2025-08-18 21:53

ORLANDO, Florida, Aug 18 (Reuters) - TRADING DAY Making sense of the forces driving global markets Sign up here. By Jamie McGeever, Markets Columnist Many world markets took a breather on Monday as investors awaited the outcome of U.S. President Donald Trump's extraordinary meetings with Ukraine's Volodymyr Zelenskiy and many European leaders, and looked ahead to Fed Chair Jerome Powell's keynote speech in Jackson Hole later in the week. More on that below. In my column today I ask whether U.S. consumer spending can be sustained, which would keep the economy growing and steer it away from recession. Much will depend on how the rich feel about their finances. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Today's Talking Points: * Europe goes to Washington. U.S. President Donald Trump's intense, hastily-arranged summitry continued on Monday as he welcomed Ukraine's President Volodymyr Zelenskiy to the White House to discuss how to end the Ukraine-Russia war. This follows Trump's meeting with Vladimir Putin in Alaska on Friday, which was a success for the Russian president but yielded little for Trump. And that meant little for Ukraine or Europe, which explains the extraordinary sight of Zelenskiy being backed in Washington on Monday by many of Europe's most powerful leaders, including Germany's Friedrich Merz, France's Emmanuel Macron, Britain's Keir Starmer and NATO's Mark Rutte. Trump's appearance with Zelenskiy before the cameras was cordial and even friendly, in stark contrast to their acrimonious meeting in February. Trump said the U.S. would help Europe in providing security for Ukraine as part of any deal, but also suggested to reporters that he no longer believed a ceasefire was a necessary prerequisite for striking a peace agreement. * Jackson Hole. Attention is now turning to the annual Kansas City Fed's symposium in Jackson Hole, Wyoming, which gathers Fed officials, central bankers and leading economists from around the world to discuss the challenges facing the global economy. Fed Chair Jerome Powell's speech on Friday is the keynote event. Leaving aside any possible long-term policy steers, such as changes to QT or tolerating slightly higher inflation, the main focus is whether he leans toward a rate cut in September or not. Rates traders still think he will, but their conviction is ebbing by the day. They are now attaching an 82% probability of a quarter-point cut next month, the lowest likelihood since the unexpectedly weak employment data on August 1. * Long-end bond blues. Yields on 30-year sovereign bonds in major countries around the world continue to rise. In some cases, like that of Germany, they are now the highest in many years as investors begin to fret again about inflation and fiscal spending plans. Many investors are also questioning the wisdom of the Fed resuming its easing cycle next month, which is what's currently priced into rates futures markets, with inflation above target, unemployment at a historical low, stocks at record highs and financial conditions the loosest in years. Even the long end of China's bond market is feeling the squeeze. The 30-year yield spiked 8 basis points to 2.12% on Monday, the highest in five months and biggest one-day rise since October. And this is in China, where the deflationary pressures of the last few years are showing no sign of lifting. Can the rich continue to prop up US consumer spending? U.S. consumer spending's surprising resilience is the main reason the economy has not only avoided recession, but continued to grow at a solid clip. The big question now is whether American households can keep that going, especially with higher, tariff-fueled prices coming down the pike. In the U.S., "the consumer" is king. Consumer spending accounts for around 70% of total economic output, so changes in people's propensity to spend have a direct, outsized influence on the health of the economy. But "the consumer" is, of course, actually millions of people. And when you split them into groups based on income and wealth, it becomes clear that total spending disproportionately comes from the rich. Mark Zandi, chief economist at Moody's Analytics, said earlier this year that the richest 10% of Americans, those earning at least $250,000 a year, now account for half of all consumer spending. That's a record. Thirty years ago, the richest 10% accounted for 36% of all consumer spending. A Boston Fed paper , opens new tab last week backed up Zandi's findings, concluding that the strength of aggregate consumer spending in the last three years is due to high-income earners. But the authors suggest high-income consumers have a reasonable cushion because they haven't maxed out their credit cards. While the lower-income and middle-income cohorts both saw their credit card debt soar past pre-pandemic totals in the last few years, wealthier Americans' credit card debt remains below the 2019 high and well below the level implied by the pre-pandemic trend. So, if necessary, they still have room to borrow to fund their spending. EARNING POWER Spending across the income deciles could also be supported by enhanced earning power. While some indicators show that the U.S. labor market may be softening, annual average earnings growth still rose in July to 3.9%, meaning real wage growth is running at a 1.3% annual pace, depending on what slice of inflation you use. Real annual wage growth has been between 1.0% and 1.8% for over two years, above the average for the decade leading into the COVID-19 health crisis. And overall workers' income may be growing at an even faster rate, according to economists at Bank of America. They calculate that aggregate labor income – number of jobs multiplied by wages multiplied by number of hours worked - increased 5.5% in July on a six-month annualized basis. Most of that growth was driven by higher wages. With household delinquency rates, excluding student loans, cooling off this year, strength in labor income should continue to support consumer spending, they argue. This, in turn, should help the U.S. avoid the recessionary spiral of lower spending begetting layoffs, begetting even lower spending, begetting more job cuts. This is one of the reasons BofA economists retain their out-of-consensus call that the Federal Reserve won't cut interest rates at all this year. FLASHING AMBER? Others are less confident. Zandi at Moody's Analytics warns that a correction on Wall Street would hit the rich hard via the negative wealth effects, "and, given how weak the economy is, push it into recession." The concentration of equity ownership at the top of the U.S. wealth ladder is extreme - the richest 1% in the country owns 50% of stock market assets and the top 10% holds around 90%. Some measures of household spending are already flashing amber. Inflation-adjusted spending as measured by personal consumption expenditures flat lined in the first half of this year. Yet figures on Friday showed that retail sales rose 0.5% in July after an upwardly revised 0.9% gain in June. But then there are tariffs. Companies, not consumers, have borne the brunt of these levies so far. Economists at Goldman Sachs estimate that consumers absorbed only 22% of tariff costs through June, but they reckon that figure could rise to 67% in the months ahead if the Trump administration's expected tariffs are implemented. So there are grounds for both caution and optimism. Much will depend on whether the rich draw in their horns. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. 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. (This story has been refiled to correct the spelling of Emmanuel Macron's first name in paragraph 12) https://www.reuters.com/business/global-markets-trading-day-corrected-graphic-2025-08-18/

2025-08-18 21:49

RIO DE JANEIRO, Aug 18 (Reuters) - Brazil's Petrobras (PETR3.SA) , opens new tab is leaning toward corn as the raw material for a renewed foray into ethanol, potentially sidelining sugarcane and beleaguered sugar producer Raizen (RAIZ4.SA) , opens new tab, three Petrobras sources familiar with the matter said, citing preliminary evaluations. Energy company Petrobras, majority-owned by Brazil's government, has previously said its potential return to ethanol would involve buying minority stakes in other companies, similar to past investments. Sign up here. While sugarcane ethanol has not been definitively ruled out, corn ethanol is gaining favor in Petrobras, the sources told Reuters over the weekend, citing falling production costs driven by corn crop growth and rapid expansion in the industry. Sugarcane ethanol output, however, has stagnated amid competition for the raw material from the sugar industry. Petrobras is also eyeing increased corn output in Brazil's northern regions, where ethanol supplies are low but corn production is rising, the sources said. "We're closer to corn than cane. The outlook is better. We're talking to several corn producers," one of the sources said, without naming any companies that Petrobras was talking to. Petrobras said in a statement that it has no planned investments in ethanol or distribution of the fuel with Raizen. Two other Petrobras sources said discussions about re-entering the ethanol sector remain in early stages. "The return to ethanol is certain, but there's nothing concrete with anyone," one of those sources said, warning to expect delays to any eventual deal. The company sources spoke on condition of anonymity because they were not authorized to speak to the media. Raizen, a joint venture between Cosan (CSAN3.SA) , opens new tab and Shell (SHEL.L) , opens new tab that produces sugar and sugarcane ethanol, was hit by bad news last week when it reported a swing to a first-quarter loss and mounting net debt. On Monday, Raizen shares rebounded from a 16% drop last week, fueled by reports over the weekend suggesting that Petrobras may be considering a stake in the company. Raizen said it would not comment on the matter when asked about those reports. "They want to sell to us, but talks haven't even started here," one of the Petrobras sources said, referring to Raizen. https://www.reuters.com/business/energy/petrobras-favors-corn-over-cane-ethanol-may-exclude-raizen-sources-say-2025-08-18/

2025-08-18 21:40

Aug 18 (Reuters) - Vulcan Elements, a North Carolina-based rare earth magnet manufacturer, has agreed to buy a supply of the critical minerals from ReElement Technologies that will be sourced outside of China. The companies, both of which are privately held, declined to give precise financial terms but said that the price is "significantly below" the floor of $110 per kilogram that the U.S. Department of Defense guaranteed to MP Materials (MP.N) , opens new tab last month for the two most popular rare earths. Sign up here. The contract was signed in mid-July, Vulcan said. Rare earth oxides are used to make metal that can then be turned into magnets for use in fighter jets, radar and other military applications, as well as consumer electronics. "This pricing will enable Vulcan to be competitive in global markets," Vulcan CEO John Maslin told Reuters. "We wanted to make sure the unit economics made sense." Indiana-based ReElement, which licenses its technology from Purdue University, will supply Vulcan with "thousands of metric tons" of rare earth oxides annually for five years beginning in 2026 from outdated electronics or from mine sites, said CEO Mark Jensen. ReElement says it can supply the rare earths to Vulcan below $110 per kilogram because of its use of a processing technique known as chromatography, which is different than the industry-standard solvent extraction used by many of its peers. "We are laser focused on cost," Jensen told Reuters. "We will see where the market goes, but right now we're focused more on the market price versus that price floor." Reuters was first to report last month that the Trump administration is considering extending that price floor to other firms, news that was relayed in a close-door Washington meeting attended by Vulcan, ReElement and others. https://www.reuters.com/markets/commodities/vulcan-elements-signs-rare-earths-supply-deal-with-reelement-technologies-2025-08-18/

2025-08-18 21:27

Aug 18 (Reuters) - Figure Technology Solutions' revenue surged 22% in the first half of 2025, the blockchain lender disclosed on Monday in its U.S. initial public offering paperwork, the latest crypto-linked firm set to hit the new listings market. The company, co-founded in 2018 by technology entrepreneur Mike Cagney and his wife June Ou, is a blockchain-native capital marketplace that connects origination, funding, and secondary market activity. Sign up here. The New York-based company and some of its existing stockholders plan to sell shares in the offering. With the IPO calendar set for a seasonal slowdown through the end of August, corporate issuers are lining up for a potential roadshow launch after Labor Day when the new listings market kicks back into action. Winklevoss twins' crypto exchange, Gemini, also publicly filed for New York IPO last week. Figure's revenue surged 22.4% to $191 million in the six months ended June 30. The company reported a profit of $29 million, compared with a loss of $13 million in the same period a year earlier. Cagney was also the co-founder of fintech SoFi (SOFI.O) , opens new tab and stepped down as the firm's CEO in 2018. Figure's loan origination system and capital marketplace is used by more than 160 partners. In 2021, Figure raised $200 million in a funding round at a$3.2 billion valuation. Earlier this month, Figure said it had confidentially filed for a New York IPO. Goldman Sachs, Jefferies and BofA Securities are the lead underwriters for the offering. Figure will list on the Nasdaq under the symbol "FIGR". Proceeds from the offering will be used for general purposes. https://www.reuters.com/business/mike-cagneys-figure-technology-reveals-revenue-surge-us-ipo-filing-2025-08-18/

2025-08-18 21:18

Aug 18 (Reuters) - Shares of U.S. solar energy companies rose on Monday after the Trump administration released new subsidy rules for clean energy projects that were not as stringent as many investors had feared. Late on Friday, the Treasury Department narrowed the definition for what it means for a solar or wind project to be considered under construction, a requirement to qualify for federal tax credits worth 30% of a project's cost. Sign up here. The changes include requiring developers of big solar arrays and wind farms to complete physical work rather than simply show that they have invested capital. Solar companies criticized the move on Friday, but analysts, investors and others said the guidelines were better than many expected. The MAC Global Solar Energy index (.SUNIDX) , opens new tab was up 4% in mid-day trade, with top gainers, including residential solar company Sunrun (RUN.O) , opens new tab, up 9%, and panel manufacturer First Solar (FSLR.O) , opens new tab, up 8.6%. "Although it creates some complications, it is manageable," Raymond James analyst Pavel Molchanov said in an email. Some in the industry had feared that project developers would have to incur a large percentage of project costs in order to be eligible for the credits, or that they would have a narrower timeline to claim the subsidies after starting construction. The Treasury Department left the 4-year window unchanged for projects that start construction before the credits expire. The One Big Beautiful Bill Act requires projects to begin construction by July of next year or enter service by the end of 2027 to qualify for a 30% tax credit and bonuses that can push the subsidy even higher. Under previous law, the credits were available through 2032. https://www.reuters.com/sustainability/climate-energy/clean-energy-investors-relieved-by-trump-tax-rule-changes-2025-08-18/

2025-08-18 21:11

Defence minister attributes fires to climate change, heat wave Army deploys 3,000; PM urges national climate change pact ASTORGA, Spain, Aug 18 (Reuters) - Spain's worst wave of wildfires on record spread to the southern slopes of the Picos de Europa mountains on Monday and prompted authorities to close part of the popular Camino de Santiago pilgrimage route. "This is a fire situation we haven't experienced in 20 years," Defence Minister Margarita Robles told Cadena SER radio. Sign up here. "The fires have special characteristics as a result of climate change and this huge heat wave," she said. The heatwave spanning 16 days is the third-longest on record and sent temperatures up to 45 degrees Celsius (113 Fahrenheit) over the weekend, according to state weather agency Aemet. It is expected to start easing on Monday evening or Tuesday. Southern Europe is experiencing one of its worst wildfire seasons in two decades, with Spain and Portugal among the hardest-hit countries. So far this year, an estimated 344,400 hectares (851,000 acres) have burned in Spain - an area equivalent to the size of the island of Mallorca - according to the European Forest Fire Information System (EFFIS). It's the largest area on records that go back to 2006 and more than four times the 2006-2024 average. A firefighter died when his truck crashed near the village of Espinoso de Compludo, raising the death toll to four from the recent wave of fires. In Portugal, wildfires have burned about 216,200 hectares so far this year, according to EFFIS - more than four times the 2006-2024 average for this period - and two people have died. The Spanish army has deployed 3,000 troops and 50 aircraft to help firefighters, emergency services general director Virginia Barcones said. Spain is also receiving or has been offered help from France, Italy, Netherlands, Slovakia, Germany and the Czech Republic through the European Civil Protection mechanism, according to the Interior Ministry. In the past week alone, about 20 wildfires have devastated thousands of hectares in the regions of Galicia and Castile and Leon, forcing authorities to cut rail services in the area, as well as a 50-km (30-mile) stretch of the Camino de Santiago, an ancient pilgrimage path trodden by thousands in the summer. It links France and the city of Santiago de Compostela on the western tip of Spain, where the remains of the apostle St James are said to be buried. 'TERRIBLE THING' Patrice Lepettre, a 75-year-old pilgrim in Astorga, told Reuters the inconvenience for hikers was temporary and could not be compared to the locals' plight. "It's a terrible thing for the population. The pilgrims can go back home and come another year to finish the Camino, but for the people who live here, it's a terrible thing," he said. Leaders of regions run by the main opposition People's Party (PP) have criticised the central government for poor planning and asked for more resources to fight the wildfires. Prime Minister Pedro Sanchez on Sunday urged a "state pact" on climate change with all main political forces, which was dismissed as a "diversion" by PP spokesperson Ester Munoz on Monday. The Interior ministry said 27 people have been arrested and 92 were under investigation for suspected arson since June. In Palacios de Jamuz in the northern region of Castile and Leon, where a wildfire had burned down whole rows of houses, Delia Lobato was inspecting the damage and lamented the deaths of people and trees. "Such young people who had their whole lives ahead and who are gone, that's the hardest thing," she said. "We will plant again, and if I don't see it grow well my children will." https://www.reuters.com/sustainability/climate-energy/record-spanish-wildfires-close-part-camino-de-santiago-route-2025-08-18/