By Siyi Liu

SINGAPORE (Reuters) -Oil prices extended declines on Wednesday and were set for their largest monthly drop in more than three years as the global trade war eroded the outlook for fuel demand, while fears of mounting supply also weighed.

Brent crude futures fell by 75 cents, or 1.17%, to $63.50 per barrel by 0641 GMT. U.S. West Texas Intermediate crude futures dropped 79 cents, or 1.31%, to $59.63 a barrel.

Brent and WTI have lost 15% and 17% respectively so far this month, the biggest percentage drop since November 2021.

Both benchmarks slumped after U.S. President Donald Trump’s April 2 announcement of tariffs on all U.S. imports. They then sank further to four-year lows as China responded with its own levies against U.S. imports, stoking a trade war between the top two oil-consuming nations.

Trump’s tariffs on imports into the U.S. have made it probable the global economy will slip into recession this year, according to a Reuters poll.

China’s factory activity contracted at the fastest pace in 16 months in April, a factory survey showed on Wednesday.

Worries about demand amid the trade war have weighed on investor sentiment, said ANZ bank senior commodity strategist Daniel Hynes.

"There are also concerns that recent strength in U.S. economic data was only temporary, due to stockpiling ahead of the tariffs that now appears to be abating," he added.

U.S. consumer confidence slumped to a nearly five-year low in April on growing concerns over tariffs, data showed on Tuesday.

Recent signs of a de-escalation in the trade wars, including a pair of orders Trump signed on Tuesday to soften the blow of his auto tariffs, eased some jitters among global investors.

That said, analysts believe the oil market will stay under pressure as the Trump administration continues to prioritise lower oil prices to manage inflation.

Oil prices were also undermined by fears of mounting supply from the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+.

Several OPEC+ members will suggest a ramp-up of output hikes for a second straight month in June, sources told Reuters last week. The group will meet on May 5 to discuss output plans.

On the supply front, {{8849|U.S. crcrude oil inventories rose by 3.8 million barrels last week, market sources said on Tuesday citing American Petroleum Institute data. [API/S]

U.S. government data on stockpiles is due at 10:30 a.m. ET (1430 GMT) on Wednesday. Analysts polled by Reuters expect, on average, an 400,000 barrel increase in U.S. crude oil stocks for last week. [EIA/S]

By Chen Aizhu and Trixie Yap

SINGAPORE (Reuters) -China’s used cooking oil (UCO) exports to the United States, its largest buyer, are set to plunge in coming months due to steep tariffs, forcing sellers to divert shipments to Europe and elsewhere, industry players said.

With Trump administration is now charging 125% import tariff on Chinese UCO from this month. Shipments to the U.S., valued at $1.1 billion last year, are tumbling with the last cargoes sailing around late March and early April before trade grinds to a halt, said three China-based UCO traders.

China’s UCO exports hit an all-time high last year at nearly 3 million metric tons or worth $2.64 billion, according to Chinese customs.

"For the time being, arbitrage to the U.S. is closed and we think it will remain so for the medium term," said Richard Dickinson, Shanghai-based head of trading Amarus Trading, one of the largest dealers of Chinese UCO.

"Some of the exports will be diverted to Europe and new markets in Asia such as Korea, Thailand, Malaysia and India."

At least four new Sustainable Aviation Fuel facilities, which use UCO as an ingredient and totalling at least 700,000 metric tons per year of production capacity, have started up or will begin operation by this year in Thailand, Malaysia and Japan, according to industry insiders.

Exports to the U.S. have fallen since last December as Beijing removed tax rebates for UCO exports and also due to the new U.S. clean fuel tax policy that discourages the use of imported UCO, and the latest tariffs only exacerbates the situation, a shipper of the fuel said.

Most Asian stock markets were little changed on Wednesday as investors digested a series of key economic indicators, chiefly weak factory activity data from Japan and China, and Australian CPI inflation.

Meanwhile, Indian stocks edged lower amid rising geopolitical tensions with Pakistan, while equities in South Korea fell amid heightened political unrest in the country.

Regional markets took few cues from a positive overnight close on Wall Street. Major U.S stock indexes closed with modest gains on Tuesday, while futures tied to these benchmark indexes fell in Asian trading on Wednesday as, globally investors awaited key PCE price index data and major corporate earnings due in the coming days.

Trump Tariffs slam China, Japan industrial activity

Fresh economic data from China and Japan revealed a slowdown in industrial activity, largely attributed to escalating U.S. tariffs under President Donald Trump’s administration. 

China’s official manufacturing Purchasing Managers’ Index (PMI) fell to 49.0 in April, down from 50.5 in March, indicating a contraction in factory activity. 

This decline marks the first contraction since December 2023 and is attributed to the intensifying trade war with the U.S., which has imposed a whopping 145% tariff on Chinese goods. 

The Caixin reading also reflected a sharp drop in overseas orders following Trump’s tariffs.

The downturn has prompted calls for economic stimulus as the impact of these tariffs becomes more evident. 

China’s Shanghai Composite was muted, while the Shanghai Shenzhen CSI 300 were also unchanged. Hong Kong’s Hang Seng edged 0.3% higher

Meanwhile, Japan’s industrial production decreased by 1.1% m-o-m in March, surpassing market expectations of a 0.5% drop. 

These reductions are linked to disrupted auto part supplies, a consequence of the U.S. imposing a 25% tariff on car and truck imports and a temporary 10% tariff on all Japanese goods. 

Japan’s Nikkei 225 index was largely muted while TOPIX rose 0.4%, as markets returned after a public holiday.

Australia Q1 CPI supports RBA rate cut bets

Data on Wednesday showed that Australian consumer price index inflation grew slightly more than expected in the first quarter, while underlying inflation fell back into the Reserve Bank of Australia’s target range of 2%-3%, supporting the case for a rate cut.

The RBA is expected to cut interest rates by 25 basis points at its next policy meeting on May 20.

Australia’s S&P/ASX 200 edged 0.3% higher.

Other Asian stock indexes only edged higher despite easing U.S. tariff tensions.

Nifty 50 down amid Indo-Pak tensions; KOSPI down on political unrest

India’s Nifty 50 fell 0.2% at open.

Pakistan’s Information Minister Attaullah Tarar stated on Wednesday that the country has reliable intelligence indicating India may carry out a military strike within the next 24 to 36 hours.

This development comes amid growing tensions between the two nuclear-armed neighbors, after India alleged that Pakistani elements were involved in last week’s attack that killed 26 people at a tourist site in Indian Kashmir.

Meanwhile, South Korea’s KOSPI declined after media reports showed that South Korean prosecutors were searching the private residence of ousted President Yoon Suk Yeol.

Yoon was ousted after he declared a martial law in South Korea in December last year.

Chinese manufacturing activity shrank more than expected in April, government data showed on Wednesday, as local producers were slammed by a sharp drop in overseas orders after U.S. President Donald Trump imposed steep trade tariffs against Beijing.

A separate, private survey showed China’s manufacturing sector still remained in expansion, albeit at a much slower pace.

The official manufacturing purchasing managers index read 49.0 in April, compared to expectations of 49.7. The print also fell sharply from the 50.5 seen in the prior month.

A reading below 50 indicates a contraction, with China’s manufacturing PMI now back in contraction territory after two months of gains. 

The drop in manufacturing activity came as China became embroiled in a bitter trade war with the U.S. through April. Trump imposed 145% tariffs on Chinese goods, while China retaliated with a 125% levy on American goods.

But the U.S. tariffs are expected to largely stymie American demand for Chinese goods- a trend that bodes poorly for Chinese manufacturers, given that U.S. exports represent a major revenue stream. 

This notion drove April’s weakening in activity, as new business orders were slashed across the board. 

China’s non-manufacturing activity also disappointed in April, with the non-manufacturing PMI rising 50.4 against expectations for a print of 50.6. The reading also fell from 50.8 in the prior month. 

This brought China’s composite PMI down to 50.2 in April from 51.4 in March, with the print now barely remaining in expansion territory.

Wednesday’s PMI reading highlights the impact of steep U.S. tariffs on China’s manufacturing powerhouses, as they are cut off from American markets. But the country has so far shown little intent in trade talks with the U.S., having recently denied Trump’s claims that negotiations were taking place.

Caixin manufacturing PMI remains in expansion

Separately, a private survey of China’s manufacturing sector read stronger than expected for April, remaining in expansion albeit at a sharply slower pace from the prior month.

The Caixin manufacturing PMI read 50.4 in April, higher than expectations that it would shrink to 49.8. The reading still fell from the 51.2 seen in the prior month.

The Caixin reading also reflected a sharp drop in overseas orders following Trump’s tariffs. This resulted in Chinese industries operating at lower capacities, which in turn spurred job shedding in the sector.

"The U.S. tariff hikes took a toll on external demand, with new export orders declining at the fastest rate since July 2023... The ripple effects of the ongoing China-U.S. tariff standoff will gradually be felt in the second and third quarters. As such, policymakers should be well- prepared, with action taken sooner rather than later," Wang Zhe, Senior Economist at Caixin Insight Group said in a statement. 

The Caixin data differs from the government data, in that while the government PMI covers larger, state-run industries in the north, the Caixin PMI focuses on smaller, private companies in the South. Investors usually use both surveys to gain a broader picture of the Chinese economy.

Wednesday’s data shows China’s economy clocked a weak start to the second quarter of 2025 after some improvement earlier in the year.

The soft economic data furthers the case for more government stimulus, with Beijing having outlined both fiscal and monetary measures to help support the economy.

The S&P 500 closed sharply higher Tuesday for the sixth-straight day, underpinned by falling Treasury yields and signs of flexibility on tariffs from the White House as well as signs of further trade deals just as the earnings season continues to heat up. 

At 4:00 PM ET (21:00 GMT), the Dow Jones Industrial Average gained 300 points, or 0.8%, while the S&P 500 index gained 0.6%, and the NASDAQ Composite gained 0.6%. 

U.S. President Donald Trump, who is set to sign an order on Tuesday, easing some of his 25% tariffs on cars and car parts, said the reprieve will offer automakers short term help.

"We just wanted to help [automakers] enjoy this little transition, short-term. If they can’t get parts, you know, it has to do with a very small percentage. If they can’t get parts, we didn’t want to penalize them," Trump said.

In another positive note on the trade front, Commerce Secretary Howard Lutnick told CNBC that the U.S. was close to announcing a major trade deal.

The move comes a day after Secretary Bessent in an interview with CNBC on Monday, said many countries have offered "very good" tariff proposals to the U.S.

However, this positive tone was undermined by the White House slamming Amazon for reportedly planning to display the cost of President Donald Trump’s tariffs next to the total price of products on its site.

“This is hostile and political act by Amazon,” White House press secretary Karoline Leavitt said at a press briefing earlier Tuesday.

Treasury yields drop as consumer confidence falls

Treasury yields slumped on Tuesday after the Conference Board announced consumer confidence fell 7.9 points to 86.0 in April.  This was the lowest reading since May 2020 and below the 87.7 expected by economists polled by Investing.com.

"In the details of the report, a gauge of current conditions slipped 0.9 points to 133.5, a seven-month low, and a gauge of future expectations plunged 12.5 points to 54.4, the lowest reading since 2011," Stifel said in a Tuesday note.

Elsewhere, the Atlanta Fed’s GDP Now for Q1 fell to -2.7%, from -2.5%, and the JOLTS Job Openings for March fell to 7.192 million from 7.48 million.

Investors are also bracing for a series of other U.S. economic data releases later this week, including the Federal Reserve’s preferred inflation gauge – the PCE price index, and the monthly U.S. jobs report.

Busy earnings schedule awaits "megacaps"

Markets also awaited earnings from the “magnificent seven” megacaps, including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Meta Platforms (NASDAQ:META), this week.

Microsoft and Meta are set to report on Wednesday, while Apple and Amazon are scheduled to report their earnings on Thursday.

This is set to be a very busy earnings week, with about one-third of S&P 500-listed firms slated to post results this week.

Earlier Tuesday, General Motors (NYSE:GM) stock fell 0.7% despite the auto giant reporting first-quarter earnings and revenue that topped analyst expectations, as it suspended its guidance and froze share buyback program in response to new Trump tariffs.

Coca-Cola (NYSE:KO) stock gained 0.8% after the soft drinks giant reported a drop in first-quarter revenue, even after price hikes.

Spotify (NYSE:SPOT) stock fell more than 3% after the streaming music service unveiled a current-quarter guidance for monthly active users that was below expectations.

United Parcel Service (NYSE:UPS) stock slipped 0.5% lower even after the delivery giant reported better-than-expected first-quarter 2025 results, with adjusted earnings and revenue surpassing analyst estimates.

Royal Caribbean (F:RCL) stock was flat after the cruise operator raised its annual profit forecast on Tuesday, benefiting from strong bookings for its premium sailings to regions such as Alaska and Japan.

(Ayushman Ojha and Peter Nurse contributed to this article.)

Gold prices slipped over 1% in Asian trading on Wednesday, after U.S. President Donald Trump’s administration said it would ease the impact of auto tariffs, and affirmed trade talks with China.

Investors cautiously awaited key U.S economic indicators this week, including the Federal Reserve’s preferred inflation gauge – the PCE price index.

As of 02:08 ET (06:08 GMT), Spot Gold declined 1.1% to $3,308.93 per ounce, while Gold Futures expiring in June fell 0.8%% to $3,322.55 an ounce.

US to ease impact of auto tariffs; says in trade talks with China 

President Donald Trump’s administration on Tuesday said Washington will soften the impact of its automotive tariffs by easing some duties imposed on foreign parts in domestically manufactured cars.

A Wall Street Journal article, which first reported the move, stated that the adjustment means automakers paying Trump’s auto tariffs will be exempt from additional duties, such as on steel and aluminium.

Moreover, in an interview with CNBC on Monday, Secretary Bessent said many countries have offered ’very good’ tariff proposals to the U.S.

He also stated that the U.S. government is in contact with China and that it is up to China to de-escalate the situation.

These developments eased some fears around rising US-Sino trade tensions.

Gold, which recently reached record highs, thrives in periods of economic uncertainty, geopolitical tensions, and rising inflation, as investors seek safe-haven assets to protect their wealth.

Among other precious metals, Silver Futures fell 0.4% to $32.862 an ounce, while Platinum Futures were unchanged at $993.20 an ounce.

US April jobs data, Q1 GDP, PCE inflation awaited

The JOLTS job openings report for March will be released later on Tuesday, while April U.S. jobs data is scheduled for Friday.

The U.S. will also report its first-quarter gross domestic product (GDP) data, and the PCE price index this week.

These datapoints will be crucial to gauge the Fed’s rate outlook, as it has adopted a wait-and-see approach amid global trade uncertainty.

Copper prices subdued; China holds off on fresh stimulus

Copper prices were largely muted as investors sought clarity on U.S.-China tariff talks.

China’s policymakers have vowed to support businesses and workers hit by steep U.S. tariffs, but refrained from announcing fresh stimulus measures.

Benchmark Copper Futures on the London Metal Exchange were unchanged at $9,392.20 a ton, while Copper Futures expiring in May lost 0.8% to $4.8620 a pound.

Most Asian currencies firmed slightly on Tuesday, advancing against a battered dollar as traders remained uncertain over the U.S. plans for more trade tariffs, as well as a potential deal with China. 

A market holiday in Japan made for softer trading volumes in the region. 

Most regional currencies were nursing steep losses in recent weeks, as a bitter tariff exchange between the U.S. and China and heightened uncertainty over the global economic outlook battered risk appetite. 

But some of these losses were softened by a sharp drop in the dollar, as traders also appeared to be slashing positions in U.S. assets. This trend was also apparent with a sharp fall in U.S. Treasuries, although they regained some ground this week. 

The Chinese yuan and the Taiwan dollar were among the better performers on Tuesday, while the Japanese yen weakened slightly as risk appetite improved. 

A Wall Street Journal report said U.S. President Donald Trump was considering some alterations to his steep automotive tariffs, in order to lessen their impact. 

Elsewhere, the Canadian dollar weakened, with the CAD/USD pair down 0.3% after the Liberal Party under Mark Carney was seen heading for a close victory in federal elections defined by Trump’s tariff and sovereignty threats. 

Dollar near 3-yr low as tariff uncertainty persists 

The dollar index and dollar index futures both moved little in Asian trade after coming back in sight of a three-year low this week.

The greenback was battered by what appeared to be a mass pivot away from U.S. assets, amid uncertainty over Trump’s trade and economic agenda. 

The WSJ reported on Monday evening that Trump was considering scaling back some of his automotive tariffs, amid heightened concerns over their economic impact. The move offered some relief to markets, and sparked bets that Trump will seek further deescalation in his tariff agenda.

U.S.-China trade talks are a major point of focus, although both sides have offered wildly different signals on negotiations. Trump claimed that his administration was in talks with China, while Beijing denied any such claims. 

Chinese yuan firms; Asian econ. data awaited 

Focus this week is squarely on a string of key Asian economic readings, as well as a Bank of Japan meeting.

The Chinese yuan firmed on Tuesday, with the USD/CNY pair falling 0.3%. Chinese purchasing managers index data for April is due on Wednesday, and is set to offer more cues on business activity in the face of a dire Sino-U.S. trade war. 

The Australian dollar’s AUD/USD pair fell 0.1%, with focus turning to first-quarter consumer inflation data due on Wednesday. The print is widely expected to factor into the Reserve Bank’s outlook on interest rate cuts, with analysts projecting a sustained decline in inflation will elicit more easing. 

The Japanese yen’s USD/JPY pair rose 0.3% as the currency gave up more of its recent gains. The BOJ is set to meet later this week, and is expected to keep rates unchanged amid heightened economic uncertainty. But the BOJ could still signal further monetary tightening, especially as Japanese inflation rose sharply in recent months. 

Among other Asian units, the Taiwan dollar’s TWD/USD pair fell 0.5%, while the South Korean won’s USD/KRW pair rose 0.1%.

The Singapore dollar’s USD/SGD pair fell 0.2%, while the Indian rupee’s USD/INR pair fell 0.2% to below 85 rupees.

Most Asian stock markets advanced on Tuesday, led by gains in automakers after the U.S. moved to soften the impact of auto tariffs, while mainland Chinese stocks ticked down as Beijing held off from announcing fresh stimulus measures.

Japanese markets were closed for a public holiday, leading to thin trading volumes in Asia.

Major U.S stock indexes eked out marginal gains on Monday, while futures tied to these benchmark indexes edged higher in Asian trading on Tuesday.

Automakers gain on Trump’s tariff reprieve; BOJ policy meeting looms

President Donald Trump’s administration on Tuesday said Washington will soften the impact of its automotive tariffs by easing some duties imposed on foreign parts in domestically manufactured cars.

A Wall Street Journal article, which first reported the move, stated that the adjustment means automakers paying Trump’s auto tariffs will be exempt from additional duties, such as on steel and aluminium.

Hong Kong’s Hang Seng index rose 0.5%, with gains in Chinese automakers. 

Hong Kong-listed NIO Inc (HK:9866) shares surged 5%, while Geely Automobile (HK:0175) jumped 2.5%.

South Korea’s KOSPI rose 0.8%, with Hyundai (OTC:HYMTF) Motor (KS:005380) climbing 1.7%.

Futures for India’s Nifty 50 added 0.3%.

Futures for Japan’s Nikkei 225, which comprises major auto stocks, gained 0.3%, indicating a rise after the markets return from a holiday.

Investors also awaited the Bank of Japan’s policy meeting starting on Wednesday, where the central bank is expected to keep interest rates unchanged on May 1 amid global uncertainty despite strong inflation prints.

Elsewhere, Australia’s S&P/ASX 200 climbed 0.9%, while Singapore’s Straits Times index rose 0.4%.

China stocks down despite easing trade tensions; Beijing holds off on additional stimulus 

China’s Shanghai Composite edged 0.1% lower, while the Shanghai Shenzhen CSI 300 fell 0.2%.

This was despite signs of easing U.S.-China trade tensions.

U.S. Treasury Secretary Scott Bessent on Monday stated that all aspects of the U.S. government are in contact with China and that it is up to China to de-escalate the situation. 

This came after Beijing earlier denied that any talks occurred.

Meanwhile, China’s policymakers vowed to support businesses and workers hit by steep U.S. tariffs and called for preparations for worst-case scenarios, state media reported Friday.

However, they did not announce any additional measures beyond what was revealed in their annual policy meeting in March.

China’s official and Caixin manufacturing activity data will both be released on Wednesday, providing a first look at how tariff actions impacted the manufacturing sector.

U.S. President Donald Trump is expected to soften the blow of his automotive tariffs by preventing duties from stacking on top of other tariffs he has imposed, while also scaling back some duties on foreign parts, the Wall Street Journal reported on Monday. 

The move will mean that U.S. automakers paying Trump’s automotive tariffs will not be subject to other duties, such as those on steel and aluminum, the WSJ report said, citing people familiar with the matter. 

The move will also be retroactive, meaning that automakers could be reimbursed for tariffs they have already paid, the WSJ report said. 

Trump also plans to modify its tariffs on auto part imports, which will allow automakers to be reimbursed for up to an amount equal to 3.75% of the value of a U.S.-made car for one year, the WSJ report said.

Trump’s 25% tariffs on finished imported cars took effect in early April, while a 25% duty on foreign auto parts is set to take effect from May 3.

Trump is expected to announce the tariff relief before a trip to Michigan for a rally outside Detroit on Tuesday evening, the WSJ said.

The potential tariff relief is likely aimed at allowing automakers more time to shift supply chains to the U.S., in line with Trump’s tariffs. 

Trump’s auto tariffs had ramped up concerns over heightened car costs in the U.S., given that even cars manufactured domestically still import a wide variety of components. 

U.S. stocks saw modest gains on Monday, with the Dow and S&P 500 ending fractionally higher and the Nasdaq ending fractionally lower, as investors digested the latest comments from U.S. Treasury Secretary Scott Bessent and looked ahead to earnings reports from megacap American companies with a combined market value of around $20 trillion.

The Dow Jones Industrial Average closed up 114 points or 0.28%, while the S&P 500 index eked out a gain of 3 points, or 0.06%. The NASDAQ Composite index saw a small drop of 17 points, or 0.1%.

Trade hopes

Stocks were able to add to last week’s gains on hopes that the U.S. would start to announce some trade deals.

"There remains a lot of hope and hype about trade deals, and this might prevent a sharp slump in the SPX in the immediate term, but the index is at the top-end of its trading range and shouldn’t be chased beyond ~5500," Vital Knowledge analyst Adam Crisafulli said in morning’s note to clients. 

In an interview with CNBC on Monday, Secretary Bessent said many countries have offered ’very good’ tariff proposals to the U.S.

"We are continuing to make substantive movement on negotiations with many of our trading partners," Bessent stated. "The negotiations with our Asian trading partners are going very well; the negotiations with the Republic of Korea have gone very well; the VP’s negotiations with India went very well; and I think we’ve had some very substantial negotiations with our Japanese allies."

He also stated that all aspects of the U.S. government are in contact with China and that it is up to China to de-escalate the situation.

The Trump administration has shown signs of wanting to ease tensions in the ongoing trade war, which has rattled markets and fueled fears of a global recession. 

Earnings ahead: Apple, Microsoft, Amazon, Meta 

Investors were eyeing earnings from the “magnificent seven” megacaps, including Apple Inc (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Meta Platforms Inc (NASDAQ:META), this week.

"The Q1 earnings season (and Q1 economic data) have been decent, but this is in part because the full effects of tariffs haven’t been felt – that will soon change," Crisafulli added. 

Microsoft and Meta are set to report on Wednesday, while Apple and Amazon are scheduled to report their earnings on Thursday.

These reports are key to gauging corporate resilience amid ongoing tariff tensions and capital expenditure worries around AI.

Earnings from other major sectors, like Visa (NYSE:V), Coca-Cola Co (NYSE:KO), and Caterpillar Inc (NYSE:CAT), were all due this week.

(Ayushman Ojha, Senad Karaahmetovic and Sam Boughedda contributed to this article).