Poland's downing of suspected Russian drones had triggered fresh talk of sanctions while Israel had attacked Hamas leaders in Qatar the day before. U.S. crude settled down 2.04%, or $1.30, at $62.37 a barrel, while Brent ended the session at $66.37 per barrel, down 1.66%, or $1.12, on the day. In precious metals, spot gold , which hit record highs earlier this week, fell 0.13% to $3,635.83 an ounce. U.S. gold futures fell 0.19% to $3,636.50 an ounce. https://www.reuters.com/world/china/global-markets-wrapup-7-2025-09-11/

2025-09-11 20:44

US deficit nears $2 trillion with one month left in 2025 fiscal year Net US customs duties reach record $29.5 billion in August Receipts, outlays reach records for August, fiscal year-to-date WASHINGTON, Sept 11 (Reuters) - The U.S. budget deficit for August fell $35 billion or 9% from a year earlier to $345 billion as President Donald Trump's tariffs pushed net customs receipts up by about $22.5 billion for the month, the Treasury Department said on Thursday. With one month to go in the 2025 fiscal year, the year-to-date deficit rose $76 billion, or 4% to $1.973 trillion. A U.S. Treasury official declined to predict whether the deficit would top $2 trillion for the full fiscal year ended September 30 but told reporters that September typically has higher revenues than August because of quarterly tax payment deadlines. Sign up here. The official said the fiscal-year-to-date deficit was the third highest for that period after the COVID-era 11-month deficits of $3.007 trillion in fiscal 2020 and $2.711 trillion in fiscal 2021. Those two years also had the highest full-year deficits due to a collapse in receipts and heavy COVID relief spending. Receipts for August rose $38 billion or 12% to $344 billion, while August outlays grew $2 billion to $689 billion. Both receipts and outlays reached new records for the month. Adjustments for calendar shifts in benefit payments and receipts would have produced a $47 billion deficit reduction in August instead of the $35 billion reduction, the Treasury said. "With one month left in fiscal 2025, we expect the deficit for the year to come in at $1.78 trillion, reflecting the fact that September is typically a surplus month due to strong estimated individual and corporate income tax collections," Oxford Economics Lead U.S. Economist Nancy Vanden Houten said in a note. Net customs receipts in August also reached an all-time monthly record of $29.5 billion, quadrupling from $7 billion a year earlier, driven by Trump's tariffs, which administration officials have touted as a now-essential federal revenue source. The customs duties were the third-highest revenue category in August after $153 billion in individual income taxes and $134 billion in Social Security and Medicare payrolls deductions. For the fiscal year to date, net customs duties were up $95 billion to a record $165.2 billion. The year-on-year growth in monthly customs receipts has remained in the low $20 billion range for the past three months despite higher duty rates from Trump's global "reciprocal" tariffs starting on August 9. The Treasury official said that higher tariff collections typically begin to show up in budget results about a month after increases in rates. Total receipts for the first 11 months of fiscal 2025 rose $300 billion or 7% to a record $4.691 trillion, while outlays rose $376 billion or 6%, to a record $6.664 trillion. Social Security outlays were up $117 billion or 8% to $1.513 trillion as a result of cost of living adjustments and increases in the number of beneficiaries, while Treasury debt interest rose $76 billion, or 7% to $1.124 trillion, and Department of Education spending fell $111 billion or 44% to $140 billion due to cuts to federal student aid and elementary and secondary education programs. https://www.reuters.com/markets/us/us-august-deficit-falls-345-billion-tariff-revenues-rise-2025-09-11/