2025-03-17 21:33

ORLANDO, Florida, March 17 (Reuters) - Making sense of the forces driving global markets Global equity markets on Monday kept up the positive momentum initiated by Friday's rebound, as investors parked their concerns over escalating global trade tensions and hoovered up cheap and beaten down stocks. Sign up here. Many short-term positioning and momentum indicators suggest Wall Street was oversold, so in that light a continuation of the recovery is understandable. Chances for a truce in the Ukraine-Russia war, slender as they may be, are also lending some support to risky assets at the margins. But there are plenty of reasons to be wary of chasing this bounce too aggressively - Monday saw the release of yet another surprisingly weak U.S. retail sales report, and the White House confirmed President Donald Trump's previous pledge that reciprocal tariffs will come into effect on April 2. Today's Key Market Moves. But impressive as the global rebound has been over the last two trading days - more than 3% in both the S&P 500 and MSCI World Index - it's a brave person to call this a definitive turn. There's simply too much uncertainty and too little visibility around Trump's trade war for that. And the U.S. economic data continues to soften - Citi's U.S. economic surprises index has been in negative territory since February 20 and is languishing near its lowest level since September. The outlook for other major economies, notably China and Europe, is brighter. February's 'data dump' from China was mixed but did include strong retail sales figures, and Beijing has made spurring domestic consumption a priority. Meanwhile Germany's plans to open the fiscal taps are a huge boost to Europe's growth prospects. The picture in Japan is in many ways more fascinating. The Bank of Japan is keen to continue normalizing policy after decades of ultra-low and negative interest rates, a stance that is justified by the rapid pace of wage growth. According to Jeff Weniger, head of equities at WisdomTree, Japanese wages are now outstripping U.S. wages at the fastest rate in decades. Long-term Japanese Government Bond yields are printing new multi-year highs almost on a daily basis - the 40-year JGB yield is fast approaching 3%, and on Monday rose for a 13th day out of the last 14. But higher borrowing costs, global market turbulence and trade war uncertainties are being felt - Japan's economic surprises index on Monday fell to the lowest since January. The BOJ is unlikely to raise interest rates again later this week, and money markets are pricing in a 25 basis point move in June or July. In the U.S., consumers may also be feeling squeezed, not by rising borrowing costs, but by falling asset prices. Houston, we have an asset problem, not a debt problem It's widely believed that the biggest issue with U.S. consumers' balance sheets is indebtedness, but the Federal Reserve's latest financial accounts – and the volatile stock market – suggest that larger risks may be on the other side of the ledger. This seems counterintuitive. Household wealth has never been higher, rising some $163 billion in the fourth quarter of last year to a record net $169.4 trillion, as gains in stocks and 'other' assets more than offset declines in bonds and home prices, according to the Fed's latest report. And when looking at assets as a share of gross disposable income, considered a more accurate barometer of wealth, households have rarely ever been richer. But cracks are starting to appear in the edifice. Households directly or indirectly owned $56 trillion worth of stocks at the end of last year, a record amount. As a share of total gross wealth, equity exposure is at a historically high level, and vulnerable to a significant decline if markets slide. The market is wobbling. With only two weeks left of the current quarter, the S&P 500 is heading for a fall of 4% and the Nasdaq is down 8%. Some $5 trillion has been wiped off the U.S. stock market in the last month, the sharpest dose of wealth destruction since the bear market of 2022. This has potentially profound implications for a consumption-based economy where the top income decile – the owners of nearly all of the country's financial assets – is responsible for roughly half of the nation's consumer spending. So while it's famously been said that "the stock market is not the economy," that may not be strictly true. Oxford Economics' chief U.S. economist Ryan Sweet – one of many who have recently cut their 2025 growth forecasts – has warned that household net wealth matters more for the consumer spending outlook than ever before. "A stronger wealth effect has proven to be a tailwind for overall consumer spending, but it could just as easily turn into an outsize drag in the event of a bear market," he wrote last week. HIGH WATER MARK He's right. One of the most remarkable statistics in recent years is that the U.S. economy has grown 50% in nominal terms since the post-pandemic low in 2020, less than five years ago. Household wealth has played a key role in this via a virtuous cycle of strong consumer spending, high corporate profits, soaring stock markets and resilient economic activity. But what if one part of that cycle – asset prices – has reached its high-water mark? What was a virtuous cycle when asset prices were rising could quickly flip to a vicious cycle when they fall. We may already be seeing the beginnings of this. Consumer sentiment is now at a two-and-a-half-year low, University of Michigan surveys show, and tepid monthly retail sales reports are offering reasons to be concerned. ON THE OTHER SIDE Meanwhile, the other side of the household balance sheet is actually in relatively good shape. Total nominal debt fell slightly in the fourth quarter to $20.79 trillion, the first decline in nearly five years. And if you exclude a few quarters in the pandemic distorted by government stimulus checks, debt as a share of gross disposable income is now the lowest since 1999. Applying the same criteria, mortgage debt - households' biggest single debt burden - as a share of GDI is the lowest since 1998. So overall, debt levels appear relatively low and stable, while asset values are high and primed for a fall. What could move markets tomorrow? 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. I'd love to hear from you, so please reach out to me with comments at [email protected]. You can also follow me at [@ReutersJamie and @reutersjamie.bsky.social.] 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. https://www.reuters.com/markets/global-markets-trading-day-2025-03-17/

2025-03-17 21:32

March 17 (Reuters) - Steel Dynamics (STLD.O) , opens new tab forecast its first-quarter earnings below Wall Street estimates on Monday, as declining steel prices continue to weigh on margins of its steel-making segments. The Fort Wayne, Indiana-based company expects its first-quarter earnings to be between $1.36 and $1.40 per share, lower than the analysts' estimate of $1.41 per share, according to data compiled by LSEG. Sign up here. The company posted first-quarter earnings of $3.67 per share, a year ago. The steelmaker expects the drop in steel prices to affect profit in its fabrication operations segment, but anticipates increased shipments to offset some of the margin compression in its larger steel operations segment. Steel Dynamics also noted an uptick in order activity for the quarter, supported by demand from commercial, data center, manufacturing, warehouse and healthcare sectors. "The accelerated announcements for meaningful manufacturing domestic investment and onshoring, coupled with the U.S. infrastructure program are expected to positively impact demand," the company said on Monday. Steel Dynamics plans to release its first-quarter earnings after the markets close on April 22. https://www.reuters.com/markets/commodities/steel-dynamics-forecasts-first-quarter-profit-below-estimate-amid-falling-steel-2025-03-17/

2025-03-17 21:08

MONTREAL, March 17 (Reuters) - Bombardier (BBDb.TO) , opens new tab CEO Eric Martel said on Monday he was concerned Washington could target the private planemaker's U.S. contracts if Canada cancels a C$19 billion ($13.30 billion) deal for 88 Lockheed Martin (LMT.N) , opens new tab F-35 fighter jets. Canada, locked in a trade war with the United States, is reviewing the contract for the jets. Sign up here. "Effectively, we could be targeted. This is my concern," Martel told reporters in Montreal after a speech hosted by the Canadian Club. In October, Montreal-based Bombardier announced the delivery of an eighth jet to the United States Air Force as part of a deal with a potential value of $465 million. The aircraft carry specialized communications platforms. U.S. President Donald Trump doubled down on Monday, saying he would not give exemptions to broader steel and aluminum duties, and pledged to introduce fresh reciprocal and sectoral tariffs on April 2. Canada's Defense Ministry, acting on a request from new Prime Minister Mark Carney, said it has made a legal commitment of funds for the first 16 F-35 aircraft but cited "the changing environment" as the reason for the review. "I am there to defend Bombardier, but I understand why the new prime minister is asking these questions," Martel said. Martel's comments highlight the complexity of a trade war for the integrated aerospace sector, which risks getting caught up in an earlier threat by Trump to impose 25% tariffs on all imports from Canada and Mexico. It is unclear whether a U.S. exemption for Canadian and Mexican goods like Bombardier's planes that comply with the United States-Mexico-Canada Agreement (USMCA) will be extended past April 2. Martel said if the U.S. did impose tariffs that affect the company's jet deliveries, one option would be to hand over planes first to its non-U.S. clients, echoing a strategy by European planemaker Airbus (AIR.PA) , opens new tab. Bombardier, with a division in Wichita, Kansas, and a vast U.S. supply chain, also expects that any possible tariffs would not apply to the U.S. content on its business jets, reducing any potential hit, Martel said. He added he does not see U.S. tariffs on its planes as likely or lasting a long time if applied. Martel said existing U.S. tariffs on aluminum and steel, along with retaliatory counter duties introduced last week by Canada on those metals and adhesives, have had minimal impact on Bombardier's costs. ($1 = 1.4291 Canadian dollars) https://www.reuters.com/business/aerospace-defense/bombardier-ceo-fears-us-could-target-firm-if-canada-scraps-jet-deal-2025-03-17/

2025-03-17 20:57

PDVSA to produce 105,000-138,000 bpd of Hamaca heavy crude A portion of output to be refined domestically, another exported to markets other than the US Diluents to be recycled, supplied from Paraguana complex March 17 (Reuters) - Venezuela's state-run PDVSA has put together three operational scenarios as part of a plan to continue producing and exporting oil at its largest joint venture with Chevron (CVX.N) , opens new tab once a license for the U.S. major to operate in the country expires next month, according to a company document seen by Reuters on Monday. The administration of U.S. President Donald Trump this month gave Chevron 30 days through early April to wind down all oil operations and exports from Venezuela that are currently going to the United States under a license granted in 2022. Sign up here. Chevron has a presence in the U.S.-sanctioned South American country through joint ventures where PDVSA is the largest shareholder, with the Petropiar project at the vast Orinoco Belt being the most important partnership. The Venezuelan firm plans to produce between 105,000 and 138,000 barrels per day (bpd) of Hamaca heavy crude at Petropiar once the Chevron license expires, in line with production levels in recent months, the document says. A portion of the crude output that varies depending on the scenario will be sent to domestic refineries along with some byproducts like vacuum gasoil, while another portion will be exported to markets other than the U.S. The vacuum gasoil allows PDVSA to produce low-octane gasoline for domestic distribution. PDVSA's main goal with the changes is to maintain Petropiar's output levels and avoid the need to halt the upgrader or shut any of the joint ventures' oilfields, a source close to the company's operations said. PDVSA and Chevron did not immediately reply to requests for comment. In order to deal with possible shortages of diluents needed to sustain Petropiar's operations, PDVSA will recycle a larger portion of imported naphtha while supplying other diluents from its largest refining complex, Paraguana, to the project. A dynamic movement of tankers that is currently allowing Chevron to move Venezuelan crude between domestic ports before exporting would be minimized, according to the document. Some units of Petropiar's crude upgrader are expected to be taken out of service to produce feedstocks other than crude oil in an arrangement similar to the one PDVSA put in place in 2020 when the Chevron license was restricted by Trump's first administration. https://www.reuters.com/business/energy/venezuelas-pdvsa-produce-refine-export-crude-previously-handled-by-chevron-2025-03-17/

2025-03-17 20:35

DUBAI, March 17 (Reuters) - Abu Dhabi petrochemicals company Borouge (BOROUGE.AD) , opens new tab will seek shareholder approval to buy back up to 2.5% of its shares, it said on Monday, after its share price plunged on this month's news of its merger deal with Austria's Borealis. Borouge's majority shareholder Abu Dhabi National Oil Company and Austria's OMV (OMVV.VI) , opens new tab said they had agreed to merge polyolfein businesses Borouge and Borealis to create a chemicals powerhouse with a $60 billion enterprise value. Sign up here. Borouge's shares slid to close at a record low of 2.3 dirhams ($0.6263) per share on March 11 from 2.66 dirhams on March 4, which was their highest since September 2023. The shares were up 4.7% at 2.46 dirhams by 0900 GMT on Monday. "The proposed share buyback underscores the company's confidence in its long-term growth prospects and commitment to delivering superior returns to its shareholders through multiple avenues," Borouge said in a statement. Borouge is 54% owned by ADNOC and 36% by Borealis, which in turn is owned 75% by OMV and 25% by ADNOC. The remaining 10% of Borouge is floated on the Abu Dhabi Securities Exchange (ADX). Shareholders will vote on the buyback at an annual general meeting on April 7. They will also vote on dividends that are proposed at $1.3 billion for 2024. Borouge made a net profit of $1.24 billion last year. The proposed buyback would be conducted via open market transactions on ADX. The size depends on market conditions and other factors, with 2.5% as a ceiling. Current Borouge shareholders are expected to be offered an exchange of their shares for stock in the merged entity, Borouge Group International, after the merger deal closes. ($1 = 3.6723 UAE dirham) https://www.reuters.com/markets/deals/borouge-proposes-shares-buyback-after-stock-slides-merger-news-2025-03-17/

2025-03-17 20:19

WASHINGTON, March 17 (Reuters) - The U.S. Department of Energy said on Monday it has disbursed $57 million of an up to $1.52 billion loan guarantee for Holtec's Palisades nuclear plant in Michigan, which the company hopes will be the first U.S. commercial reactor to restart after ceasing operations. The conditional loan guarantee was part of an effort by the administration of former President Joe Biden to support nuclear energy, which generates virtually emissions-free power, to curb climate change and to help satisfy rising electricity demand from artificial intelligence, electric vehicles and digital currency. Sign up here. The department's first disbursement on the loan guarantee, about $38 million, occurred in January after its Loan Programs Office closed the financing last year. "Today’s action is yet another step toward advancing President (Donald) Trump’s commitment to increase domestic energy production, bolster our security and lower costs for the American people," Energy Secretary Chris Wright said in a release. Power company Entergy (ETR.N) , opens new tab closed the 80-megawatt Palisades reactor in Michigan in 2022, after the plant generated electricity for more than 50 years. It shut two weeks ahead of schedule over a glitch with a control rod, despite a $6 billion federal program to save nuclear plants suffering from rising costs. Holtec wants to reopen the plant in the fourth quarter of 2025, but still needs permits from the Nuclear Regulatory Commission. Holtec is repairing steam generators at Palisades as the standard procedure for maintaining the units was not followed when the plant went into shutdown. Pat O'Brien, a Holtec spokesperson, said the company was "well on our way to helping unleash American energy." https://www.reuters.com/business/energy/us-releases-57-million-financing-help-reopen-michigan-reactor-2025-03-17/