2025-05-09 11:42

S&P rates Romania BBB-, outlook negative Political turmoil and uncertainty are risks to fiscal consolidation Second round of presidential election on May 18 Fitch likely to cut Romania rating in August, BofA economists say BUDAPEST/LONDON, May 9 (Reuters) - Ratings agency S&P Global has warned that the current political upheaval in Romania is putting the country's coveted investment grade credit rating under increasing threat. Romania's financial markets were rattled this week after hard-right presidential candidate George Simion's victory in a first-round vote deepened a political crisis in central Europe's second-largest economy. Sign up here. Prime Minister Marcel Ciolacu resigned following the result, triggering the collapse of the pro-Western coalition government and causing widespread concern about the country's already strained finances. A poll showed Simion, a vocal Eurosceptic, winning the deciding May 18 run-off election. S&P warned that policymaking would become more fragmented and less stable over the next few months, regardless of the outcome, and result in "weaker growth, fiscal, and external outcomes than our already pessimistic assumptions." Romania is currently rated BBB- by both S&P and Fitch, and an equivalent Baa3 by Moody's. All three have a "negative" outlook. They are the lowest rating in the investment grade category, meaning that any downgrade will lead to a drop into the so-called "junk" bracket. That tends to put off conservative international investors and, therefore, push up borrowing costs. Bucharest already runs the European Union's biggest budget deficit, exceeding 9% of GDP. Its main funding avenues are also affected by the political situation, S&P said, with access to the Eurobond market "weakened ... leading to pressure on the exchange rate and the domestic bond market." Romania's currency, the leu, has fallen nearly 3% against the euro, forcing the central bank to step in to try and stabilise it. CONSOLIDATION RISKS Bank of America economists said they expect Fitch to downgrade Romania's rating by one notch in August, as the increased probability of a nationalist president and a change in government add risks to Romania's fiscal consolidation path. "This, in turn, in our view means the EU could consider suspending funds in June-July and a ratings downgrade also looks hard to avoid." Romania's economy grew just 0.8% last year, the slowest pace since the COVID-19 pandemic, with one large employers' group warning this week that the political turmoil could push the country into recession. Sunday's shock first round result has also seen its 10-year government bond yield, a proxy of the interest rate the government pays on its borrowings, shoot up some 100 basis points to its highest level since November 2022. JPMorgan analysts have warned of a 15-20% devaluation of the leu versus the euro if the instability worsens after the deciding second-round vote. The central bank likely spent anywhere between 5 to 10 billion euros of its foreign exchange reserves in the past few days to shore up the leu, based on estimates by economists and investment banks. S&P's post-election scenarios include the potential for an unstable minority government that would try to move ahead with fiscal consolidation, or early parliamentary elections which would further delay budget cuts. A third, more optimistic, scenario considers the formation of a unity government with sufficient backing for fiscal stabilisation. https://www.reuters.com/markets/europe/romanias-political-crisis-could-affect-external-financing-sources-sp-says-2025-05-09/

2025-05-09 11:37

KYIV, May 9 (Reuters) - Ukraine maintained steel production growth in the first four months of 2025 despite the loss of the coking coal mine in Pokrovsk in the eastern part of the country, data from the Ukrainian steel producers' union showed on Friday. Ukrainian steelmaker Metinvest suspended operations at Ukraine's only coking coal mine, citing a deteriorating security situation as Russian forces advanced. Sign up here. Raw steel output rose by 1% in January-April to 2.43 million metric tons from 2.40 million in the same period of 2024, the data showed. Steel production has suffered since Russia's invasion in February 2022, which has led to the destruction of leading steel plants. Ukraine, formerly a major steel producer and exporter, reported a 70.7% drop in output in 2022 to 6.3 million tons. It fell to 6 million tons in 2023 but increased to 7.58 million in 2024. https://www.reuters.com/markets/commodities/ukraine-steel-output-rises-1-so-far-2025-producers-union-says-2025-05-09/

2025-05-09 11:31

LONDON, May 9 (Reuters) - Britain has more than doubled funding available under a scheme seeking to spur investment in offshore wind projects to 544 million pounds ($721.78 million), after higher than expected demand, the government said on Friday. The country has put offshore wind at the heart of its 2030 clean energy plan and hopes to boost capacity from around 15 GW at present to 43-50 GW by the end of the decade. Sign up here. But there are worries it could miss targets after one of the largest projects in development, Orsted's Hornsea 4 project, was cancelled this week. The Danish company said it was no longer economic to proceed given rising building costs. An expansion of the investment incentive scheme which the government calls the 'Clean Industry Bonus' from an initial budget of 200 million pounds to 544 million pounds could help improve the financial viability of new projects. The scheme will help underpin the economics of projects bidding in Britain's next annual renewable subsidy auction which will be held later this year. Successful bidders in the Clean Industry Bonus will receive an initial 27 million pounds in funding for every gigawatt (GW) of capacity from offshore wind projects. It is open to developers investing in regions that need it most or in cleaner supply chains, including traditional oil and gas communities, ex-industrial areas and ports and coastal towns, the Department for Energy Security and Net Zero (DESNZ) said. "This additional funding has the potential to help secure billions in private investment in new factories manufacturing components for the offshore wind industry across the UK," Ana Musat, Executive Director of Policy at industry group RenewableUK said in the government statement. ($1 = 0.7537 pounds) https://www.reuters.com/sustainability/climate-energy/britain-increases-wind-farm-incentives-funding-720-million-2025-05-09/

2025-05-09 11:25

BERLIN, May 9 (Reuters) - A court in Switzerland said on Friday that Nord Stream 2, part of Russian gas company Gazprom (GAZP.MM) , opens new tab, has reached a debt restructuring agreement with its creditors. The court had set a deadline of May 9 for Switzerland-based Nord Stream 2 to both restructure its debts and pay back small-scale creditors. The court had said it could declare Nord Stream 2 bankrupt if this condition was not met. Sign up here. The $11 billion Nord Stream 2 pipeline to carry Russian gas to Europe was completed in 2021 but was never commissioned as relations with Moscow broke down ahead of Russia's invasion of Ukraine in February 2022. Europe slashed its imports of Russian gas following Moscow's invasion and Gazprom posted a $7 billion loss the following year. The court in Zug in Switzerland said the decision could still be appealed. It declined to give further details on the debt or the creditors. Gazprom did not reply to a request for comment. The Nord Stream pipeline system is made up of two double pipelines across the Baltic Sea to Germany and was the biggest route for Russian gas to enter Europe. It was capable of delivering 110 billion cubic metres of gas a year. But in September 2022, one of the two lines of Nord Stream 2 was damaged by mysterious blasts, along with both lines of Nord Stream 1. U.S. President Donald Trump is pushing for peace in Ukraine, raising the prospects of a thaw in gas ties. Officials from Washington and Moscow have held discussions about the U.S. helping to revive Russian gas sales to the continent, eight sources familiar with the talks have told Reuters. But Brussels wants to ban new Russian gas deals by the end of 2025 and ban imports under existing deals by the end of 2027. The plan, to be debated next month, would require approval from the European Parliament and a majority of member states. Hungary and Slovakia have expressed their opposition to the move. https://www.reuters.com/business/energy/nord-stream-2-agrees-debt-restructuring-deal-court-says-2025-05-09/

2025-05-09 10:55

LONDON, May 9 (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. It's Friday, so today I'll provide a quick overview of what's happening in global markets and then offer you some weekend reading suggestions away from the headlines. Today's Market Minute * Behind closed doors, Chinese officials have grown increasingly alarmed about the U.S. tariffs' impact on their economy and the risk of isolation as China's trading partners have started negotiating deals with Washington. * From his first moments on the balcony of St. Peter's Basilica, Pope Leo XIV gave three important clues about what kind of leader of the 1.4-billion-member Catholic Church he will be. * U.S. President Donald Trump and British Prime Minister Keir Starmer on Thursday announced a limited bilateral trade agreement that leaves in place Trump's 10% tariffs on British exports, modestly expands agricultural access for both countries and lowers prohibitive U.S. duties on British car exports. * While many investors survived the market volatility unleashed by U.S. President Donald Trump's "Liberation Day" with only a few scratches, macro hedge funds suffered one of their worst maulings in years. Check out the latest from Reuters' columnist Jamie McGeever. * Forget April, it’s this summer that could prove decisive as investors seek to determine if this shift is a short-term move or a true secular change in market leadership. Read the analysis from TPW founder Jay Pelosky. Tariff rollback hopes rising World markets have latched onto the prospect of a gradual rollback of U.S. tariffs to extend their recent recovery from April's trade shock. Even though it appears the universal 10% levies leveled on all countries' imports to America will remain regardless of bilateral talks underway, there is still some optimism that many of the more extreme 'reciprocal' tariffs may be negotiated away. Britain's trade deal with Washington on Thursday encouraged those hopes, and investors will be paying close attention to the U.S.-China talks set to begin in Switzerland this weekend. Wall Street rallied again on Thursday, with the dollar .DXY surging to its best levels in a month and U.S. Treasury yields hitting their highest in two weeks. Oil prices gained, the VIX 'fear index' ebbed to the lowest since April 2 and Bitcoin recaptured the $100,000 level to hit its highest since January. U.S. stock futures held those gains overnight and equities surged in Japan and Taiwan. MSCI's all-country stock index (.MIWD00000PUS) , opens new tab is back in positive territory for the year to date, even though Wall Street indexes remain in the red for 2025. Tech gains have helped. Nvidia (NVDA.O) , opens new tab plans to release a downgraded version of its H20 artificial intelligence chip for China in the next two months, following U.S. export restrictions on the original model, sources told Reuters. But ahead of the weekend talks in Switzerland, China reported a surprisingly big beat in worldwide exports for April as demand from countries seeking to capitalise on the 90-day tariff pause offset a 21% drop in Beijing's bilateral exports to America. Even that decline in exports to the United States surprised forecasters, who had expected a greater drop given the 145% direct tariffs imposed on China. This suggests many U.S. importers couldn't switch suppliers easily and may have to pass on the higher costs to consumers. This could spur worries about rising consumer prices and put upward pressure on Treasury yields. Friday's diary sees a parade of top Federal Reserve officials speaking following this week's Fed decision to hold policy rates steady as the central bank waits to see how the trade and inflation picture pans out. April inflation updates are due next week. President Donald Trump wasted little time in resuming his stinging criticism of Fed Chair Jerome Powell on Thursday, calling him a "fool" for not lowering interest rates. Vice President JD Vance added to the attacks, saying Powell has "been wrong about almost everything." Thursday's $25 billion sale of 30-year Treasury bonds jarred in the backdrop. The auction's 2.31 bid-to-cover ratio, a gauge of demand, was the lowest since July 2024 and the 58.9% awarded to indirect bidders, which include foreign investors, was the lowest since 2019. Elsewhere, UK stocks (.FTSE) , opens new tab, (.FTMC) , opens new tab advanced again as investors digested the runes of Thursday's U.S. trade deal and the Bank of England's quarter-point rate cut. With BoE policymakers surprisingly split on the cut, markets pulled back expectations of further easing this year, and BoE boss Andrew Bailey underlined the fact that tariffs are still set to rise despite the concessions in Thursday's trade deal. But key parts of the trade deal, particularly how it sidestepped any compromise on food standards, will allow Britain to more easily engage in parallel negotiations with the European Union this month. Weekend reading suggestions Here are some articles away from the day-to-day headlines that you may find interesting. * SUDDEN STOP?: The Institute of International Finance shows portfolio investment flows to the emerging markets came to a standstill in April as the United States tabled trade tariffs across the world and global markets plunged. Only flows to Chinese debt were positive during the turbulent month, with equity flows across China and EM at large in the red and debt flows negative to EM ex-China countries too. , opens new tab *MOVIE SURPLUS: After President Trump said he would impose 100% U.S. import tariffs on movies made abroad, Gary Hufbauer at the Peterson Institute for International Economics wrote that he thinks the plan should be canceled. Hufbauer argues that retaliation against Hollywood and related services could slash a $37 billion U.S. trade surplus in overall entertainment and would invite countries to retaliate not only against Hollywood but also against all types of U.S. services, including those provided by the likes of Google and Amazon. , opens new tab * KINDLEBERGER TRAP?: In an article for CEPR's VoxEU website, central bank adviser and author Robert McCauley addresses an unlikely but widely discussed risk that a re-vamped Federal Reserve might be unwilling to extend emergency dollar credit via global swap lines. , opens new tab * MIDEAST GAMBLE: President Trump reportedly blindsided Israeli Prime Minister Benjamin Netanyahu last month with a gamble on opening negotiations with Iran. Reuters' Samia Nakhoul, Humeyra Pamuk and Parisa Hafezi report on how the success of those talks hinges on winning a handful of key concessions to stop the Islamic Republic from developing a nuclear bomb. * UNEQUAL AGEING: Detailing the scale of Europe's demographic challenge, a report from the Bruegel , opens new tab think tank by David Pinkus and Nine Ruer shows that by 2050 working-age populations are projected to decline in 22 out of 27 European Union countries. But they point out that the scale of the problem is far greater in Eastern and Southern countries, as higher migration to Northern and Western economies bolsters those populations. , opens new tab * FLAWED 'ACCORD'?: In a piece for the Project Syndicate website, former International Monetary Fund chief economist Ken Rogoff critiques proposals by members of Trump's economic team to reduce the U.S. current account deficit by weakening the dollar. He argues the so-called 'Mar-a-Lago Accord' idea is based on a deeply flawed understanding of the relationship between the dollar's global status and U.S. de-industrialization. , opens new tab * TRILLION-DOLLAR UPGRADE: Europe's ageing power grid and limited energy storage capacity mean that the continent will need to invest trillions of dollars to cope with rising green energy output and increasing electricity demand and to avoid blackouts. Reuters Nina Chestney examines the issue in light of Spain and Portugal's worst ever blackout last month. * 'TRUMP TRADE' HEAD FAKE: In a blog on the Council on Foreign Relations website, former U.S. Treasury official Brad Setser , opens new tab runs through a number of theories as to why currency markets got it wrong so far in betting that Trump's tariff policies would strengthen the dollar. , opens new tab * LEGAL BACKLASH: As federal judges rule against the Trump administration in dozens of politically charged cases, the families of at least 11 of the jurists have been targeted with threats and harassment. A Reuters Special Report details the pressure put on some U.S. judges and their families by supporters of the President. Chart of the day Trade talks between the world's two largest economies will begin in Switzerland this weekend. Ahead of those talks, China reported that its exports in April were far ahead of forecasts despite the imposition of 145% U.S. tariffs. The unexpected buoyancy partly reflected demand for materials from overseas manufacturers who rushed to send out goods in order to make the most of 90-day tariff pause. However, China's direct exports to the U.S. fell 21%, which means the trade surplus with the U.S. dropped to $20.5 billion from $27.6 billion in March. Today's events to watch * Canada April employment report * U.S. Treasury Secretary Scott Bessent meets Swiss government officials ahead of weekend trade talks with China in Switzerland * Federal Reserve Board Governors Christopher Waller, Lisa Cook, Adriana Kugler and Michael Barr all speak. New York Fed President John Williams, Cleveland Fed President Beth Hammack, St. Louis Fed chief Alberto Musalem, Richmond Fed chief Thomas Barkin and Chicago Fed boss Austan Goolsbee all speak. Bank of England Governor Andrew Bailey and BoE chief economist Huw Pill speak * U.S. corporate earnings: Monster Beverage, AMC, Echostar 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/markets/us/global-markets-view-usa-2025-05-09/

2025-05-09 10:34

SINGAPORE, May 9 (Reuters) - East China-based independent refiner Hongrun Petrochemical plans to restart its recently-acquired Changyi Petrochemical site as early as this month, four trade sources said on Friday. Hongrun has already secured some crude oil cargoes in the past month ahead of the restart of the 160,000 barrels per day Changyi plant, two of the sources added. Sign up here. However, the operation rate of the Changyi plant could remain curtailed in the near term as Hongrun is still sorting out the transfer of crude quota from its previous operator Sinochem, a third source said. Both Hongrun Petrochemical and Changyi Petrochemical sites are located in Shandong's Weifang city. Calls to Hongrun were not answered. Hongrun is expected to assume Changyi's crude oil import quota, which was allotted to Sinochem under the first issue of 2025 permits Beijing released late last year, Reuters previously reported. The refinery has been shut since mid-2024. https://www.reuters.com/business/energy/chinas-hongrun-group-restart-newly-acquired-refinery-soon-sources-say-2025-05-09/