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February 13, 2025

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Are Trump’s 25% Tariffs a Game-Changer for Steel Stocks? Here’s What to Watch Now!

8 Mins Read

On Monday morning, President Trump announced plans to impose 25% tariffs on steel and aluminum imports — a sweeping policy move that’s certain to reshape the Materials sector. While this can negatively affect several industries, domestic steel producers are likely to benefit from increased demand.

How Markets Reacted to the 25% Tariff Announcement

The StockCharts MarketCarpets provides a clear visual of how investors reacted when the tariff announcement made headlines.

FIGURE 1. MARKETCARPETS VIEW OF THE MATERIALS SECTOR. Notice the top gainers consist of domestic metals producers.Image source: StockCharts.com. For educational purposes.

The stocks that gained the most following the announcement were Steel Dynamics, Inc. (STLD) and Nucor Corporation (NUE), both domestic steel producers, as well as Newmont Corporation (NEM), a mining company focused on gold and copper extraction.

The surge in STLD and NUE reflects investor expectations that tariffs will curb foreign competition, allowing US steelmakers to raise prices and expand market share. NEM also gained, likely due to broader market concerns over trade tensions and inflation. On top of this, copper — a key industrial metal — could see supply chain shifts or price fluctuations, depending on how tariffs impact global trade flows.

Let’s take a longer-term look at these stocks relative to the Materials sector and the broader market (S&P 500). Below is a PerfCharts view of their relative performance over the last year.

FIGURE 2. PERFCHARTS OF THE S&P 500, XLB, STLD, NUE, AND NEM. Though NEM outperformed, the other stocks and the Materials sector underperformed the broader market.Chart source: StockCharts.com. For educational purposes.

Global steel production decreased in 2024. So it’s no surprise that the Materials Select Sector SPDR Fund (XLB), our sector proxy, underperformed the S&P 500, and that many steel producers and miners would also underperform the broader market and sector. Interestingly, NEM outperformed the S&P 500, XLB, STLD, and NUE in 2024 due to surging gold prices, strong financial performance, increased gold production, and free cash flow.

Still, if the new tariff environment remains unchanged, then NEM and especially STLD and NUE may have plenty of room to run. Let’s take a look at the sector and all three stocks to see if there are any present trading opportunities.

Let’s start with XLB. Take a look at a 5-year seasonality chart of XLB to get some context.

FIGURE 3. 5-YEAR SEASONALITY CHART OF XLB.  Sector performance tends to follow a cyclical pattern, with March, July, and November historically seeing the highest close rates and average gains.Chart source: StockCharts.com. For educational purposes.

Geopolitical shifts under the new administration will likely reshape seasonal trends. Nevertheless, historical context remains valuable. Over the past five years, March has been XLB’s second-strongest month, with a 75% higher-close rate and an average gain of 4.8%. That’s the seasonality picture.

Now, let’s look at the price action from a longer-term trend perspective. Below is a weekly chart of XLB.

FIGURE 4. WEEKLY CHART OF XLB. While the Materials sector has lagged behind the S&P 500, it’s been trending upward nevertheless.Chart source: StockCharts.com. For educational purposes.

This five-year chart shows XLB underperforming the S&P 500. If you go back a few decades, this negative performance has been steady. Yet XLB, due to overall market growth, inflation, and sector-specific cycles, has been trending up in absolute terms.

Demand for materials is cyclical, and the Materials sector Bullish Percent Index ($BPMATE), a breadth indicator, illustrates this clearly. Currently, the BPI is moving upwards, with 31% of stocks within the sector flashing Point & Figure buy signals. Typically a crossover from below to above 30% would issue a bull alert; a move above 50% would strongly favor the bulls, signifying that buyers have the edge. Understanding XLB’s broader trend helps contextualize whether the stocks within the sector are moving with or against the sector’s trend relative to their trajectories.

Let’s look at the daily chart of NEM.

FIGURE 5. DAILY CHART OF NEM. Is it a new bullish trend or a bear rally?Chart source: StockCharts.com. For educational purposes.

NEM is attempting to recover from a steep selloff that began in October. The key question is whether the bullish reversal signals the start of a robust recovery or a temporary bounce within a sustained downtrend.

To gain insight into this question, let’s examine a couple of indicators: one that measures momentum and another that analyzes volume. Volume-wise, the Accumulation/Distribution Line (ADL) plotted behind the price shows strong money flow into the stock, its buying pressure supporting NEM’s recovery. The Commodity Channel Index (CCI) is showing strong bullish momentum, yet indicates that NEM may be sailing into overbought conditions.

The key levels to watch are near the top line (Leading Span B, red cloud) and the projected bottom line (also the Leading Span B, but in the green section) of the Ichimoku Cloud. If price declines at or near the top, but bounces at the bottom, the bullish reversal thesis remains intact, signaling a potential early buying opportunity for those looking to get into the stock. If prices fall below the bottom level, the downtrend is likely to resume.

Now let’s look at the domestic steelmakers on the list, starting with a weekly chart of STLD.

FIGURE 6. WEEKLY CHART OF STLD. The stock price looks like it’s in a volatile ascent.Chart source: StockCharts.com. For educational purposes.

I’m highlighting a weekly rather than a daily chart for two reasons: First, you can’t see the larger (trend) context on a daily chart, and second, the key levels are just as apparent in the weekly as in the daily chart.

Over the last six years, of which the last three are shown on the chart, STLD has been trending upward with increasing volatility. Steel production in the US may have decreased significantly in 2024, yet STLD prices continue to cumulatively rise. This trend underscores the inherent cyclicality of the steel industry, as evidenced by the fluctuating prices.

NOTE: Although “seasonality” and cyclicality can be related, the latter refers more to macroeconomic, industry, and supply-demand shifts. These typically drive fluctuations in a manner that gets smoothed out in seasonality charts. So, when I use the term “cyclicality,” I’m referring to these fluctuations before them being “averaged out” in a seasonality calculation.

The ZigZag line illustrates the major swing highs and lows that define the trend, as well as key support and resistance levels. If STLD’s uptrend were to maintain its trajectory, price must stay above the swing low level slightly above $110 (see magenta line) and eventually break above resistance at the most recent swing high at $155. Given this is a weekly chart, it may take months to play out (assuming the longer-term uptrend sustains itself).

Note, however, that the selling pressure appears to be the dominant driver for near-term volume, according to the Chaikin Money Flow (CMF). If volume precedes price in this particular instance, then a pullback may be imminent.

Last, but not least, take a look at a daily chart of NUE.

FIGURE 7. DAILY CHART OF NUE. The stock is in a downtrend and all the indicators spell a bear rally.Chart source: StockCharts.com. For educational purposes.

NUE may have jumped 6.24% on Monday, but what are investors rushing into? While Trump’s 25% tariffs on steel and aluminum imports are likely to boost domestic steel producers, NUE is amid an arguably robust downtrend.

Its response to the 61.8% Fibonacci Retracement (drawn from the December high to low) isn’t promising either, making the recent surge look more like a bear rally than a bullish trend reversal. Additionally, the CMF has remained largely negative, dipping well below the zero line and recently crossing it again, indicating that selling pressure continues to dominate.

However, there are shoots of hope, as NUE appears to be rising against the broader Dow Jones U.S. Iron & Steel Index ($DJUSST) of which NUE is a component (see magenta line). If NUE stays above the $115 level (the most recent swing low), then such a level may signal a bottom. Of course, you’ll want to make sure that volume and momentum support are aligned with this potential reversal.

At the Close

If you’re bullish on U.S. steel producers, consider adding these stocks to your ChartLists, keeping a close watch on the MarketCarpets Materials sector view, and staying informed on industry news. With these tools and insights, you’re likely to spot a market opportunity.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

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In World news

Why do Japanese government workers keep losing sensitive data while drunk?

4 Mins Read

Nights out drinking can often end badly. But in Japan, they have a habit of going spectacularly wrong for government employees – who on at least two occasions in recent years have lost sensitive personal data after a few too many beers.

An employee of the Finance Ministry’s customs and tariff bureau went drinking with a colleague after work last Thursday, in the city of Yokohama south of Tokyo, according to public broadcaster NHK.

Within five hours, the man had nine glasses of beer, it reported. It wasn’t until he had left the restaurant, gotten on a train and traveled home that he realized his bag – containing highly sensitive information – was missing.

The employee had received the documents at a meeting earlier that day, the ministry said. Also in the bag was the employee’s work laptop, containing personal information about the man and his colleagues.

The ministry apologized to the public for “damaging” their trust, promising to punish the employee, according to NHK. So far, there have been no reports that the lost information has been used illegally, it said.

It may sound like an astonishing blunder – but it’s not the first time something like this has happened.

In 2022, another government worker lost a USB flash drive containing the personal details of every resident of the city of Amagasaki, northwest of Osaka.

The man had fallen asleep on the street after drinking alcohol at a restaurant, and when he woke up, his bag containing the flash drive was gone, NHK reported at the time.

The flash drive contained the names, birth dates, and addresses of 465,177 people – the city’s entire population. It also contained sensitive information including tax details, bank account names and numbers, and information on households receiving public assistance such as childcare payments.

A culture of drinking, and retro tech

While these two incidents represent unusually embarrassing nights out, Japan has long been notorious for its heavy drinking work and office culture.

It’s not unusual to see groups of salarymen in business suits chugging beer at izakaya pubs late into the evening or slumped in the middle of the street after consuming too much.

Japan’s health ministry warned of the dangers of excessive drinking in 2021, calling it a “major social problem.”

These marathon drinking sessions serve to encourage business relations with colleagues and clients, often helping secure deals and curry favor in the workplace. But the heavy drinking habits are also a reflection of Japan’s grueling work culture – with employees traditionally working brutal hours under immense pressure with stagnant salaries.

Even as Japan’s government tries to ease the pressure – drafting legislation to prevent death and injury from excessive work hours, and introducing a four-day workweek for Tokyo government employees – old habits die hard.

Combine that drinking culture with Japan’s particularly old-fashioned preference for analog technologies and the risk increases of sensitive data going astray.

Japan’s bureaucratic systems are famously slow to change, with a reliance on technologies and systems that are obsolete in many other parts of the world – hence employees’ use of hard drives, paper documents and other easily-lost items.

This was highlighted in 2018 when the then cybersecurity minister shocked the public by saying he’d never used a computer – a claim he later walked back after it made international headlines.

The massive gap in modern technology became clear during the Covid-19 pandemic when the government’s efforts toward mass vaccination and testing revealed the inefficiencies of paper filing and other outdated systems, Reuters reported.

A digital agency was soon set up to overhaul the government’s internal systems. The new digital minister declared a “war on floppy disks” – which were only phased out across the government in 2024, long after other major economies and world leaders had stopped using them.

The agency has also targeted fax machines and traditional carved seals used instead of signatures to sign documents in Japan.

This post appeared first on cnn.com

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In Business

Google says U.S. is facing a power capacity crisis in AI race against China

4 Mins Read

The U.S. is facing a power capacity crisis as the tech sector races against China to achieve dominance in artificial intelligence, an executive leading the energy strategy of Alphabet’s Google unit said this week.

The emergence of China’s DeepSeek artificial intelligence firm sent the shares of major power companies tumbling in late January on speculation that its AI model is cheaper and more efficient. But Caroline Golin, Google’s global head of energy market development, said more power is needed now to keep up with Beijing.

“We are in a capacity crisis in this country right now, and we are in an AI race against China right now,” Golin told a conference hosted by the Nuclear Energy Institute in New York City on Tuesday.

Alphabet’s Google unit embarked four years ago on an ambitious goal to power its operations around the clock with carbon-free renewable energy, but the company faced a major obstacle that forced a turn toward nuclear power.

Google ran into a “very stark reality that we didn’t have enough capacity on the system to power our data centers in the short term and then potentially in the long term,” Golin said.

Google realized the deployment of renewables was potentially causing grid instability, and utilities were investing in carbon-emitting natural gas to back up the system, the executive said. Wind and particularly solar power have grown rapidly in the U.S., but their output depends on weather conditions.

“We learned the importance of the developing clean firm technologies,” Golin said. “We recognized that nuclear was going to be part of the portfolio.”

Last October, Google announced a deal to purchase 500 megawatts of power from a fleet of small modular nuclear reactors made by Kairos Power. Small modular reactors are advanced designs that promise to one day speed up the deployment of nuclear power because they have smaller footprints and a more streamlined manufacturing process.

Large nuclear projects in the U.S. have long been stymied by delays, cost overruns and cancellations. To date, there is no operational small modular reactor in the U.S. Google and Kairos plan to deploy their first reactor in 2030, with more units coming online through 2035.

Golin said the project with Kairos is currently in an initial test-pilot phase with other partners that she would not disclose. Kairos received permission in November from the Nuclear Regulatory Commission to build two 35-megawatt test reactors in Oak Ridge, Tennessee.

The goal is to get buy-in from partners like electric utilities to create an approach that can broadly deploy the technology, Golin said.

The nuclear industry increasingly views the growing power needs of the tech sector as a potential catalyst to restart old reactors and build new ones. Amazon announced an investment of more than $500 million in small nuclear reactors two days after Google unveiled its agreement with Kairos.

Last September, Constellation Energy said it plans to bring the nuclear reactor at Three Mile Island near Harrisburg, Pennsylvania back online through a power purchase agreement with Microsoft.

Golin said nuclear is a longer-term solution, given the reality that power capacity is needed now to keep up with China in the artificial intelligence race. “Over the next five years, nuclear doesn’t play in that space,” she said.

President Donald Trump declared a national energy emergency through executive order on his first day in office. The order cited electric grid reliability as a central concern.

Trump told the World Economic Forum in Davos, Switzerland that he would use emergency powers to expedite the construction of power plants for AI data centers.

Secretary of Energy Chris Wright issued an order on Feb. 5 that listed “the commercialization of affordable and abundant nuclear energy” as a priority.

This post appeared first on NBC NEWS

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