2025-05-28 14:18

SAO PAULO, May 28 (Reuters) - Stocks of Brazilian steel companies fell on Wednesday after the government said it would renew for 12 months a system meant to protect the national steel industry, but that steelmakers have said is ineffective. WHY IT’S IMPORTANT The steel industry began criticizing the quota system almost as soon as it was set up last year, saying it failed to control the flow of imports, mainly from China. Sign up here. Under the system, as long as the import quota is not reached, steel products can enter the country if they pay import tax of between 9% and 16%. If the cap is exceeded, a 25% tariff applies, Brazilian government news outlet Agencia Brasil said. MARKET REACTION On the first day of trading following the announcement, CSN (CSNA3.SA) , opens new tab was down 4.4%, Usiminas (USIM5.SA) , opens new tab dropped 3.6% and Gerdau fell (GGBR4.SA) , opens new tab 1.2%. Brazil's benchmark stock index Bovespa fell only 0.5%. CONTEXT The system, which has been expanded to now include 23 steel products, was already criticized by the sector for being too broad. Tuesday's government announcement retained the exclusion - also criticized by the industry - from the quota and tariff system of imports from countries that have trade agreements or negotiated special conditions with Brazil. The steel sector has urged the government to renew the scheme with the inclusion of all steel products in the 25% tariff, as the European Union and the United States have done. BY THE NUMBERS Steel imports rose 27.5% year-on-year in the first four months of 2025, reaching 2.2 million metric tons, according to data from the country's steel mills association, Aco Brasil, which did not comment on the matter on Wednesday. https://www.reuters.com/markets/commodities/brazilian-steel-companies-shares-fall-after-government-renews-tariff-system-2025-05-28/

2025-05-28 12:56

May 28 (Reuters) - Finance Minister Anton Siluanov said on Wednesday an adjustment to the $60 oil cut-off price for Russia's budget rule should be considered, marking a potential policy shift that could impact Moscow's ability to raise spending and build up cash reserves. Under the budget rule, the Finance Ministry sells foreign currency from its rainy-day National Wealth Fund to make up for any shortfall in revenue from oil and natural gas exports, or makes purchases in the event of a surplus. Sign up here. While Siluanov had previously spoken in favour of the cut-off price being changed, he recently ruled out an adjustment for the next three-year budget. Responding to a lawmaker's question about Russia's depleting reserves on Wednesday, he appeared to change tack once more, saying the issue would be discussed when formulating budget policy. "We need to think about whether, when preparing the new budget for the medium-term, we should look at the cut-off price level ... to what extent it corresponds today to levels that allow us to ensure not only the preservation of the National Wealth Fund, but also its replenishment," Siluanov said. Russia's fiscal buffers have dwindled since its February 2022 invasion of Ukraine, with Moscow dipping into the wealth fund to finance budget deficits and support state-owned companies. The fund's liquid assets stood at $40.4 billion on May 1, down from $112.7 billion before the invasion. High prices for oil, the cornerstone of Russia's export-focused economy, enable Russia to set funds aside, but with Brent futures having dropped to about $60 a barrel and Urals crude even lower, Moscow's finances are under pressure. A lower cut-off price would allow Russia to save more petrodollars, but that also implies reduced expenditure, which, as analysts have noted, may be hard to achieve with Moscow spending heavily on the war in Ukraine. https://www.reuters.com/business/energy/russian-finance-minister-returns-idea-adjusting-oil-price-budget-rule-2025-05-28/

2025-05-28 12:38

LONDON, May 28 (Reuters) - What matters in U.S. and global markets today By Mike Dolan , opens new tab, Editor-At-Large, Financial Industry and Financial Markets Sign up here. After weeks of trade and debt anxiety, the spotlight has shifted back to the artificial intelligence theme on Wednesday, as investors wait with rare trepidation for Nvidia's (NVDA.O) , opens new tab quarterly earnings. I'll dive into all of today's other market news and then explain the significance of the timing of ECB President Christine Lagarde's recent call for the euro to replace the dollar as the world's reserve currency. Today's Market Minute * Demand at an auction of 40-year Japanese government bonds on Wednesday fell to the lowest since July, during a selloff in super-long debt this month. * Oil prices settled 1% lower on Tuesday as investors worried about a supply glut after Iranian and U.S. delegations made progress in their talks and on expectations that OPEC+ will decide to increase output at a meeting this week. * President Vladimir Putin's conditions for ending the war in Ukraine include a demand that Western leaders pledge in writing to stop enlarging NATO eastwards and lift a chunk of sanctions on Russia, according to three Russian sources with knowledge of the negotiations. * If the United States is to significantly reduce or eliminate its trade deficit, the dollar will have to weaken a lot. How much is unclear, as history shows large dollar declines are rare and have unpredictable consequences for trade. Check out Reuters columnist Jamie McGeever's latest piece. * U.S. President Donald Trump's sweeping tax and spending bill calls for drastic cuts to clean energy tax credits that have been major drivers of the recent boom seen in utility-scale renewable power and battery capacity. In Reuters columnist Gavin Maguire's latest piece, he outlines the potential implications of this in six charts. Spotlight back on Nvidia The inevitable levelling off of Nvidia's explosive growth is already underway, but the chip designer also faces investor worries about AI overspend and questions about how much U.S. chip curbs on China will cost the company going forward. Nvidia's stock price - which is basically unchanged in 2025 to date - climbed anew on Tuesday along with the broad market rally. That was helped by reports that the company will launch a new chipset for China at significantly lower prices than the currently restricted H20 model. Meanwhile, the overall market mood improved considerably, with the S&P 500 (.SPX) , opens new tab jumping 2% on relief over temporarily defused U.S.-European trade tensions, a retreat in long-term government debt yields, and positive U.S. consumer confidence readings for May. However, there were mixed takes on the May household survey, capital goods orders data for last month was soft, and edginess in long bond markets is already coming back. So the main driver of the rally was likely the U.S.-EU trade news after Trump backed down from Friday's 50% tariff threat against the European Union, delaying its implementation until July 9. EU officials have asked leading European companies and CEOs for details of their U.S. investment plans, according to two sources familiar with the matter, as Brussels prepares to advance trade talks with Washington. Tensions on long-dated government debt resurfaced today, meantime, with another tepid sale of Japan's ultra long bonds, reinforcing speculation that Tokyo may be forced to trim sales of debt of such long maturities as fiscal worries grow. The Ministry of Finance sold about 500 billion yen ($3.46 billion) of 40-year bonds with a bid-to-cover ratio of 2.21, the lowest since a sale in July last year and well below the historical average of 3. That saw 30-year JGB borrowing rates jump back about 5 basis points from Tuesday close, drawing long-dated yields higher around the world. The yen strengthened slightly on the day. With its own home-grown fiscal concerns, the U.S. saw 30-year yields also back up about 5 bps to just under 5%. Some $70 billion of 5-year Treasury notes come under the hammer later. Meanwhile, investor attention has also turned to a Financial Times report that European Central Bank President Christine Lagarde considered stepping down before her term ends in 2027. The ECB responded by saying Lagarde was determined to complete her eight-year term. Elsewhere, the New Zealand dollar held firm even after the country's central bank cut its benchmark rate by 25 bps to 3.25% and flagged a slightly deeper easing cycle than it forecast three months ago. And Shein is working towards a listing in Hong Kong after the online fast-fashion retailer's proposed initial public offering in London failed to secure the green light from Chinese regulators. Now to today's column, where I look into this week's combative speech from ECB boss Lagarde on the status of the euro. Lagarde's euro 'battle cry' emphasizes EU cash need If the euro supplants the dollar as the world's main reserve currency, Europe might lose some currency competitiveness - but the related capital flows it's seeking more than compensate. European Central Bank President Christine Lagarde , opens new tab weighed in on the debate about the euro's global reserve status on Tuesday by reiterating the ECB's long-standing aim to boost the currency's wider use and position it as the logical alternative to the dollar. The euro has long been the clear second choice in reserve usage, both in the positive and negative sense. While its share of overall reserve coffers is still far behind the dollar's, the euro is way ahead of any other serious rivals to the greenback bar gold. But what was eye-catching about the very vocal ECB support for wider euro usage was the timing and thrust. Lagarde's statements come amid fresh doubts about the dollar's haven status, the U.S. economy's role in the world at large and America's fraying geopolitical alliances - as well as the Trump administration's perceived desire for a weaker, more competitive exchange rate. And Lagarde's speech clearly framed U.S. difficulty as Europe's opportunity. After noting that the dollar and U.S. financial markets had been effective global anchors for decades, she added that "when doubts emerge about the stability of the legal and institutional framework, the impact on currency use is undeniable." "These doubts have materialized in the form of highly unusual cross-asset correlations since April 2 this year, with the U.S. dollar and U.S. Treasuries experiencing sell-offs even as equities fell," the ECB chief explained, referring to market ructions after Trump's 'reciprocal tariff' gambit last month. "The EU has a legitimate reason to turn its commitment to predictable policymaking and the rule of law into a comparative advantage," Lagarde added, underscoring the need for political and internal capital market reforms in the EU that would enable the bloc to seize this opportunity. Clearest of all was her plea for joint debt issuance to boost the scale of 'safe' euro assets, a move that is still controversial within Europe due to persistent German pushback. "Economic logic tells us that public goods need to be jointly financed," she said, re-upping the ECB's preference for expanding the pool of jointly issued euro assets. And she also pointedly underlined the attraction of Europe's military rearmament to official investors who "seek geopolitical assurance in another form: they invest in the assets of regions that are reliable security partners and can honour alliances with hard power." WHATEVER IT TAKES The frank speaking caught everyone's attention. Rabobank strategist Jane Foley said the speech had a "battle cry" element to it. It's still anyone's guess what the outcome will be of the bilateral U.S.-EU trade talks come July's deadline and as a host of disagreements remain. Trump's jarring stop/start EU tariff announcements this past weekend make it difficult to sketch out a possible resolution, and many experts suspect Washington is intent on talking to individual countries to split the group. The tone of the ECB's stance suggests it's bracing for the risk of harsher standoffs ahead. What's more, Lagarde's statement comes as the euro's nominal broad exchange rate has soared to record highs, up almost 20% over the past decade. While that won't please many exporters in the bloc, it does suggest that the ECB - unlike the U.S. administration - is comfortable with its currency's structural strength and thus may be willing to ease policy accordingly. And that will help with the additional debt financing needed of Europe's ambitious new projects - most notably in defense, green energy and tech. On that financing need, central and private sector bankers tend to agree with former ECB chief Mario Draghi about the scale of what is needed, as outlined in his recommendations last summer. , opens new tab For example, BNP Paribas economist Laurent Quignon , opens new tab wrote on Tuesday about the total sums needed, as he made a pitch on what Europe can do this year to boost financing via changes to regulation, securitization and the banking union. Adding Draghi's call for annual energy and tech investments of up to 800 billion euros to an almost 200 billion euros of new defense spending and on top of ongoing commitments, he calculated an additional annual EU financing requirement of 1.5 trillion euros through 2028 and 1.4 trillion from then to 2030. That would be more than double the flows observed in the decade through 2024 - and about the same as the total amount of European money that has flowed into the U.S. equity market since 2012. Whatever the implications for exchange rate competitiveness, Europe now has a big bill to pay. Some 'exorbitant privilege' would help. Chart of the day 'Nvidia day' (NVDA.O) , opens new tab has become a moment of great excitement for markets in recent years, as the AI darling's stellar earnings and stock gains have typically impressed Wall Street. But investors are approaching today's announcement with caution. That's because Trump's administration, in a fresh effort to limit Beijing's access to cutting-edge technology, last month put export limits on Nvidia's H20 chip, a move the company said would result in $5.5 billion in charges. While the company is expected to report first-quarter revenue surged an annual 66.2% to $43.28 billion, analysts put the quarterly revenue hit ahead from the China chip curbs at anywhere from $3-$4.5 billion. Today's events to watch * Richmond Federal Reserve's May business surveys (10:00 AM EDT); Dallas Federal Reserve May service sector survey (10:30 AM EDT) * Federal Reserve releases minutes of last policy meeting; New York Fed President John Williams and Minneapolis Fed chief Neel Kashkari speak * U.S. Treasury sells $70 billion of 5-year notes, $28 billion of 2-year floating rate notes * U.S. corporate earnings: Nvidia, Agilent, Salesforce, Synopsys, Nordson 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/finance/global-markets-view-usa-2025-05-28/

2025-05-28 12:22

Putin wants written pledge to halt NATO expansion eastwards, sources say Russia also seeks lifting of sanctions and protection for Russian speakers in Ukraine Ukraine has insisted on NATO membership aspirations despite Russian demands MOSCOW, May 28 (Reuters) - President Vladimir Putin's conditions for ending the war in Ukraine include a demand that Western leaders pledge in writing to stop enlarging NATO eastwards and lift a chunk of sanctions on Russia, according to three Russian sources with knowledge of the negotiations. U.S. President Donald Trump has repeatedly said he wants to end the deadliest European conflict since World War Two and has shown increasing frustration with Putin in recent days, warning on Tuesday the Russian leader was "playing with fire" by refusing to engage in ceasefire talks with Kyiv as his forces made gains on the battlefield. Sign up here. After speaking to Trump for more than two hours last week, Putin said that he had agreed to work with Ukraine on a memorandum that would establish the contours of a peace accord, including the timing of a ceasefire. Russia says it is currently drafting its version of the memorandum and cannot estimate how long that will take. Kyiv and European governments have accused Moscow of stalling while its troops advance in eastern Ukraine. "Putin is ready to make peace but not at any price," said one senior Russian source with knowledge of top-level Kremlin thinking, who spoke on condition of anonymity. The three Russian sources said Putin wants a "written" pledge by major Western powers not to enlarge the U.S.-led NATO alliance eastwards - shorthand for formally ruling out membership to Ukraine, Georgia and Moldova and other former Soviet republics. Russia also wants Ukraine to be neutral, some Western sanctions lifted, a resolution of the issue of frozen Russian sovereign assets in the West, and protection for Russian speakers in Ukraine, the three sources said. The first source said that, if Putin realizes he is unable to reach a peace deal on his own terms, he will seek to show the Ukrainians and the Europeans by military victories that "peace tomorrow will be even more painful". The Kremlin did not respond to a request for comment on Reuters' reporting. Putin and Russian officials have repeatedly said any peace deal must address the "root causes" of the conflict - Russian shorthand for the issue of NATO enlargement and Western support for Ukraine. Kyiv has repeatedly said that Russia should not be granted veto power over its aspirations to join the NATO alliance. Ukraine says it needs the West to give it a strong security guarantee with teeth to deter any future Russian attack. President Volodymyr Zelenskiy's administration did not respond to a request for comment. NATO has also in the past said that it will not change its "open door" policy just because Moscow demands it. A spokesperson for the 32-member alliance did not respond to Reuters' questions. Putin ordered tens of thousands of troops into Ukraine in February 2022 after eight years of fighting in eastern Ukraine between Russian-backed separatists and Ukrainian troops. Russia currently controls just under one fifth of the country. Though Russian advances have accelerated over the past year, the war is costing both Russia and Ukraine dearly in terms of casualties and military spending. Reuters reported in January that Putin was growing concerned by the economic distortions in Russia's wartime economy, amid labour shortages and high interest rates imposed to curb inflation. The price of oil, the bedrock of Russia's economy, has declined steadily this year. Trump, who prides himself on having friendly relations with Putin and has expressed his belief the Russian leader wants peace, has warned that Washington could impose further sanctions if Moscow delays efforts to find a settlement. Trump suggesting on social media on Sunday that Putin had "gone absolutely CRAZY" by unleashing a massive aerial attack on Ukraine last week. The first source said that if Putin saw a tactical opportunity on the battlefield, he would push further into Ukraine - and that the Kremlin believed Russia could fight on for years no matter what sanctions and economic pain were imposed by the West. A second source said that Putin was now less inclined to compromise on territory and was sticking to his public stance that he wanted the entirety of four regions in eastern Ukraine claimed by Russia. "Putin has toughened his position," the second source said of the question of territory. NATO ENLARGEMENT As Trump and Putin joust in public over the outlook for peace in Ukraine, Reuters could not determine whether the intensification of the war and the toughening of positions heralds determination to reach a deal or the collapse of talks. In June last year, Putin set out his opening terms for an immediate end to the war: Ukraine must drop its NATO ambitions and withdraw all of its troops from the entirety of the territory of four Ukrainian regions claimed and mostly controlled by Russia. In addition to Crimea, which it annexed in 2014, Russia currently controls almost all of Luhansk, more than 70% of Donetsk, Zaporizhzhia and Kherson regions. It also occupies a sliver of the Kharkiv and Sumy regions, and is threatening Dnipropetrovsk. Former U.S. President Joe Biden, Western European leaders and Ukraine cast the invasion as an imperial-style land grab and have repeatedly vowed to defeat Russian forces. Putin casts the war as a watershed moment in Moscow's relations with the West which he says humiliated Russia after the Soviet Union fell in 1991 by enlarging NATO and encroaching on what he considers Moscow's sphere of influence. At the 2008 Bucharest summit, NATO leaders agreed that Ukraine and Georgia would one day become members. Ukraine in 2019 amended its constitution committing to the path of full membership of NATO and the European Union. Trump has said that previous U.S. support for Ukraine's NATO membership bid was a cause of the war, and has indicated that Ukraine will not get membership. The U.S. State Department did not respond to a request for comment for this story. Putin, who rose to the top Kremlin job in 1999, has repeatedly returned to the issue of NATO enlargement, including in his most detailed remarks about a possible peace in 2024. In 2021, just two months before the Russian invasion, Moscow proposed a draft agreement , opens new tab with NATO members that, under Article 6, would bind NATO to "refrain from any further enlargement of NATO, including the accession of Ukraine as well as other States." U.S. and NATO diplomats said at the time that Russia could not have a veto on expansion of the alliance. Russia wants a pledge on NATO in writing because Putin thinks Moscow was misled by the United States after the 1989 fall of the Berlin Wall when U.S. Secretary of State James Baker assured Soviet leader Mikhail Gorbachev in 1990 that NATO would not expand eastwards, two of the sources said. There was such a verbal promise, former Central Intelligence Agency Director Director William J. Burns said in his memoires, but it was never formalised - and it was made at a time when the collapse of the Soviet Union had not occurred. NATO, founded in 1949 to provide security against the Soviet Union, says it poses no challenge to Russia - though its 2022 assessment of peace and security in the Euro-Atlantic area identified Russia as the most "significant and direct threat" , opens new tab. Russia's invasion of Ukraine that year prompted Finland to join NATO in 2023, followed by Sweden in 2024. Western European leaders have repeatedly said that if Russia wins the Ukraine war, it could one day attack NATO itself - a step that would trigger a world war. Russia dismisses such claims as baseless scaremongering, but has also warned the war in Ukraine could escalate into a broader conflict. https://www.reuters.com/world/europe/putin-ukraine-peace-wants-pledge-halt-nato-enlargement-sources-say-2025-05-28/

2025-05-28 12:11

NEW YORK, May 28 (Reuters) - The S&P 500 will finish the year near current levels, according to a Reuters poll, after many strategists in recent months cut their 2025 forecast for the index over uncertainty surrounding U.S. President Donald Trump's tariffs. Based on the median forecast of 51 equity strategists, analysts, brokers and portfolio managers collected May 15-28, the year-end target for the benchmark S&P 500 (.SPX) , opens new tab is 5,900, down from 6,500 in a February poll by Reuters. The S&P 500 ended Tuesday at 5,921.54. Sign up here. The market will remain choppy, strategists said, while seven out of 14 respondents who answered a question on profit growth said S&P 500 earnings will be marginally higher in 2025 than in 2024 and two said significantly higher. Five said they would be marginally lower. Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, said the firm lowered its year-end target to 6,000 recently from 6,500 set at the start of the year. "Clearly earnings will be impacted by what's going on with tariffs," he said. "Our belief is tariffs are a tax and some combination of U.S. consumers, U.S. companies along with international producers and companies will pay the taxes. In essence, that kind of wealth transfer comes out of earnings to a certain extent," he added. According to LSEG, S&P 500 earnings are expected to increase 8.4% in 2025 compared with 12.1% in 2024. But the 2025 estimate is down sharply from 14% growth estimated on January 1. Trade developments have whipsawed the stock market this year, especially after Trump's April 2 announcement of sweeping tariffs on imports globally. In his latest move, Trump on Sunday backed down from his threat of a 50% tariff against the European Union, delaying its implementation until July 9 to allow for negotiations between the White House and the 27-nation bloc. The move prompted Brussels to fast track preparations for trade talks. Following a Tuesday rally, the S&P 500 is up just 0.7% for the year. But strategists say the back-and-forth nature of tariff negotiations has made predicting what the index will do tough. "It's very difficult to forecast given the tariff uncertainty and the changing dynamics that seem to happen daily," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan. "There's just a higher risk premium that has to be put on stocks, and that's going to be with us through the rest of this year." He said his firm's "base" target is 5,600 for the S&P 500 for this year, but a "6,000 to 5,600 range seems very reasonable based on the tariff environment not really causing a recession or deteriorating corporate profits too much." Some strategists have raised their S&P 500 forecasts recently. Last week, David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, wrote that the firm was increasing its year-end target to 6,000 from 5,800 partly because of a "solid first-quarter earnings season". Concerns over the U.S. debt load have added to recent jitters and a "sell America" view by some investors. Moody's downgraded its U.S. credit rating on May 16, and the Republican-controlled U.S. House of Representatives passed Trump's sweeping tax-cut bill last week. The bill goes to the U.S. Senate next for review where investors worry spending cuts could be whittled down, growing the deficit. The S&P 500 posted gains exceeding 20% in both 2024 and 2023, helped by megacap technology stocks and optimism over the business potential of artificial intelligence. While the S&P 500 technology sector (.SPLRCT) , opens new tab remains down 1.7% so far for 2025, it has been bouncing back, and some investors still see it as a good bet going forward. "Technology will likely remain volatile, but any downturns we get in tech, investors should use that as a long-term buying opportunity," Saglimbene said, noting tech profit growth should hold up. Samana said Wells Fargo Investment Institute likes energy (.SPNY) , opens new tab, financials (.SPSY) , opens new tab and communication services (.SPLRCL) , opens new tab and noted the firm "took the opportunity in the middle of the pullback to upgrade tech." He is cautioning investors against consumer staples (.SPLRCS) , opens new tab and utilities (.SPLRCU) , opens new tab. At the same time, Eric Teal, chief investment officer for Comerica Wealth Management, expects the Dow to end the year at 48,000 and to outperform the S&P 500 this year "due to more industrial and attractively valued companies and less-concentrated technology exposure." The poll has the Dow Jones Industrial Average (.DJI) , opens new tab finishing this year at 43,708, down from 47,024 in the Reuters February poll. The index closed at 42,343.65 on Tuesday. (Other stories from the Reuters Q2 global stock markets poll package) https://www.reuters.com/world/us/with-trump-tariff-jitters-sp-500-finish-year-nearly-even-with-2024-2025-05-28/

2025-05-28 12:05

May 28 (Reuters) - GameStop (GME.N) , opens new tab has purchased bitcoin worth about $513 million, the company said on Wednesday as the ailing video game retailer looks to capitalize on the growing adoption of cryptocurrencies globally. GameStop said in a filing it acquired 4,710 bitcoins, although it did not disclose the period for the purchases. The world's largest cryptocurrency was trading down 0.7% at $108,903 by 7 a.m. ET. Sign up here. The purchases are GameStop's first bitcoin purchase since unveiling its plans in March to invest in the digital asset, adopting a strategy pioneered by Michael Saylor's Strategy (MSTR.O) , opens new tab, an enterprise software company and the largest corporate holder of bitcoin. Strategy's stock has seen significant gains alongside the rising price of bitcoin, attracting investors seeking exposure to the digital asset without directly investing in it. For GameStop, which was at the center of 2021's meme-stock frenzy, the move could boost investor interest at a time it is struggling to turn around its mainstay business of selling video games through brick-and-mortar stores in the digital age. Shares of the Dallas, Texas-based company were 4.4% higher in pre-market trading. The company had cash, cash equivalents and marketable securities of $4.78 billion as of Feb. 1. The announcement comes a day after Trump Media and Technology Group (DJT.O) , opens new tab, U.S. President Donald Trump's social media firm, said it would raise $2.5 billion to buy bitcoin. https://www.reuters.com/business/gamestop-buys-bitcoin-worth-513-million-crypto-push-2025-05-28/