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FINWIRES

IMF Warns Government Fuel Tax Cuts Impede Inevitable Consumption Cuts Amid Supply Disruption

-- Shielding consumers from high energy prices is "fiscally expensive" and delays consumption cuts, the International Monetary Fund stated Friday in comments that fly in the face of government efforts to soften the blow of fuel price surges.

It has warned European governments that broad energy subsidies are distorting market signals and delaying necessary consumption cuts.

In a new technical briefing published on Friday, the IMF urged a pivot to targeted support to preserve fiscal discipline as the Middle East conflict chokes global supplies.

The organization argued that broad-based subsidies are sabotaging global efforts to stabilize energy markets.

Alfred Kammer, Director of the IMF's European Department, noted that while price caps and fuel tax cuts are politically popular, they create a dangerous "demand rigidity."

By artificially lowering prices, governments prevent the very consumption cuts needed to balance a global supply chain that has seen zero new tankers loaded in the Middle East throughout March.

"Excessive shielding distorts the price signal to cut consumption," the IMF stated in its regional assessment.

The Fund emphasized that if demand does not fall in response to the Strait of Hormuz closure, energy prices will remain "higher for longer," potentially pushing the Eurozone into a deep recession with inflation nearing 5%.

This warning coincides with a bleak outlook from IEA Chief Fatih Birol, who reportedly said that it will take two years to restore Middle Eastern energy output to pre-war levels.

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Australia

Intel Poised for 'Slight Beat' Amid Solid Server CPU Demand, RBC Says

Intel (INTC) is expected to report a "slight beat" in its fiscal first-quarter results amid robust server central processing unit demand, RBC Capital Markets said in a note e-mailed Tuesday.On Thursday, the chipmaker is likely to post adjusted per-share earnings and revenue above RBC's projections for breakeven and $12.20 billion, respectively, for the March quarter, according to the brokerage. The current consensus on FactSet is for non-GAAP EPS of $0.02 and sales of $12.42 billion."We expect a slight beat/raise driven by strong server CPU demand," RBC analyst Srini Pajjuri said. "(Personal computer) market also appears to be holding up for now."First-quarter revenue in the company's data center and artificial intelligence segment is pegged at $4.3 billion, representing a 3% annual gain, with room for potential upside, according to RBC."While demand remains strong, management expected internal wafer supply constraints to be most acute in (the first quarter) which could limit near-term upside," Pajjuri wrote. "Recent media reports point to Intel raising prices which should help."For the current quarter, RBC expects Intel to issue an outlook above Wall Street's estimates of $13.1 billion in revenue and adjusted EPS of $0.09, driven by server CPU demand and improving wafer supply.The data center and AI business is projected to see sequential growth of 10% in the second quarter, with RBC seeing potential upside amid improving supply and healthy pricing. The brokerage expects server demand to continue to benefit from agentic AI and sees industry supply remaining "tight" through 2026, it said in the note.RBC maintained its sector perform rating on Intel's stock with a $48 price target.The company's shares were up 0.3% in Tuesday afternoon trade, bringing its year-to-gains to nearly 79%.Last year, the US government agreed to invest $8.9 billion in Intel's common stock as part of a deal to secure a stake in the company. Separately, Nvidia (NVDA) agreed to inject $5 billion in Intel under a collaboration that aims to develop new data center and PC chips.Price: $66.04, Change: $+0.34, Percent Change: +0.52%

$INTC$NVDA
Australia

Scholastic Reports Preliminary Results of Dutch Auction Tender Offer

Scholastic (SCHL) on Tuesday announced preliminary results from its modified Dutch auction tender offer, which closed on Monday.The company said that shareholders tendered a total of about 2.85 million shares at or below the $40 per share purchase price, including about 1 million shares that were tendered by notice of guaranteed delivery.Based on the preliminary count, Scholastic expects to purchase all properly tendered shares at $40 each, for a total cost of about $114.1 million, excluding fees and expenses, it added.The company said that following completion of the offer, it expects nearly 17.9 million shares to remain outstanding, representing a reduction of about 13.7% in its share count.Shares of Scholastic rose 2.3% in the session.Price: $40.69, Change: $+0.93, Percent Change: +2.34%

$SCHL
Sectors

Sector Update: Financial

Financial stocks were declining in Tuesday afternoon trading, with the NYSE Financial Index decreasing 0.7% and the State Street Financial Select Sector SPDR ETF (XLF) off 0.6%.The Philadelphia Housing Index was adding 0.6%, and the State Street Real Estate Select Sector SPDR ETF (XLRE) fell 1.8%.Bitcoin (BTC-USD) was decreasing 0.9% to $75,117, and the yield for 10-year US Treasuries was rising 5 basis points to 4.30%.In corporate news, Coinbase (COIN) and Gemini Titan have been sued by New York Attorney General Letitia James for allegedly violating the state laws against against illegal gambling with their prediction markets, Reuters reported, citing complaints filed in a state court in Manhattan. Coinbase shares fell nearly 7%.

$COIN