Source: Cointelegraph

Source：FXStreet

Major European indexes outperform U.S. stocks so far this year

Source: Reuters

An emerging trade war between the United States and China could drive US crude exports lower in 2025, for the first time since the pandemic, by reducing access to the Chinese market, according to analysts.

That outlook reflects a potential unintended consequence of President Donald Trump's protectionist policies, running counter to his administration's vow to maximise already record-high US oil and gas production.

The US has grown into the world's third-largest exporter behind Saudi Arabia and Russia, since it lifted a 40-year federal ban on exports of domestic oil in 2015. While US crude exports grew only slightly in 2024, the last time they fell was in 2021, after the Covid-19 outbreak slashed global energy demand.

"International demand for US crude may be peaking out, and this could only further accelerate that," said Matt Smith, an analyst at Kpler.

Rohit Rathod, a senior analyst with ship tracking firm Vortexa, said he expected total US oil exports to slip to 3.6 million barrels per day (bpd) in 2025, from 3.8 million bpd in 2024, as Chinese tariffs keep some US oil grades at home.

China consumes around 166,000 barrels of US crude daily, roughly 5% of all US export cargoes. Some of that could stay on US shores, or be diverted to other markets after Beijing announced retaliatory tariffs this week.

The fall in exports would most likely be made up of medium density types of oil with a higher sulfur content, such as Mars and Southern Green Canyon that are considered medium-sour grades. Those types made up about 48% of the US crude imported by China last year.

Such grades are ideal for US refineries and could easily find buyers domestically — particularly if the United States follows through on its threats to impose new tariffs on Canadian and Mexican oil, analysts said.

"Medium sours are welcome barrels in the US Gulf Coast. Refiners need it," Rathod said.

Most of the rest of China's crude imports from the US were lighter density, lower-sulfur types, such as West Texas Intermediate, which are known as light, sweet grades.

That type of oil could be diverted to European and Indian refiners at competitive prices, analysts said.

The Louisiana Offshore Oil Port handled nearly half of all exports to China last year, according to Kpler.

The company was not immediately available for comment.

Another 25% of US exports to China came from Enbridge's Ingleside, Texas facility, near Corpus Christi, Kpler data showed.

Enbridge's facility will see very little impact since less than 15% of it's historical volumes have gone to China, said Phil Anderson, a senior vice-president at the company.

"The market is very liquid globally for light crude," he said.

Among the top sellers of U.Scrude to China is Occidental Petroleum, which sold at least 13 cargoes of light, sweet WTI Midland there in 2024, according to Kpler.

Occidental did not immediately reply to a request for comment.

For China, the impact is likely muted, as US imports accounted for just 1.7% of the country's total crude imports in 2024, worth about US$6 billion (RM26.65 billion), according to Chinese customs data, and down from 2.5% in 2023.

China had increased imports from Canada by about 30% last year to over 500,000 bpd, thanks to the expansion of the Trans Mountain pipeline. China's appetite for US oil has also diminished in recent years, due to discounted Russian and Iranian oil.

Source: Theedgemarkets

Bank of Canada governor Tiff Macklem said on Thursday that a policy shift in the US was causing uncertainty and President Donald Trump's tariff threats were already impacting businesses and households.

Trump agreed on Monday to temporarily pause a 25% levy on almost all imports from Canada and Mexico, which if implemented, could have pushed the economies of both the countries into a whirlwind of recession and higher prices.

The tariffs have been suspended for a month, the US government said this week.

"Trump's threats of new tariffs are already affecting business and household confidence, particularly in Canada and Mexico," Macklem said, while virtually addressing a conference held in Mexico City.

"The longer this uncertainty persists, the more it will weigh on economic activity in our countries," he said.

The Bank of Canada said last month that the threat of tariffs was making economic projections difficult, but cautioned that a 25% tariff could cause major economic damage.

In his prepared remarks on Thursday, Macklem said if significant broad-based tariffs were imposed, they would reduce long-run prosperity, which monetary policy cannot change.

But besides the looming tariffs, other headwinds were also posing challenges for monetary policy, such as prospects of war, rising trade protectionism, economic fragmentation, the advent of new technologies, and catastrophic weather events, he said.

"In a world with more structural change and more negative supply shocks, central banks will be faced with harder choices," Macklem said, adding that all of the challenges make central banks vulnerable to criticism.

"We will be called ineffective or criticised for not doing enough. And some will challenge our independence," he said.

The Bank of Canada was criticised during the pandemic when market participants and politicians blamed its monetary policy measures for failing to tame recession and joblessness.

In a report published last month on the review of steps it had taken during the pandemic, the bank said it would improve its communications and its forecasting models to predict future shocks.

Macklem said amid an uncertain world, central bankers will have to rely on their strategies to maintain price stability, communicate clearly on the limitations of monetary policy, create advanced modeling, and work collaboratively with other central banks.

"We need to remain evidence-based, technocratic and professional, and free of political influence," he said.

Source: Theedgemarkets

The Reserve Bank of India (RBI) cut its key repo rate for the first time in nearly five years on Friday and signalled a less restrictive policy approach ahead, as it seeks to provide stimulus to the sluggish economy.

The Monetary Policy Committee (MPC), which consists of three RBI and three external members, cut the repo rate by 25 basis points to 6.25% after having kept it unchanged for 11 straight policy meetings.

The decision was in line with a Reuters poll, where over 70% of economists had predicted a quarter-point reduction, and marked the first reduction in India's key rate since May 2020.

All six MPC members voted to cut rate and to maintain the monetary policy stance at "neutral".

The MPC noted that though growth is expected to recover, it is much lower than last year and inflation dynamics have opened space for rate easing, RBI Governor Sanjay Malhotra said in the first policy review since his appointment in December.

"The MPC while continuing with the neutral stance felt that a less restrictive monetary policy is appropriate at this current juncture," Malhotra said.

India's benchmark 10-year bond yield was up five basis points (bps) at 6.70% after the announcement, while the rupee and benchmark equity indexes weakened marginally.

"The MPC refrained from an outright dovish signal by maintaining a 'neutral' stance, said Radhika Rao, senior economist at DBS Bank in Singapore.

Most economists polled by Reuters ahead of the policy meeting had forecast Friday's cut and only one more reduction of 25 bps in April, taking the policy rate down to 6%.

India's government has forecast annual growth of 6.4% in the year ending in March, below the lower end of its initial projection, weighed by a weaker manufacturing sector and slower corporate investments. That would be its slowest pace of expansion in four years.

Growth is seen in a 6.3%-6.8% range in the next fiscal year as well.

The central bank on Friday forecast growth of 6.7% next year.

Improving employment conditions, recently announced tax cuts, moderating inflation and good agricultural output after a strong monsoon will help growth, Malhotra said.

Though retail inflation is still well above the RBI's medium-term target of 4%, it eased to a four-month low of 5.22% in December and is seen gradually declining towards the target in coming months.

The central bank sees inflation averaging 4.8% in the current financial year, easing to 4.2% next year.

Food inflation pressures are expected to ease, Malhotra said, but added that volatile energy prices pose a risk to the inflation outlook.

Core inflation, though likely to rise, will remain moderate, Malhotra said.

Balancing trade-offs

Malhotra, who was earlier a top official in the federal ministry of finance, used his first policy announcement to lay down the central bank's priorities, suggesting a shift from the tight banking regulations pursued under predecessor Shaktikanta Das.

"There are trade-offs between stability and efficiency," Malhotra said, referring to draft rules which propose to raise capital requirements for bank lending to under-construction infrastructure projects and raise the liquidity requirement against digital deposits.

"We will keep this trade-off in mind while formulating regulations. It will be our attempt to strike the right balance, keeping in view the benefits and costs of each and every regulation," he said.

The Indian government in rare public comments had said tight banking regulations were responsible for part of the slowdown and officials had privately advised against the new rules, Reuters reported last year.

Since Malhotra has taken over, the rupee has weakened and volatility has risen, prompting markets to speculate that the central bank was easing its grip on the currency.

Under Das, rupee volatility had fallen to multi-decade lows as the central bank intervened heavily to keep the rupee in a narrow band.

Malhotra stuck to the long-held position of the central bank that interventions are only intended to smoothen "excessive and disruptive volatility rather than targeting any specific exchange rate level or bank".

"The exchange rate of the Indian rupee is determined by market forces," he said.

The rupee fell marginally after the policy, trading at 87.47, close to the record low of 87.58.

Source: Theedgemarkets