2025-04-04 06:31

Swedish CPIF inflation -0.5% month/month, +2.3% year/year Data well below analysts' expectations Inflation has been running above forecast this year Supports Riksbank's cautious stance on policy STOCKHOLM, April 4 (Reuters) - Swedish headline consumer prices fell 0.5% in March from the previous month and rose 2.3% from the same month a year earlier, flash figures from the statistics office (SCB) showed on Friday, bringing inflation back near the Riksbank's target. The outcome eases pressure on the Riksbank to adopt a more hawkish stance, and the crown weakened against the euro shortly after the data release. Analysts had on average expected inflation, measured using the consumer price index with a fixed interest rate (CPIF), to edge 0.2% lower on the month and rise 2.6% year-on-year. Sign up here. "Today's data puts inflation close to the Riksbank’s just updated forecast and lends temporary support to the Board’s cautious stance," Swedbank said in a research note. Sweden's central bank held its key policy rate at 2.25% at its latest meeting and forecast policy would remain unchanged for the foreseeable future though uncertainty, not least linked to U.S. policy moves and global trade, is unusually great. Inflation had been running higher than expected this year and, while the Riksbank has said it expects consumer price increases to remain above the 2% target level through this year, board members have said the uptick looks to be temporary. How U.S. President Donald Trump's sweeping new tariffs on global trading partners, and the response they are likely to generate, will impact inflation remains uncertain, and Governor Erik Thedeen has said the Riksbank is ready to act if necessary. Some economists have predicted that a tighter monetary policy may be called for in the year ahead. "Today's inflation print is a welcome relief for Governor Thedeen & Co, which buys them more time in these uncharted international risk waters. We stick to our long-held baseline for unchanged policy rate of 2.25 percent," Handelsbanken said in a note. The flash figures are a preliminary reading with a fuller set of data due on April 11. https://www.reuters.com/markets/europe/swedish-march-flash-cpif-inflation-falls-back-below-forecast-2025-04-04/

2025-04-04 06:30

NEW DELHI, April 4 (Reuters) - India is looking to strengthen energy and defence ties with Sri Lanka and promote investments during Prime Minister Narendra Modi's two-day state visit to the island nation, where New Delhi competes with China for greater influence. Modi, set to arrive on Friday evening, will be the first global leader hosted by Sri Lankan President Anura Kumara Dissanayake after he took office in September. Sign up here. Sri Lanka is keen to attract foreign investment to stabilise its economy after a financial crisis in 2022, during which India provided $4 billion in financial assistance. India is also one of Sri Lanka's key bilateral lenders, which agreed to restructure about $1.36 billion in loans after the island nation defaulted on its debt in May 2022. "Prime Minister Modi’s visit aims to strengthen the longstanding ties between Sri Lanka and India," the Sri Lankan president's office said in a statement. The visit will see pacts signed on key sectors such as energy, digitalisation, security, healthcare, as well as agreements related to India’s debt restructuring assistance for Sri Lanka, it added. At their first meeting in New Delhi in December, the leaders discussed investments in Sri Lanka and plans for India to supply liquefied natural gas to Sri Lanka and help link power grids. The talks also featured development of a regional energy and industrial hub in eastern Trincomalee. In January, Dissanayake said the two were in talks on building an oil refinery there as a joint venture focusing on exports, domestic media said. When completed, the project would stoke competition between India and China, whose state energy firm Sinopec (600028.SS) , opens new tab has signed a deal to build a $3.2-billion oil refinery in Sri Lanka's southern port city of Hambantota. New Delhi-run Indian Oil Corp is already the second biggest fuel supplier after state-owned Ceylon Petroleum Corp. India's foreign ministry did not comment on whether the proposed Trincomalee refinery will figure in this week's talks. It told reporters in a briefing ahead of the visit that Modi would join in a ceremony to break ground for a 120-megawatt solar power project of the Ceylon Electricity Board and India's National Thermal Power Corporation (NTPC.NS) , opens new tab. The ministry said it hoped to wrap up an agreement on defence cooperation with Sri Lanka. December's discussions had envisioned provision of arms to Sri Lanka to boost its defence capability. https://www.reuters.com/world/india/indias-modi-aims-stronger-energy-defence-ties-with-sri-lanka-visit-2025-04-04/

2025-04-04 06:10

LITTLETON, Colorado, April 4 (Reuters) - Coal traders could become rare winners among businesses reeling from U.S. President Donald Trump's drastic new tariff regime that adds at least 10% to the cost of nearly all goods imported into the United States. That is because energy providers across Asia - which has been hit with some of the highest new U.S. tariffs - will be under pressure to cut power costs for their consumers, which include many of the world's largest goods producers. Sign up here. By helping to lower operating costs for factories, Asia's utilities may allow manufacturers to sustain some sales to the world's largest importer, even with the new tariffs in place. But in order to produce the cheapest power possible, Asian power producers will need to step up the use of coal and likely cut back on the use of pricier fuels in their generation mix. That would be good news for coal traders and miners in the region, but likely bad news for regional emissions levels, which will only climb further as more coal gets burned for power. HARDEST HIT Most affected by the new U.S. tariff levels are the manufacturers of Asia, where China and Vietnam have been hit with new tariffs of 34% and 46%, respectively. Between them, China and Vietnam are home to a major share of the global production of electronics, clothing, furniture and sporting goods that are regularly purchased by U.S. consumers. Other Asian nations with large export-oriented manufacturing bases that have also been hit with steep new tariffs include Indonesia (32%), Cambodia (49%), Malaysia (24%) and the Philippines (17%). Given the relatively soft state of consumer demand in the U.S. so far in 2025, companies will not be able to pass on much of the cost increase triggered by the tariffs to consumers without incurring a sharp drop in sales. So, instead many companies may try to absorb at least some of the tariff impact themselves, and look for ways to reduce costs in order to maintain a profitable operating margin. This widespread search for cost reductions will likely be aided by local governments, who will be eager to preserve jobs in the manufacturing sector despite the new hostile trade arena. COAL FIX Coal traders will happily volunteer to help in those cost-cutting endeavours by supplying power producers with extra volumes of thermal coal for electricity production. Coal is by far the cheapest and largest source of thermal power production in Asia, and accounted for around 56% of regional electricity supplies in 2024, according to Ember. Pollution reduction efforts have seen natural gas displace some coal output in certain countries, and accounted for around 10% of regional electricity supplies last year. Going forward, however, coal will likely undergo a resurgence as utilities prioritise cost over all else in an effort to help manufacturers weather the tariff storm. For coal traders, this will likely mean supplying higher volumes more regularly to major coal-burning hubs across the region. And the region's largest manufacturers are already among the fastest-growing coal consumers in the world, according to data from global trade intelligence firm Kpler. Indeed, in 2024 nearly all major manufacturing hubs in Asia recorded steep increases in coal imports from the year before, including China (10%), Vietnam (28%), Cambodia (26%), the Philippines (5%) and Malaysia (3%). In addition, the import totals into those countries were all record highs in 2024, even as shipments to countries outside of Asia continue to decline. This combination of growing demand among a narrowing group of consuming nations is good news for coal traders, who can optimize shipments to a relatively small number of destinations. In 2025, thanks to the cost-cutting drive triggered by Trump's new tariffs, the coal volumes shipped to Asia's main markets will likely only climb higher still. That means that even as Asia's production lines struggle to maintain margins with the new tariffs in place, coal traders can expect growth in both volumes and margins as the region's power system attempts to drive power costs as low as possible. The opinions expressed here are those of the author, a market analyst for Reuters. https://www.reuters.com/business/energy/coal-traders-could-be-rare-winners-trumps-tariff-turmoil-maguire-2025-04-04/

2025-04-04 06:06

Brent closes at lowest since August 2021 Oil posts biggest weekly decline since 2023 China announces retaliatory tariffs on US OPEC+ unexpectedly speeds up oil output hikes Russian court rules not to suspend Caspian pipeline export terminal HOUSTON, April 4 (Reuters) - Oil prices plunged 7% on Friday to settle at their lowest in over three years as China ramped up tariffs on U.S. goods, escalating a trade war that has led investors to price in a higher probability of recession. China, the world's top oil importer, announced it will impose additional tariffs of 34% on all U.S. goods from April 10. Nations around the world have readied retaliation after Trump raised tariff to their highest in more than a century. Sign up here. Commodities including natural gas, soybeans and gold also dived, while global stock markets tumbled. Investment bank JPMorgan said it now sees a 60% chance of a global economic recession by year-end, up from 40% previously. Global benchmark Brent futures settled $4.56, or 6.5%, lower at $65.58 a barrel, while U.S. West Texas Intermediate crude futures lost $4.96, or 7.4%, to end at $61.99. At the session low, Brent fell to $64.03 and WTI hit $60.45, their lowest in four years. For the week, Brent was down 10.9%, its biggest weekly loss in percentage terms in a year and a half, while WTI posted its biggest decline in two years with a drop of 10.6%. "To me, this is probably close to fair value in crude until we get some sort of indication of how much demand has actually been reduced by," said United ICAP Energy Specialist Scott Shelton. "My opinion is we probably will end up in the mid to high $50s in the near term for WTI," Shelton said, warning that demand would suffer under the current market circumstances. Trump's new tariffs are "larger than expected" and the economic fallout, including higher inflation and slower growth, likely will be as well, Federal Reserve Chair Jerome Powell said in remarks that pointed to the potentially difficult set of decisions ahead for the U.S. central bank. OPEC+ INCREASES Further pressuring oil prices, the Organization of the Petroleum Exporting Countries and allies (OPEC+) decided to advance plans for output increases. The group now aims to return 411,000 barrels per day (bpd) to the market in May, up from the previously planned 135,000 bpd. A ruling by a Russian court that the Caspian Pipeline Consortium's (CPC) Black Sea export terminal facilities should not be suspended also pressured prices lower. That decision could avert a potential fall in Kazakhstan's oil production and supplies. Imports of oil, gas and refined products were given exemptions from Trump's sweeping new tariffs, but the policies could stoke inflation, slow economic growth and intensify trade disputes, weighing on oil prices. Goldman Sachs analysts responded with sharp cuts to their December 2025 targets for Brent and WTI by $5 each to $66 and $62 respectively. "The risks to our reduced oil price forecast are to the downside, especially for 2026, given growing risks of recession and to a lesser extent of higher OPEC+ supply," the bank's head of oil research, Daan Struyven, said in a note. HSBC trimmed its 2025 global oil demand growth forecast from 1 million bpd to 0.9 million bpd, citing tariffs and the OPEC+ decision. Money managers raised their net long U.S. crude futures and options positions in the week to April 1, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. https://www.reuters.com/business/energy/oil-set-worst-week-months-over-trumps-new-tariffs-2025-04-04/

2025-04-04 06:04

U.S. wields power as epicentre of financial world Mar-a-Lago accord for dollar devaluation seen as unlikely More aggressive tactics may involve dollar funding, payments U.S. bankers fear European blowback FRANKFURT, April 4 (Reuters) - With the ink still fresh on U.S. President Donald Trump's latest batch of tariffs, some are already bracing for what may come next in his effort to strong-arm trading partners into doing his bidding. As the epicentre of the financial world and the issuer of the global reserve currency, the United States has a number of levers that Trump can pull to coerce other countries, from credit cards to the very provision of dollars to foreign banks. Sign up here. While deploying these unconventional weapons would come at a large cost for the U.S. itself and may even backfire altogether, observers say such doomsday scenarios should not be discarded. This would be particularly true if tariffs do not succeed in reducing the U.S. trade deficit with the rest of the world - an outcome many economists see as plausible given the fact that near-full employment in the U.S. has led to deep labour shortages. China retaliated on Friday, sending U.S. stocks tumbling further, deepening the crisis. "I could well imagine that Mr. Trump...grows frustrated and he does try to implement wacky ideas, even if the logic for them is not there," said Barry Eichengreen, professor of economics and political science at the University of California, Berkeley. MAR-A-LAGO ACCORD The U.S. administration's not-so-secret plan is to rebalance trade by weakening the dollar. A way to do that would be to enlist foreign central banks in a coordinated effort to revalue their own currencies. According to a paper , opens new tab by Trump's pick to chair his Council of Economic Advisers, Stephen Miran, this may happen as part of a Mar-a-Lago accord, a reference to the dollar-capping Plaza Accord of 1985 and to Trump's resort in Florida. The November paper suggested the United States would use the threat of tariffs and the lure of U.S. security support to persuade foreign countries to appreciate their currencies against the dollar, among other concessions. But economists are sceptical any such deal would gain traction in Europe or China because the economic and political situation is so different now from four decades ago. "I think that's a really unlikely scenario," Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics, said. Obstfeld argued tariffs had already been imposed, removing their use as a threat, and the United States' commitment to global security had been weakened by its ambiguity on Ukraine. He added central bankers in the euro zone, Japan and Britain were unlikely to yield to a deal that would see them forced to raise interest rates and risk a recession. And TS Lombard chief economist Freya Beamish argued that engineering a stronger yuan would also go against China's need to reflate its struggling economy. Even in Japan, where the government has repeatedly intervened in the currency market over the past few years to prop up the yen, memories of 25 years of deflation that only recently ended may temper any enthusiasm for strong yen appreciation. DOLLAR BACKSTOP If an accord can't be reached, Trump's administration might be tempted to use more aggressive tactics, such as harnessing the dollar's status as the currency in which the world trades, saves and invests. This may take the shape of threatening to turn off the Federal Reserve's taps for foreign central banks, which allows them to borrow dollars in return for collateral in their own currency, according to Obstfeld and some supervisors and central bankers. This is an essential source of funding at times of crisis, when money markets seize up and investors retrench to the safety of the dollar. Taking it away would upset a multi-trillion market for dollar credit outside of the United States and hit banks in Britain, the euro zone and Japan particularly hard. Of course, these so-called swap lines are firmly in the Fed's hands and Trump has never signalled it wanted to take control of powerful monetary institution. But his recent moves to replace key personnel, including at regulatory agencies, have unnerved observers. "It is no longer inconceivable that in a bigger negotiation this could serve as a nuclear threat," Spyros Andreopoulos, founder of the Thin Ice Macroeconomics consultancy, said. He thought such a move would over time erode the dollar's status as a reliable global currency. CREDIT CARDS The United States has another ace up its sleeve - its payment giants, including credit card companies Visa (V.N) , opens new tab and Mastercard (MA.N) , opens new tab. While Japan and China have to varying degrees developed their own electronic means of payment, the two U.S. firms process two-thirds of card payments made in 20-nation euro zone. Mobile phone app payments, dominated by U.S. firms such as Apple and Google make up almost one-tenth of retail payments. This shift has put Europeans on the back foot in a vast market, worth more than 113 trillion euros ($124.7 trillion dollars) in the first six months of last year. Were Visa and Mastercard to be pressured into pulling the plug on services, as they did in Russia shortly after it invaded Ukraine, Europeans would have to use cash or cumbersome bank transfers to shop instead. "That the U.S. has turned hostile is a huge setback," Maria Demertzis, chief economist for Europe at the Conference Board think tank, said. The European Central Bank has said this exposed Europe to the risk of "economic pressure and coercion" and a digital euro may be a solution. But the plans to roll out this digital currency have become bogged down in discussion and may take years to introduce. European officials are considering how they could respond to Trump's actions but are wary of triggering a further escalation. They could impose tariffs of their own or resort to more drastic measures, such as limiting U.S. banks' access to the European Union. Taking such radical steps could, however, be hard because of the international clout of Wall Street, as well as the risk of a backlash against European lenders doing business in the U.S. Still, some international bank executives told Reuters that they were concerned about the threat of blowback from Europe in the coming months. https://www.reuters.com/markets/after-tariff-shock-trump-may-weaponise-finance-against-allies-2025-04-04/

2025-04-04 05:47

MUMBAI, April 3 (Reuters) - India's $32 billion gems and jewellery industry is bracing for a sharp fall in exports as hefty U.S. tariffs will impede overseas sales to its biggest market, industry officials said. The United States slapped a 26% reciprocal tariff on India, dealing a blow to the South Asian country's hopes of relief under President Donald Trump's global trade policy. Sign up here. "The tariff is higher than expected," Colin Shah, managing director of Kama Jewelry, one of India's leading diamond jewellery manufacturers, told Reuters. "It is quite severe and will affect exports." India is the world's largest hub for diamond cutting and polishing, handling nine out of every 10 diamonds processed globally. The United States accounts for nearly $10 billion or 30.4% of India's annual gems and jewellery exports of $32 billion. Gems and jewellery are India's third-largest export to the United States, after engineering and electronic goods, and the industry employs millions in the South Asian country. The sector has already been hit in recent months by weak demand from China and exports dropped 14.5% to $32.3 billion in the 2023-24 fiscal year (April-March). A long-term bilateral trade deal with the United States could soften help the blow, Shah said. India and the United States are in talks to clinch an early trade deal. "We're are pretty hopeful that India could land a trade deal with the U.S. in the next few months. So, we just need to push through this tough phase for a little while longer," said Shaunak Parikh, vice chairman of the Gem and Jewellery Export Promotion Council (GJEPC). https://www.reuters.com/markets/commodities/with-us-tariffs-indias-jewellery-exports-set-sharp-decline-2025-04-03/