Unlock the White Home Watch e-newsletter free of charge
Your information to what the 2024 US election means for Washington and the world
US President Donald Trump’s “tweet-driven” uncertainty is imposing further prices on commodity merchants, slowing their funding plans and even prompting some European homes to contemplate altering their working hours to align with Trump’s social media output.
Trump’s frequent messages on X and his personal Reality Social platform — usually despatched at odd hours — have sparked volatility in commodities markets over current weeks and left merchants scrambling to react.
Richard Holtum, Trafigura’s newly appointed chief government, stated he was “semi-seriously” contemplating altering merchants’ working hours in Geneva to 2pm to midnight.
“The European hours are fairly quiet within the morning as of late,” he stated, on the FT Commodities World Summit in Lausanne. “You simply await President Trump to get up and resolve how your day goes to go.”
The president stated this week in a social media put up that he deliberate to impose 25 per cent in so-called secondary tariffs on international locations that purchase oil from Venezuela.
Invoice Reed, chief government of US buying and selling firm CCI, stated the uncertainty round tariffs had left the corporate “scrambling” to know the foundations, work that “consumes an infinite quantity of assets”.
That left corporations in “wait and see” mode, hurting funding, he stated. “It’s doable that individuals are holding off making choices . . . it’s slowing me down,” Reed added.
Jeff Dellapina, chief monetary officer of Vitol, the world’s greatest unbiased power dealer, stated Trump’s posting and his flurry of government orders have been additionally making it more durable to commerce, undermining the detailed market analysis that commodity homes use to take choices.
“Whenever you get up within the morning, these statements can overwhelm any analysis we do, so it simply naturally attracts away danger capital from the market,” he stated. That tends to “compress volatility, which then has clearly put us in a lot tighter buying and selling ranges in core commodities”.
Gunvor, an power buying and selling agency based mostly in Geneva, stated it was prepared to take much less buying and selling danger as consequence. “This type of volatility we’re seeing, which is tweet-driven . . . could be very tough for us to commerce round, so we’re pretty risk-off proper now for that motive,” stated chief monetary officer Jeff Webster. A consequence has been that sure commodities, together with crude oil, at the moment are buying and selling inside a a lot tighter vary than in earlier years.
“Our merchants are having to work twice as onerous to generate perhaps half of the revenue they have been earlier than,” Webster added.
Some buying and selling homes struck a extra optimistic tone, noting that volatility additionally introduced alternative for these capable of revenue from market dislocations.
As a result of commodity buying and selling companies transfer uncooked supplies from one place to a different, they stand to learn from market dislocations that create value arbitrage alternatives, in the event that they place themselves accurately.
Guillaume Vermersch, chief monetary officer of Mercuria, stated in durations of disruption there was all the time “an answer to be introduced” and alternatives for merchants to offer companies and options to prospects that helped them cut back their publicity.