2025-03-12 21:06

ORLANDO, Florida, March 12 (Reuters) - TRADING DAY Making sense of the forces driving global markets Sign up here. Investors breathed a sigh of relief on Wednesday after U.S. inflation figures for February came in below forecasts, triggering a rebound in the S&P 500 and Nasdaq from six-month lows that should help put global markets on a firm footing on Thursday. The CPI inflation report overshadowed the latest 'tit for tat' twist in the global trade war - U.S. President Donald Trump said he would slap further tariffs on European Union goods after the EU and other U.S. trading partners said they would retaliate for trade barriers already erected by the U.S. president. "Whatever they charge us, we're charging them," Trump said. The question now is, how much juice does this bounce have? Today's Key Market Moves. Earlier on Wednesday Japanese wholesale inflation for February came in at 4.0% thanks to buoyant raw material costs. Also in Japan, wage negotiations across major firms in the process of concluding point to another year of substantial - in some cases, record - pay increases. All this keeps alive expectations of a near-term interest rate hike by the Bank of Japan, and the 10-year JGB yield crept higher on Wednesday, close to Monday's 16-year high. One central bank definitely not hiking rates is the Bank of Canada, which lowered its key policy rate by 25 basis points on Wednesday to 2.75%, the seventh consecutive cut in nine months. But the easing cycle could end soon, with Trump's trade war threatening to lift inflation - "a new crisis," as BOC Governor Tiff Macklem put it. Meanwhile, Wall Street's rebound on Wednesday could extend further because some short term technical and momentum indicators suggest the selloff is overdone. Truist's Keith Lerner, for example, points out that the 'Relative Strength Index' for the S&P 500 has just moved into 'oversold' territory for the first time since October 2023. But the forces bearing down on consumer, business and investor confidence, economic activity and risk appetite are too great to be fully lifted any time soon. Especially as Trump shows no sign of backing down. U.S. airline Delta and retail giant Walmart opened a window into what we might expect to see more of in upcoming company earnings and economic data, warning that the unusually high level of economic uncertainty will impact the bottom line. This may extend the rotation out of Wall Street into European or Asian stocks, but a sharp U.S. economic slowdown or recession would ultimately be bad news for the rest of the world too. What then for investors? For the Fed, an economic slump would usually be met with lower interest rates. But when the root of the slump is inflationary tariffs, its response is far less clear cut. Tariffs could tie Fed's hands if growth slumps With the U.S. growth outlook darkening, it's no wonder the Federal Reserve is expected to come to the rescue and start cutting interest rates again, perhaps as soon as May. But one of the main causes of the incoming economic storm is tariffs, and that could make Chair Jerome Powell's job a lot less straightforward. Cutting rates makes sense if the looming downturn is of the traditional variety, meaning it's accompanied by a decline in inflation as demand, spending and investment all cool. But 'traditional' is not a word that springs to mind when assessing the current environment. President Donald Trump's 'on again, off again' tariff fights with America's biggest trading partners has the potential to both tank growth and boost inflation. True, policymakers were able to breathe a collective sigh of relief on Wednesday when inflation data showed consumer prices rose less than expected last month. But it may be a temporary reprieve because the inflation pass through from tariffs has yet to be felt. If the catalyst for an economic downturn is inflationary, the Fed's typical toolkit suddenly becomes much less effective. As economists at Morgan Stanley put it, "increased tariff intensity" puts the Fed in a "difficult spot." Of course, if push comes to the shove and a severe downturn occurs or market turmoil ensues, the Fed probably will cut rates – even if inflation remains above its 2% target. But the prospect of stuttering growth and sticky prices – so-called 'stagflation' – hugely complicates that calculus, as mollifying one problem could make the other worse. PAUSE INTO 2026? Tariff proponents insist duties aren't inflationary. Consumers can buy domestic goods instead, and in the longer run, exchange rate appreciation and a narrowing trade deficit will cap prices. Or so the argument goes. But most economists disagree and say tariffs are ultimately passed on to consumers. In theory, tariffs raise the price level permanently but only push up the inflation rate temporarily, assuming inflation expectations don't rise too. Fed officials maintain expectations remain well-anchored, but consumers appear to feel differently. The University of Michigan's latest survey showed one-year inflation expectations jumping to 4.3% from 3.3%, and over the next five years households see inflation at 3.5%. That's the highest since 1995. Michael Pearce at Oxford Economics says rising long-term inflation expectations due to tariffs would be an issue for the Fed. "If the spike in February inflation expectations sticks, the Fed could delay rate cuts through the middle of next year, rather than resuming them later this year," he wrote on Monday. Jan Hatzius and his team at Goldman Sachs expect core PCE inflation to reaccelerate this year to 3.0%, nearly half a percentage point higher than they'd previously expected. Inflation at 3.0%, a full percentage point above target, would be hard for many Fed officials to stomach. Another complicating factor is the dollar. It started this year at its strongest level in decades, but all its gains from the post-election 'Trump bump' have evaporated. Downside momentum is building, and further weakness would just add fuel to the inflation fire. TREAD CAREFULLY Right now, on balance, the economic environment indicates that further easing is likely. Demand, as evidenced by consumer spending indicators, is cooling, business and consumer confidence is falling, the stock market has dropped from all-time highs, and growth this year is now expected to be below trend. But with inflation still hovering closer to 3% than 2% and Trump's trade war just heating up, the Fed will need to tread carefully. It won't need reminding of how the bond market reacted the last time the Fed was perceived to be underestimating inflation. When the Fed cut rates by more than expected last fall long-dated Treasuries sold off and yields surged over 100 basis points in relatively short order. So slowing growth may warrant lower rates, but that risks triggering another selloff at the long end of the bond market - a classic rock and a hard place that Fed officials might find themselves stuck between soon. 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] , opens new tab. 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-2025-03-12/

2025-03-12 20:54

HOUSTON, March 12 (Reuters) - U.S. oil producers will meet with President Donald Trump next week, leading industry group the American Petroleum Institute said on Wednesday. Among the topics for discussion are tariffs, trade and exports of liquefied natural gas, an industry source told Reuters. Sign up here. The API, which counts oil majors ExxonMobil (XOM.N) , opens new tab and Chevron (CVX.N) , opens new tab as members, helped put together the meeting. "We appreciate the opportunity to discuss how American oil and natural gas is driving economic growth, strengthening our national security and supporting consumers with the President and his team," API spokesperson, Bethany Williams, told Reuters when asked about the meeting. Trump is pursuing a trade war with allies Mexico and Canada that the API has publicly opposed. Trump has imposed tariffs on imported crude from Canada and Mexico but issued exemptions as long as producers can prove producers comply with the trade agreement between the three countries, the United States-Mexico-Canada Agreement. Last month, in response to the tariffs, API CEO Mike Sommers said, "Energy markets are highly integrated, and free and fair trade across our borders is critical for delivering affordable, reliable energy to U.S. consumers." Oil and gas interests donated some $75 million to Trump’s presidential campaign, the Republican National Committee and allied groups, according to data compiled by the OpenSecrets organization. Billionaires Harold Hamm of Continental Resources, Kelcy Warren of Energy Transfer Partners and Jeffery Hildebrand of Hilcorp Energy Co are among the highest-profile oil and gas contributors to Trump. They and their spouses donated some $15 million to Trump's election efforts, data shows. https://www.reuters.com/business/energy/ceeraweek-us-oil-executives-meet-with-trump-next-week-2025-03-12/

2025-03-12 20:53

March 13 (Reuters) - The Australasian Centre for Corporate Responsibility (ACCR) expressed dissent on Thursday against all directors due for election at the upcoming annual general meeting of Woodside Energy (WDS.AX) , opens new tab, citing failures in managing climate risks, among other reasons. The ACCR filed members' statements attributed to Woodside's persistent shortcomings, including poor shareholder returns and inadequate management of climate risk. Sign up here. Woodside's total shareholder returns over the past 15 years have been 168% lower than the ASX100 and 83% lower than the MSCI World Energy, indicating significant underperformance against both local and global markets, the activist investor's statement outlined. ACCR added that the company continues to follow the same high-cost, high-carbon, low-value strategy that has led to its financial underperformance. On the issue of climate risk management, ACCR highlighted that 58% of shareholders in 2024 voted against Woodside's Climate Transition Action Plan, marking the world's first majority vote against a company's climate plan. Woodside directors, who will be voted against by ACCR in their upcoming re-election or election in 2025, are Ann Pickard, the chair of the sustainability committee, Ben Wyatt, the current chair of the audit and risk committee and Tony O'Neill, a member of the sustainability committee, ACCR said in the statement. https://www.reuters.com/sustainability/activist-investor-defies-woodside-directors-election-citing-climate-risk-poor-2025-03-12/

2025-03-12 20:47

Intel jumps on report TSMC pitched JV to US chipmakers PepsiCo drops on brokerage downgrade CPI shows inflation cooled more than expected in February Indexes: Dow off 0.20%, S&P 500 up 0.49%, Nasdaq gains 1.22% NEW YORK, March 12 (Reuters) - U.S. stocks advanced on Wednesday as cooler-than-expected inflation data helped stanch a sharp selloff, while the escalation of U.S. President Donald Trump's chaotic, multi-front tariff war kept gains in check. The S&P 500 and the Nasdaq closed in positive territory, the latter enjoying a muscular boost from tech and tech-adjacent momentum stocks. Sign up here. The blue-chip Dow waffled between red and green for much of the session but ended modestly lower on the day. The Labor Department's Consumer Price Index showed consumer prices cooling more than analysts expected, providing reassurance that inflation is headed in the right direction and keeping hopes alive that the U.S. Federal Reserve could cut its key interest rate this year. "We're seeing a bounce today on the lower-than-expected inflation read and some dip buying," said Greg Bassuk, CEO of AXS Investments in New York. "But Wall Street and Main Street are still looking for direction." "Investors’ hopefulness about inflation cooling is being mitigated by the ongoing trade-war strife," Bassuk added. "And for that reason, we really expect the uncertainty and volatility to continue here through much of March." In his latest tariff salvo, Trump imposed 25% duties on imported steel and aluminum, prompting Canada and Europe to respond in kind, ramping up their retaliatory tariffs on U.S. exports. U.S. equities have come under pressure amid the rising temperature of tit-for-tat tariff disputes between the United States and its trading partners, rattling investors and giving rise to fears that the resulting price jolts could tip the United States, along with Canada and Mexico, into recession. Goldman Sachs lowered its year-end target for the S&P 500, while J.P. Morgan sees increasing odds of a U.S. recession. With Wednesday's advance, the S&P 500 is 8.9% below its all-time closing high reached less than a month ago. On Monday, the bellwether index dipped below its 200-day moving average, considered a significant support level, for the first time since November 2023. On March 6, the tech-heavy Nasdaq dipped more than 10% below its record closing high reached on December 16, confirming it has been in a correction since then. The Dow Jones Industrial Average (.DJI) , opens new tab fell 82.55 points, or 0.20%, to 41,350.93, the S&P 500 (.SPX) , opens new tab gained 27.23 points, or 0.49%, to 5,599.30 and the Nasdaq Composite (.IXIC) , opens new tab gained 212.36 points, or 1.22%, to 17,648.45. Technology shares led the gainers among the 11 major sectors in the S&P 500, while consumer staples (.SPLRCS) , opens new tab and healthcare (.SPXHC) , opens new tab were the laggards. Intel (INTC.O) , opens new tab jumped 4.6% after a report said TSMC (2330.TW) , opens new tab had pitched Nvidia (NVDA.O) , opens new tab, Advanced Micro Devices (AMD.O) , opens new tab and Broadcom (AVGO.O) , opens new tab about taking a stake in a joint venture to operate the U.S. chip company's factories. PepsiCo fell 2.7% after brokerage Jefferies downgraded its rating on the stock to "hold" from "buy." Lawmakers on Capitol Hill continued to wrangle over a stopgap spending bill in an effort to avoid a government shutdown, adding further uncertainties to the mix. Advancing issues outnumbered decliners by a 1.15-to-1 ratio on the NYSE. There were 29 new highs and 186 new lows on the NYSE. On the Nasdaq, 2,589 stocks rose and 1,785 fell as advancing issues outnumbered decliners by a 1.45-to-1 ratio. The S&P 500 posted no new 52-week highs and 18 new lows while the Nasdaq Composite recorded 26 new highs and 200 new lows. Volume on U.S. exchanges was 16.14 billion shares, compared with the 16.59 billion average for the full session over the last 20 trading days. https://www.reuters.com/markets/us/futures-rise-after-wall-st-selloff-tariffs-inflation-data-focus-2025-03-12/

2025-03-12 20:43

HOUSTON, March 12 (Reuters) - U.S. wind and solar development still has significant room for expansion to power data centers, particularly in the Midwest wind corridor and sunny southwest, Microsoft Vice President of Energy Bobby Hollis told Reuters at the CERAWeek energy conference in Houston on Wednesday. The quick proliferation of Big Tech's energy-intensive data centers to expand AI and cloud technologies is rattling the long-stagnant U.S. power industry, pushing the country's power consumption to new highs and raising questions about whether carbon-free renewable electricity will be supplanted with gas-fired power. Sign up here. "We still think there is a very long road ahead that keeps renewables an important part of the mix in the places where that makes sense," said Hollis. Microsoft, which pledged five years ago to be carbon negative by 2030, is in the middle of one of the biggest data center expansions of any company globally, with plans to invest $80 billion in the effort this year alone that will require vast quantities of electricity. Solar and wind are intermittent, only producing energy when the sun is shining or wind is blowing, a problem for data centers that must run around the clock. Cheap and abundant natural gas, which produces 24/7 electricity but produces emissions that contribute to global warming, has become a quick and increasingly attractive option to big power users who had sought to lead the transition to carbon-free renewable energy. "Let's add more gas when it's necessary," said Hollis, whose company said it has procured more than 30 gigawatts of renewable power globally. "Before we ever get to that place, let's make sure that we've added the renewables." The mid-section of the U.S., with consistent and strong winds, is ripe for development of wind powered data centers, while solar power can be expanded in the sunny southeast, he said. https://www.reuters.com/business/energy/ceraweek-us-wind-solar-development-still-has-much-room-grow-data-centers-2025-03-12/

2025-03-12 20:34

HOUSTON, March 12 (Reuters) - U.S. Interior Secretary Doug Burgum told a packed room of energy executives on Wednesday that he wants their industries to ramp up drilling and mining on America's public lands, telling the crowd: "We love you!". Burgum's comments to the CERAWeek energy conference in Houston underscored the agenda of President Donald Trump, a Republican, to unfetter fossil fuels and metals production by slashing as much red tape as possible. Sign up here. "If we're going to drill, baby, drill, then we've got to be asked to also mine, baby, mine," Burgum, a former governor of the oil-producing state North Dakota, told the crowd. He said royalty payments to the government from drillers and miners operating federal lands and in U.S. waters will help pay down the national debt. Oil and gas drillers operating on federal lands paid about $75 billion from 2012 to 2022, according to the Government Accountability Office. The national debt, by comparison, is now about $36.2 trillion. U.S. oil and gas production struck record highs under the administration of former President Joe Biden, a Democrat, and it was unclear if energy companies are keen to ramp up investment with oil prices plumbing three-year lows last week. Burgum said he believes the Trump administration can unwind between 20% and 30% of the country's regulations, and estimated that doing so could sharply cut the cost of producing oil. He added that speeding up energy and mining project permitting would be a crucial focus of the administration's National Energy Dominance Council, which he chairs and which is responsible for coordinating government policies to maximize production. Burgum said boosting U.S. electricity generation and transmission capacity is key to winning what he called the "AI arms race" with China. Burgum added that he believes enforcing sanctions on Iran, which are designed to bring the OPEC member's oil exports to zero, could end that country's funding of "terror groups." MINERALS Burgum added that the council is focused on boosting U.S. production of critical minerals, which include lithium and nickel. He said the council has “really big, really powerful” ideas to boost U.S. mining, including using the planned U.S. sovereign wealth fund and better coordinating with allies. He did not directly say whether the wealth fund would invest in mines, although he underscored the country’s reliance on China, the dominant minerals processor globally. “We put ourselves in a position of incredible risk, where we've allowed ourselves to have a major competitor control 80% of the processing for critical minerals,” said Burgum. Reuters reported on Monday that Trump is considering an executive order that would build metals refining facilities on Pentagon military bases as part of his plan to boost domestic production. https://www.reuters.com/world/us/ceraweek-us-can-slash-20-30-regulation-boost-energy-interior-secretary-says-2025-03-12/