2025-02-03 18:45

ORLANDO, Florida, Feb 3 (Reuters) - "I don't like Trump, but..." This common refrain was heard throughout a major investor conference held in Miami last week, reflecting the financial industry's overwhelming optimism that the U.S. president's economic agenda will make both Wall Street and Main Street great again. Donald Trump's announcement of sweeping tariffs on Saturday, however, could put that optimism to the test, even though some have already been put on hold. The consensus "vibe" at the iConnections Global Alts/Managed Futures Association conference in Miami, which attracted more than 5,000 people from across the investment universe, was clear. The economic and market gains to be had from Trump's plans to slash taxes, public spending and regulations override whatever downside there may be in his tariff and immigration policies, never mind doubts around his broader politics, character or personality. Business will be freed from the shackles of burdensome red tape, inefficient government will be cut down to size, and capital will flow to the most productive parts of the economy – or so the thinking goes. "It's an exciting time to be in risk assets, and it's deflationary in the end because a lot of it's going to come through less regulation and creative destruction," said David Zervos, chief market strategist at Jefferies, on a panel with Morgan Stanley's head of U.S. equity research Mike Wilson. "As an individual person and somebody who's lived the American dream, I'm excited," Wilson said. One anecdotal tidbit was telling. The fireside chat with Karen Karniol-Tambour, co-CIO of hedge fund colossus Bridgewater Associates, filled little more than half of a roughly 1,000-seat hall, while the conversation later that afternoon with Vivek Ramaswamy, a Trump ally and former Republican presidential candidate, was packed to the rafters. This is not to say that the majority of conference attendees would consider themselves part of the "MAGA" crowd. But the clamor to get closer to the administration - and likely justify a few priors - was palpable. REALITY CHECK But a cloud hangs over this Trump optimism after the president slapped 25% tariffs on Canada and Mexico, and 10% on China, although his sudden announcement on Monday that the Mexico tariffs are on ice lifted that cloud a little - stocks around the world cut their losses and the dollar cut its gains. The initial announcement on Saturday should not have come as a huge surprise, as Trump has been telegraphing these tariffs for weeks. And despite the positive Trump "vibes," the bond and currency markets have been reflecting the rising tariff risk since the election. Yet U.S. equity markets had still mostly continued to defy gravity – with a few stumbles, like last Monday's DeepSeek-fueled ructions – thanks to the wave of global capital that has flooded into the U.S. and the sizzling performance of a handful of Big Tech companies. VIBE SHIFT In many ways, we are at "U.S. exceptionalism" - U.S. stocks have never been higher and Wall Street's global dominance has never been greater, corporate profit margins are the widest since the 1960s, real GDP growth is humming along nicely and unemployment is anchored near 4%. Animal spirits seem alive and well. But it is worth remembering that when economist John Maynard Keynes coined the term "animal spirits" in the 1930s, he was stressing the need to spur "spontaneous optimism" when the engine of capitalism was sputtering, not when it was already roaring. Firing them up now may not be such a wise idea. Launching a global trade war might not be such a wise idea either although the "Trump trade" Pollyannas will argue that, as Monday's developments with Mexico show, Trump is simply seeking to draw concessions and that the tariffs will be short-lived. Even if tariffs are kept in place, markets will adjust soon enough. If so, Trump's plans to slash taxes, federal spending and regulation may soon lift investor sentiment and markets again. But if Saturday's announcement was the beginning of a genuine global trade war, then Wall Street may be in store for a much bigger vibe shift. And not in a good way. (The opinions expressed here are those of the author, a columnist for Reuters.) Sign up here. https://www.reuters.com/markets/us/tariffs-offer-trump-trade-pollyannas-reality-check-mcgeever-2025-02-03/

2025-02-03 17:13

Tariffs news triggers investor risk aversion. Currency markets sees significant fluctuations NEW YORK, Feb 3 (Reuters) - U.S. President Donald Trump's initial tariff actions against Canada, Mexico and China sparked a rise in broad market volatility and a rush to take guard against increased ructions across asset classes from stocks to currencies. The U.S. President's weekend orders for additional levies of 25% on imports from Mexico and most goods from Canada, as well as 10% on goods from China, jolted markets surprised by the speed and intensity of these moves so soon after his inauguration. Analysts estimate the tariffs could raise the risk of a sharp slowdown in global growth, resurgent inflation and a pause to Federal Reserve rate cuts, prompting a bout of risk aversion from investors. The Cboe Volatility Index (.VIX) , opens new tab - an options-based gauge of investor expectation for near-term stock market moves - jumped to a 1-week high of 20.41, before paring gains to trade up 2 points at 18.43. While that is still below the index's long-term average of 19.4, it is well above its average reading over the past year of 15.8. Currency markets were also roiled with an across the board rise in implied volatility - a measure of how much the market expects prices to fluctuate in the future. Volatility expectations for currencies directly in Trump's crosshairs saw the biggest surge, but other major pairs including the euro-dollar saw a rise in expectation for future moves. One-month implied volatility for the dollar/Mexican peso pair jumped to 15.6, the highest since mid November, and about 3 points higher than its 5-year average. Meanwhile, implied volatility for the dollar/Canadian dollar pair soared as high as 9.3, its highest since November 2022. While volatility expectations for various assets had ticked up in the days before the tariffs announcement and various currencies had weakened against the dollar on expectations for tariff-related headlines, the intensity of the market reaction to the weekend headlines shows investors were not quite prepared for it, analysts said. "Generally speaking, investors were not taking Trump seriously or literally ... the announcement on Saturday as well as comments after that have compelled investors to reassess the risk," Karl Schamotta, chief market strategist with payments company Corpay in Toronto, said. Adding to the uncertainty is the possibility that some sort of deal is arrived at between the U.S. and other countries that allows for tariffs to be averted in a lasting way. The Mexican peso , which had plunged to a near three-year low against the dollar on news of the impending tariffs, reversed course to trade up 0.5% on the day after Trump said he would pause new tariffs on Mexico for one month. "The headlines come at you very fast," Mandy Xu head of derivatives market intelligence at Cboe Global Markets, said. "I think this unpredictability is partly what is driving this huge surge in option volume that we're seeing so far," she said. Sign up here. https://www.reuters.com/markets/global-markets-volatility-2025-02-03/

2025-02-03 16:54

Canadian dollar falls 0.5% against the greenback Touches weakest since April 2003 at 1.4793 Tariffs on Canada poised to take effect Tuesday 10-year yield hits lowest since Sept. 18 TORONTO, Feb 3 (Reuters) - The Canadian dollar clawed back much of its decline against its U.S. counterpart on Monday as investors weighed the possibility of Canada achieving a reprieve from U.S. tariffs, with the currency rebounding from an earlier 22-year low. The loonie was trading 0.5% lower at 1.4590 to the U.S. dollar, or 68.54 U.S. cents, after earlier tumbling to its weakest level since April 2003 at 1.4793. U.S. President Donald Trump has paused new tariffs on Mexico for one month after Mexico agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal drugs, he said. "The Mexican peso, Canadian dollar, and euro are ripping higher," Karl Schamotta, chief market strategist at Corpay, said in a note. "Markets are clearly bracing for a similar outcome" for Canada, he added. Trump said he had spoken with Canadian Prime Minister Justin Trudeau and would do so again at 3 p.m. ET (2000 GMT). However, Canada is not optimistic it can get the same kind of one-month reprieve from U.S. tariffs that was granted to Mexico, the New York Times cited a senior Canadian government official as saying on Monday. On Saturday, the U.S. President ordered sweeping tariffs of 25% on goods from Mexico and Canada. The tariffs on Canada remain poised to take effect on Tuesday, while Trudeau has said Canada would respond with 25% tariffs against $155 billion of U.S. goods. The Bank of Canada last week warned that a tariff war could cause major economic damage as it cut its benchmark interest rate by 25 basis points to 3%. Investors see a roughly 80% chance that the central bank will ease again in March. Canadian manufacturing activity increased at a slower pace in January as looming U.S. trade tariffs reduced confidence in the outlook, even as moves by clients to get ahead of the taxes led to the first increase in export orders in 17 months. Canadian bond yields fell across the curve. The 10-year yield was down 13.6 basis points at 2.929%, after earlier touching its lowest since Sept. 18 at 2.879%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-rebounds-22-year-low-tariff-pause-hopes-2025-02-03/

2025-02-03 16:22

OTTAWA, Feb 3 (Reuters) - Canada is not optimistic it can get the same kind of one-month reprieve from U.S. tariffs that was granted to Mexico, the New York Times cited a senior Canadian government official as saying on Monday. President Donald Trump said he had spoken to Prime Minister Justin Trudeau on Monday and would speak to him again later in the day. He is vowing to slap 25% tariffs on virtually all Canadian imports starting on Tuesday and a 10% surcharge on oil imports. Sign up here. https://www.reuters.com/world/americas/canada-not-optimistic-about-mexico-style-tariff-reprieve-says-new-york-times-2025-02-03/

2025-02-03 12:43

Feb 3 (Reuters) - Tyson Foods (TSN.N) , opens new tab raised its annual sales forecast on Monday as robust demand for its beef and chicken products helped the meat packer beat estimates for first-quarter results, sending its shares up 4% in premarket trade. The U.S. company expects fiscal 2025 sales to be flat to up 1%, compared with its prior forecast of flat to down 1%. Tyson also raised its annual adjusted operating income forecast to between $1.9 billion and $2.3 billion, from the previous range of $1.8 billion to $2.2 billion, driven by lower animal feed costs and efforts to cut costs and streamline operations. A gradual recovery in restaurant traffic is helping revive Tyson's wholesale supply to fast-food and fine-dining chains, while sustained eat-at-home trends have supported demand for its meat products. Demand for beef has also withstood stubbornly high prices, benefiting Tyson despite tight cattle supplies in the United States. Sales in Tyson's beef segment, its largest, were up 6.2% in the quarter ended Dec. 28, while prices were up 0.6% and volumes rose 5.6%. Chicken volumes rose 1.5%. The company's net sales rose 2.28% to $13.62 billion in the first quarter, compared with analysts' estimates of $13.44 billion, according to data compiled by LSEG. On an adjusted basis, the company earned $1.14 per share, compared with estimates of 88 cents. Sign up here. https://www.reuters.com/business/retail-consumer/tyson-foods-raises-annual-sales-forecast-beef-chicken-demand-2025-02-03/

2025-02-03 12:39

Rights group claims Shein supply chain includes cotton produced by Uyghur forced labour Group will apply for judicial review if UK regulator approves IPO Shein aims to list in London in H1 2025 if approved - sources LONDON, Feb 3 (Reuters) - Fast fashion retailer Shein's plans to list in London face a challenge from a group campaigning against forced labour in China, which said on Monday it would apply for a judicial review of the IPO if Britain's regulator approves the flotation. The group, Stop Uyghur Genocide, claims the retailer's supply chain in China includes cotton produced by Uyghur forced labour. Its plan to apply for a judicial review could increase pressure on Britain's Financial Conduct Authority, though it faces a high bar to succeed. The FCA said it cannot comment on potential listings. Shein said it strictly prohibits forced labour in its supply chain globally. The online retailer aims to list in London in the first half of this year if it gains regulatory approvals, two sources with direct knowledge told Reuters last month. In a similar challenge to an IPO in 2023, environmental law group ClientEarth applied for a judicial review after the FCA approved oil producer Ithaca Energy's flotation, but the High Court denied the application saying it could not be proved the FCA had failed to disclose material risks. The U.S. government and rights groups say Uyghur minority people are subject to abuses including forced labour in internment camps set up by the Chinese government in the Xinjiang region. China denies any abuses. Xinjiang produces around 80% of China's cotton and accounts for a fifth of global cotton production, exposing most global apparel retailers and brands to this risk. In written evidence to UK lawmakers, Shein said it only allows cotton from approved regions, which do not include China, for its products sold in the U.S., its biggest market, as part of its compliance with the U.S. Uyghur Forced Labour Prevention Act (UFLPA), which prohibits the import of products made in Xinjiang or made by designated banned companies. Shein did not specify whether its restrictions on cotton sources applied to products sold in other markets, such as the UK. The retailer does not prohibit the use of Chinese cotton in its products where such use would not breach relevant laws and regulations, it added. Sign up here. https://www.reuters.com/business/retail-consumer/shein-ipo-faces-judicial-review-challenge-uyghur-rights-group-2025-02-03/