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    Morning Bid: Trump’s tariff caution slams dollar, lifts stocks

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    (Reuters) – A look at the day ahead in Asian markets. The first full day of financial market trading in U.S. President Donald Trump’s second term in office is set to get off to a strong start on Tuesday, with Trump’s seemingly more measured approach to tariffs giving investor sentiment an instant shot in the arm.Trump issued a broad trade memo on Monday that stopped short of immediately imposing new tariffs on key trading partners, something he had previously indicated he would do on his first day in office. Instead, trade relationships with China, Canada and Mexico will be assessed and reviewed before he decides what steps to take.The U.S. stock and bond markets were closed for Martin Luther King Jr. Day on Monday, but FX markets were open, and the dollar’s steep fall across the board reflected the relief among investors that Trump appears to be dialing down the tariff rhetoric in favor of a less belligerent approach.Even if it turns out to be only temporary.The dollar index slumped 1%, its biggest decline since August. The dollar may have been primed for a fall, going by hedge fund positioning – the latest Commodity Futures Trading Commission data shows funds last week held a net long dollar position against a range of currencies worth $35 billion last week, the biggest in nine years. The dollar had rallied around 10% since September alongside the surge in U.S. Treasury yields of more than 100 basis points, a tightening of financial conditions that hit Asian and emerging markets particularly hard. A pause or reversal should ease that squeeze.U.S. stock futures are pointing to gains of around 0.4% on Wall Street on Tuesday. Asian markets were already on the front foot on Monday, with the MSCI Asia ex-Japan and Nikkei 225 indexes both rising more than 1%.Markets around the world will be sensitive to the deluge of headlines that’s likely to flow from Washington in the coming days as the new administration announces policy directives and executive orders. It is shaping up to be a volatile week.Crude oil prices dipped further from last week’s six-month high, falling for a third straight day as traders await details on Trump’s executive order declaring a national energy emergency and promise to fill up strategic reserves. Cryptocurrencies, on the other hand, were more buoyant as the self-styled “crypto President” was sworn in and bitcoin leaped to a new high just shy of $110,000. The Asian economic calendar on Monday is light, with producer price inflation from South Korea and consumer price inflation from Hong Kong the only major economic indicators on tap. Expect markets to take their cue from headlines out of Washington, the upturn in global stocks, and the diving dollar. Here are key developments that could provide more direction to markets on Tuesday:- Reaction to Trump’s first day in office- South Korea PPI (December)- Hong Kong CPI (December) More

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    EU ministers see Trump as wake-up call to fix economy

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    BRUSSELS (Reuters) – The return of U.S. President Donald Trump to the White House is a wake-up call for European Union countries to fix their economies and become more competitive, the EU’s senior financial officials said on Monday as Trump was sworn in for a second term.The 27-nation EU became increasingly worried last year about losing to China and the United States in the race for new technologies, especially ones that would help the bloc of 450 million people move to an economy with lower greenhouse-gas emissions.Many European innovators expand their businesses in the U.S., where access to capital is easier and companies are less burdened with red tape. In China, some firms receive large subsidies from the government to gain global market share, and Chinese industry already has a dominant position in solar panels, electric cars, wind turbines and batteries.”The new Trump administration should be a wake-up call for Europe,” Belgian Finance Minister Vincent Van Peteghem told reporters. “Rather than focusing on retaliation (against U.S. tariffs), we should focus on the challenges of Europe – the decreasing competitiveness and the increasing productivity gap that we face.”Rather than starting a trade war, the EU should boost its competitiveness and develop capital markets, officials said.”On the election of President Trump, the best response … is to redouble our efforts to deliver what we’ve already committed to do,” the chairman of euro zone finance ministers Paschal Donohoe told a press conference.SPECIAL U.S. RELATIONSHIPFormer EU trade commissioner Valdis Dombrovskis, now in charge of the EU economy at the European Commission, said the European Union was keen to preserve its special trade relationship with the U.S., but not at all costs.”We need to preserve these trade relationships and that’s our starting approach, both bilaterally with the U.S. but also thinking about the multilateral, rules-based trading system globally,” Dombrovskis said. “At the same time, if there is a need to defend Europe’s economic interests, we are ready to do so, as we were doing during the first Trump administration.” Polish Finance Minister Andrzej Domanski, who will set the agenda of meetings of EU finance ministers until the end of June, said key to success in dealing with the new U.S. administration was for EU governments to stick together and to strengthen Europe’s economic power.”It is very important that Europe must remain united,” he said, adding the EU had to focus on lower energy prices for its industry and consumers, as well as cutting regulation.”We must focus on building the strength of the European economy. We must focus on how to reduce energy prices. We must focus on how to remove such a regulatory burden from European companies,” Domanski said.French Finance Minister Eric Lombard said the change of U.S. administration meant the EU would have to double down on protecting its industry. “That is absolutely critical through the Clean Industry Act and other tools that we have in Europe,” Lombard said, adding trade would also be a priority, as would the development of new technologies, especially artificial intelligence. More

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    Trump’s new crypto coin sparks ethics concerns

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    PARIS/WASHINGTON (Reuters) – U.S. President Donald Trump’s launch of a crypto token shortly before his inauguration on Monday creates new conflict-of-interest concerns, ethics experts and industry insiders said.  Trump has pledged to hand management of his assets to his children, but the crypto asset is raising particular concerns due to its ability to quickly attract billions of speculative dollars with little transparency.The companies behind the “meme coins” $TRUMP and $MELANIA, for first lady Melania Trump, said they are not investments or securities but are an “expression of support.”The tokens follow Trump-branded non-fungible tokens, sneakers and a Bible, among other items he has launched. Ethics advisors and industry experts say this investment is different because his administration will regulate an industry in which he has a stake through the new token, and one where any value is arguably tied to his presidency.The companies behind the Trump token, CIC Digital LLC, an affiliate of the Trump Organization, and Fight Fight Fight LLC, co-owned by CIC Digital, collectively own 80% of the tokens, meaning that Trump-linked businesses could have gained $8 billion worth of crypto over the weekend.Danielle Brian, head of the watchdog group Project On Government Oversight, said Trump’s moves into crypto are concerning given the industry’s loose oversight. Besides being “a blatant financial conflict of interest on behalf of the president … it is deepening his engagement in a world that raises real national security concerns,” she said.Trump’s office did not respond to a request for comment.Prominent crypto investor Nic Carter said on social media the creation of personal meme coins “opens the door to secretive foreign buyers trying to curry influence with our leaders.”Some Democratic U.S. lawmakers echoed the national security concerns and conflict-of-interest worries.”Anyone globally, even individuals who have been sanctioned by the U.S. or banned from our capital markets, can now trade and profit off of $TRUMP through various unregulated platforms,” U.S. House Financial Services Committee top Democrat Maxine Waters (NYSE:WAT) wrote.Meme coins typically refer to small, extremely volatile, cryptocurrencies, often named after online jokes or trends. While supporters hope the tokens will rise as the memes go viral, most have little value.Both the Trump tokens’ websites avoid using the word cryptocurrency – referring instead to “fungible crypto assets” and marketing them as memes.University of Sussex finance professor Carol Alexander said the Trump and Melania tokens were functioning more like fan tokens that took off in 2021 and would likely become a barometer for support of the couple.Crypto markets were buoyant on Monday, with bitcoin hitting an all-time high as investors anticipated Trump’s crypto-friendly policies.Some said Trump’s coin was a game-changer.”The fact that a president is doing this brings some sort of legitimacy to the space, and I think just means that the industry is moving ahead in a way it hasn’t for the last 10 years,” said Paul Howard, senior director at crypto market-maker Wincent. More

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    Russia’s budget deficit widens to $34.4 billion after late spending spree

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    (Reuters) -Russia recorded a budget deficit of more than 3 trillion roubles for the third year running in 2024, the finance ministry said on Monday, with both spending and revenue rising sharply as Moscow ploughed economic resources into the war in Ukraine.According to the ministry’s preliminary estimate, the overall deficit stood at 3.49 trillion roubles ($34.4 billion), with revenues increasing 26% to 36.71 trillion roubles and spending climbing 24.2% to 40.19 trillion roubles.The shortfall narrowed as a percentage of gross domestic product to 1.7% from 1.9% in 2023, the data showed, but was significantly wider than the ministry’s initial plans for a deficit at 0.9% of GDP, or 1.6 trillion roubles.Excluding crucial revenues from oil and gas, however, the deficit widened to 7.3% of GDP from 7% of GDP in 2023.Spending rose sharply in December to 7.15 trillion roubles, exceeding the value of similar year-end expenditures in 2022 and 2023. That jump involved some advance spending for this year, the ministry said. This could give it greater flexibility this year, when federal budget liabilities may increase if the Bank of Russia raises its key interest rate again. The central bank held rates at 21% in December, surprising analysts who had forecast a sharp hike, a day after President Vladimir Putin publicly called for a “balanced” decision. Moscow expects spending this year to increase to 41.47 trillion roubles, of which 41% will be spent on the army, police and secret services. Rising tax revenues are seen narrowing the fiscal deficit to 0.5% of GDP. In 2024, the ministry adjusted its plans twice as the need for more spending arose.($1 = 101.4955 roubles) More

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    Trump Holds Off on Tariffs, but Paves the Way for Future Trade Action

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    President Trump will stop short of immediately imposing tariffs on imported products on Monday, but will issue an executive order directing federal agencies to begin studying a broad list of trade issues that could ultimately result in taxes on goods from China, Canada, Mexico and other countries in the coming months.The decision suggests that Mr. Trump is taking a more measured approach to fulfilling a key campaign promise of using tariffs to reorder America’s trading relationships. It will also delay — at least for now — fights that have been brewing with foreign governments, which have promised to answer Mr. Trump’s levies with tariffs of their own.The topics Mr. Trump will direct his officials to investigate in an executive order Monday will be extensive, including trade deficits and trade deals signed with China, Canada and Mexico. That could tee up the ability of the president to deploy tariffs on numerous targets for many different reasons, potentially scrambling international supply chains and spawning global trade wars in the weeks and months to come.The executive order will direct federal agencies to examine unfair trade and currency practices and to assess whether foreign governments have complied with terms of the two trade deals Mr. Trump signed in his first presidency. It will also require the government to assess the feasibility of creating an “External Revenue Service” to collect tariffs and dutiesMr. Trump is also ordering a study of tariffs that the United States has imposed for national security reasons, as well as the use of a special trade exemption, called de minimis, that allows low-value goods to come into the United States tariff free. That loophole has allowed large volumes of Chinese goods to escape the tariffs Mr. Trump slapped on China during his first term. The details of the executive order were earlier reported by The Wall Street Journal.While Mr. Trump has decided to hold off on tariffs for now, his advisers say he remains more convinced than ever that they can be used to great advantage.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More