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Daily Update — March 25, 2025

EU Carbon Prices Rise; AI and Energy; and Stock Market Slump

Today is Tuesday, March 25, 2025, and here’s your curated selection of essential intelligence on global markets from S&P Global. Subscribe to be notified of each new Daily Update.

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Energy Transition & Sustainability

EU, UK carbon prices rise tracking gas, geopolitics, further ETS linkage talks

 

European carbon allowances rose in the week ended March 21, influenced by natural gas prices, geopolitical developments and technical market dynamics. UK carbon prices also increased for the second consecutive week, primarily due to discussions among UK officials about the potential integration of the UK emissions trading system with that of Europe. As of March 21, EU Allowances were trading at €73.04 per metric ton of CO2 equivalent, reflecting a roughly 3% increase from the previous week. Market participants expressed a bullish outlook on carbon prices, citing natural gas as a significant driver due to its critical status amid ongoing geopolitical tensions.

 

The market remained attentive to developments regarding a potential ceasefire between Russia and Ukraine, particularly following Russian President Vladimir Putin's order for a temporary halt in attacks on Ukraine's energy infrastructure. This geopolitical context contributed to fluctuations in natural gas prices, which rose following an explosion at a key metering station on the Russia-Ukraine border.

 

Explore Platts Carbon Credit Assessments. Platts is a part of S&P Global Commodity Insights.

Artificial Intelligence

Listen: AI and energy: The big picture

 

AI and cloud services growth is driving up US electricity needs, creating a supply-demand imbalance that will require innovations in grid technology, a balance between datacenter expansion and power infrastructure, and cross-sector coordination to mitigate environmental impacts.

 

In today’s rapidly evolving landscape, AI is a transformative force revolutionizing business, the economy and society. The disruption created by AI and generative AI presents an opportunity for leaders to drive innovation and solidify their position on AI’s opportunities and risks. Watch all sessions from our recent event, AI in the Markets. 

Economy

Stock market slump offers potential cure to stubbornly high US inflation

 

Persistent spending by the US’ wealthiest consumers has contributed to sustained inflation, complicating the Federal Reserve's efforts to manage price increases. However, a recent decline in the equity market, with the S&P 500 dropping over 10% in mid-March from its February peak, may offer a potential solution. Economists suggest that this downturn could significantly impact high-income households as they have an outsized stake in this market. If these households reduce their spending in response to the market slump, it could lead to decreased demand and, consequently, lower inflation, aligning more closely with the Fed's target of a 2% annual increase.

 

This phenomenon is explained by the "wealth effect," where rising asset values lead consumers to feel more financially secure and, in turn, increase their spending. Recent data indicates that personal expenditures among the top 10% of income earners surged nearly 26% from the third quarter of 2022 to the third quarter of 2024, while spending among the remaining 90% of households rose only 14%. The significant stock market rally, which saw the S&P 500 increase by almost 175% to its February 2025 high from its March 2020 low, also bolstered the confidence of wealthier households, allowing them to spend more freely.

In case you missed it

  • Pakistan plans to export over 160,000 metric tons of fuel oil in March, industry sources said, as the country's oil refineries aim to reduce stockpiles amid weak domestic demand.
  • March Madness generates over $1 billion in ad sales, underscoring the vital role of live sports in the linear TV ad market. The “MediaTalk” podcast highlights why marquee sporting events like this are indispensable for networks, especially as other ad markets face challenges.
  • Easing interest rates will support Finnish and Norwegian households' sound debt servicing capacity. In both markets, S&P Global Ratings projects house prices to recover in 2025.

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