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Copper prices set to rise on the back of a weaker dollar and tariff concerns
London and Shanghai copper were set to post weekly gains on Friday. This was largely due to a declining U.S. Dollar and the persistent concern over potential U.S. Tariffs on Copper Imports. As of 0101 GMT the London Metal Exchange (LME), three-month copper fell 0.19%, to $9,881 per ton, after reaching $9,913.5 at its highest level since March 27. It was up by 2.58% over the past week. After reaching 79.900 yuan or its highest level since April 1, the Shanghai Futures Exchange copper price rose by 1.32%, to 79.780 yuan. The copper price rose by 2.03% over the past week. Copper prices are being driven higher by topics that everyone is interested in, such as a weaker US dollar, the continued flow of copper from the LME to the U.S. on the possibility of a U.S. import tariff on copper, and concerns about supply shortages elsewhere. The dollar fluctuated on Friday and hovered near its lowest levels in 3-1/2 year against the euro, sterling, and other currencies, as traders bet on further U.S. interest rate cuts, while waiting for trade agreements ahead of President Donald Trump’s July tariff deadline. The greenback is less expensive to buyers of other currencies. The LME Cash Copper Contract Premium over the Three-Month Contract The price of copper on the Comex rose to $1.403 per ton or its highest level since April 25, and the premium between Comex and LME copper also increased. LME nickel dropped 0.26%, to $15,170 per ton. Zinc fell 0.18%, to $2,763. SHFE tin increased 1.52% to 270670 yuan per ton. Aluminium gained 1.32% at 20,650 yuan. Zinc was up 1.26% at 22,435 Yuan. Lead rose 0.23% to 17245 Yuan. Click or to see the latest news in metals, and other related stories. Final June 1230 US Consumption, Adjusted MM May 1230 US Core PCE Price Index YY MM May 1400 U Mich Sentiment Final ($1 = 7.1707 Chinese yuan) (Reporting by Hongmei Li; Editing by Harikrishnan Nair) Final June 1230 US Core PCE Price Index, YY,MM May 1230 US Core PCE Price Index, MM,YY May 1400 US U. Mich Sentiment Final ($1=7.1707 Chinese Yuan) (Reporting and Editing by Harikrishnan Nair).
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US reserves will not be fully stocked until the end of the year
According to the Department of Energy, scheduled crude oil deliveries into the Strategic Petroleum Reserve will be delayed until the end of this year because of maintenance. This is up to seven months behind schedule. From January to May, the administration of former President Joe Biden planned deliveries of 15.8 million barrels to the SPR. Only 8.8 million barrels of this total have been delivered so far in the current year. A spokesperson for the Energy Department said that due to maintenance on site, SPR rescheduled all crude oil from previous solicitations as well as any exchanges through December 2025. Biden sold 180 million barrels of oil in 2022 - the biggest ever sale - in order to try and control the rising gasoline prices following the Russian invasion of Ukraine. On his first day as president in January, Donald Trump promised to fill up the SPR to "the top" in order to support the domestic petroleum industry. But it takes time. Chris Wright, the Energy Secretary, estimated that it would take 20 billion dollars and many years to replenish the reserve back to its level before the sales. Trump's tax and spending bill allots $1.5 billion to purchase SPRs and maintain them. Wright also criticised Biden for his large-scale sale of the reserve. He said it had caused damages of hundreds of millions. When asked for a breakdown of those damages, his department said the 180 million barrel sale resulted in $2 million in emergency repairs, $35 million in costs to move the oil and $243 million in costs from delays to congressionally-directed maintenance. Biden's DOE said at the time that it bought back 59,000,000 barrels of oil for the SPR at an average price less than $76 per barrel. This was a significant discount to the $95 per barrel it sold in 2022. Biden's DOE reported at the time that this resulted in an estimated $3.5 billion profit. (Reporting and editing by Muralikumar Anantharaman, Jamie Freed and Timothy Gardner in New York)
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Dollar weakens but shares rise as Fed's independence is threatened
Asia shares reached their highest level in over three years on Friday, as they followed a Wall Street rally. However, the dollar suffered on fears about the Federal Reserve’s independence and on expectations of early rate cuts. The stock indexes around the world are expected to close the week in a positive manner, as worries over tensions in the Middle East along with uncertainty about tariffs and trade agreements have been put on hold for the time being. Early in the session, MSCI's broadest Asia-Pacific share index outside Japan reached its highest level since November 20, 21. It was last trading 0.2% higher, and it is expected to post a 3% weekly gain. Japan's Nikkei rose 1.5%, and the index surpassed 40,000 for the first time since five months. The news that Washington and Beijing had reached an agreement on how to expedite the shipment of rare earths to the United States was one reason for the positive mood. U.S. Treasury secretary Scott Bessent said also on Thursday that after Washington reached an accord with the Group of Seven industrialized countries, he had asked Republicans to remove Section 899 of their tax and spending bills. When that provision was adopted by the House, it made some investors nervous, particularly foreign investors. If that provision is removed, it will ease one of the fears of foreign investors, said Khoon Gh, head Asia research at ANZ. The positive market sentiment we are experiencing is a result of the accumulation of all these... positive developments. The European futures market also saw gains, with the EUROSTOXX50 futures and DAX Futures both rising by 0.6%. The FTSE Futures rose by 0.16%. U.S. Stock Futures are little changed even though Wall Street closed at record highs on Thursday, supported further by the expectation of imminent Fed rate reductions. FED CUTS COMING The Wall Street Journal reported on Tuesday that U.S. president Donald Trump had toyed with the notion of appointing and announcing the replacement for Fed Chair Jerome Powell by September or Oct. The dollar was further weakened as traders worried about the erosion of Fed's independence, and began to price in additional rate cuts for this year. The dollar was near its lowest level in three-and-a half years on Friday, and it was heading for a weekly loss of 1.4%. This would be the largest drop since over a month. The greenback has already fallen more than 10% for the year. If it continues to fall in the coming days, this will be the biggest half-year drop since the beginning of the free-floating currency era in the early 1970s. The euro, against a weaker US dollar, was at its highest level in more than three years. It stood at $1.1688. The pound rose by 0.03%, to $1.3730. "Trump's wish to'shadow,' the Fed by using a designated successor for Chair Jay Powell, isn't a great way to promote perceptions of autonomy and integrity in U.S. Policymaking, and, by extension that of reserve currency status for the U.S. Dollar," said Thierry Witzman, global FX rates strategist at Macquarie Group. The Fed's bet on a Fed cut has increased due to a series of economic data that were weaker than expected. Attention is now focused on the release of Friday's core PCE Price Index, the U.S. Central Bank's preferred inflation measure. The yields on U.S. Treasury bonds were unchanged in Asia, after falling in the previous session. The two-year yield was at 3.7418%, and the benchmark 10-year rate at 4.2554%. Oil prices are set to decline by a week's end, as the ceasefire between Israel and Iran continues. This has eased concerns about Middle East supply. Brent crude futures rose 0.41% to $68.01 per barrel, while U.S. oil rose 0.46% at $65.53 a barrel on Friday. However, both crudes are headed for a drop of more than 10% in the coming week. Spot gold dropped 0.23%, to $3320.25 per ounce.
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Weekly oil loss due to fading Mideast supply risk
The price of oil is expected to drop this week as the Iran-Israel ceasefire holds and eases concerns about Middle East supply risk. However, prices increased on Friday due to the summer driving season in the United States. Brent crude futures were up 34 cents or 0.5% to $68.07 per barrel at 0111 GMT. U.S. West Texas Intermediate Crude gained 33 cents or 0.51% to $65.57 per barrel. The benchmarks had been set to drop about 12% in a week. Tuesday, oil futures fell to their lowest level in over a week after U.S. president Donald Trump announced that a ceasefire agreement had been reached between Iran and Israel. The price of oil rose slightly on Thursday as U.S. government figures showed that crude oil and fuel stocks fell last week and demand and refining activity increased. The market is beginning to realize that crude oil stocks are extremely low, said Phil Flynn. Senior analyst at Price Futures Group. The dollar index also fell to its lowest level in three years on the back of a report that Donald Trump planned to select the next Federal Reserve Chief early. This fueled new bets about interest rate reductions in the United States. Oil becomes cheaper for holders of currencies other than the dollar, which increases demand and supports prices. Benjamin Netanyahu, the Prime Minister, said that before the oil prices settled on Thursday he was confident his country would not miss out on peace opportunities. He also mentioned that there were still supply risks. (Reporting and editing by Tom Hogue; Nicole Jao)
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McGeever: A hawkish Fed can cause the biggest "pain trades" on markets.
Financial markets are in limbo as the first half of this year ends. They're waiting to see if the global trade deal kaleidoscope will come together - or not - after July 9 when Washington's "reciprocal" tariffs expire. Which trades are most at risk if investors get caught off guard? Today's market is in a state of suspended animation. This is an incredibly bullish situation. The U.S. forecasts for growth are increasing, S&P earnings growth estimates are running at 14% next year, and corporate deal-making has picked up. World stocks are also at record highs. It seems that the uncertainty following President Donald Trump’s "Liberation Day", April 2, tariffs is a distant past. The relief rally raged for almost three months and only took a short pause during the 12-day conflict between Israel & Iran. Some might even say it's too rosy. What will be the "pain trades", if we see a decline? Unsurprisingly, the major pressure points occur in asset classes and on markets where sentiment and positioning are heavily skewed in one direction. A sudden price change can cause too many traders to rush out of the market at once. Bank of America's global fund manager monthly survey is a good way to identify positions that are overloaded. According to the Bank of America's June survey, long gold is the most popular trade right now (according 41% of respondents), followed by long "Magnificent Seven Tech Stocks" (23%), and then short U.S. Dollar (20%). These three trades are popular because they have proven to be highly profitable. The "Mag 7", a basket of Nvidia shares, Microsoft, Meta, Apple and Alphabet, as well as Amazon and Alphabet, accounted for more than half of S&P 500’s 58% return over two years in 2023-2024. The Roundhill "Mag 7" ETF, which is equal-weighted, has risen 40% in the past year. This week, the Nasdaq 100, a market index that includes these seven companies, reached a new high. Gold prices have nearly doubled over the past two and a half years. They reached a record-breaking $3,500 per ounce in April. The dollar has fallen 10% in this year and is on course for its worst half-year since the establishment of the free-floating rate system more than 50 year ago. Slash and... BURN? These three positions are a derivative of a fundamental bet. The belief that the Federal Reserve is likely to cut U.S. rates substantially over the next 18-month period, which would turn all of these positions into moneymakers. Rates futures markets are increasing their bets for lower rates despite the Fed's revised projections of economic growth last week being notable for their hawkish tone. This is largely because several Fed officials have made dovish remarks and oil prices have fallen sharply. The traders now predict 125 basis point rate cuts before the end of next. Morgan Stanley's economists are even more pessimistic, predicting no change in the forecast for this year and 175 basis point cuts for next year. This would bring the Fed funds rate down to between 2.5% and 2.75%. A reduction in borrowing costs is especially beneficial for companies with high growth potential, such as Big Tech. In theory, low rates would also be good for gold as it is a non-interest bearing asset. On the other hand, it is difficult to imagine a scenario where the economy continues to grow, boosting equity performance, and the Fed also cuts rates by 175 basis points. A Fed that eases at this speed and scale would almost certainly be trying to quell a raging fire in the economy, which is most likely a recession or severe slowdown. Risk assets may not necessarily crash in this environment, but overextended positions will be exposed. This isn't a first for investors to have bet on Fed cutbacks in the last three years. However, we haven't seen a major crash as a consequence. The markets have fared better than most observers predicted, and reached new highs. If "pain trading" does emerge in the second part of the year, this will be due to one particular sore spot: A hawkish Fed. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X.
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US announces it has reached an understanding with China to accelerate rare earth exports
A White House official announced on Thursday that the United States and China have reached an agreement on how to expedite the shipment of rare earths to the United States. This comes amid efforts to resolve a trade dispute between the two world's largest economies. China agreed to remove non-tariff measures imposed on the United States from April 2 during talks in Geneva in May, although it is unclear how certain of these countermeasures would be removed. China has added rare earths as part of its response to the U.S. tariffs announced recently by President Donald Trump. A White House official announced on Thursday that "the administration and China have agreed to an additional agreement for a framework in order to implement the Geneva Agreement". Officials said that the understanding was "about how to expedite rare earth shipments into the U.S. once again". Bloomberg quoted U.S. Commerce Sec. Howard Lutnick as saying: "They will deliver rare earths" and "we will take down our countermeasures" once they have done that. The Chinese embassy in Washington has not responded to a comment request immediately. Reporting by Nandita BOSE and Steve Holland, writing by Costas PITAS; editing by Chris Reese
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DNOW acquires MRC Global for $1.5 billion in all-stock deal
DNOW, a supplier of industrial and energy products, announced on Thursday that it will buy MRC Global for $1.5 billion in stock plus debt. The combined company will have over 350 service and distributor locations in 20 countries. It will serve customers from the gas utility sector, upstream, middlestream and downstream. The acquisition is part of the ongoing consolidation within the oilfield service and industrial supply sectors, where companies are combining to increase geographic reach, expand product offerings, and improve operational efficiency. MRC Global distributes pipe, fittings and automation products primarily to the energy, utility, industrial and industrial markets. According to calculations, MRC Global shares will be exchanged for 0.9489 DNOW shares, resulting in a deal value per share of $13.85 - a 6.8% premium. DNOW shares also rose 1.9% in extended trading. The deal will close in the fourth-quarter of 2025. DNOW shareholders are expected to own 56.5%, and MRC shareholders 43.5%, of the new entity. The deal is expected to save the companies $70 million annually in three years due to supply chain efficiency, system integration, and cost savings for public companies. The deal will also be expected to increase adjusted earnings per share within the first year of closing. DNOW CEO David Cherechinsky is the new leader of the combined company. It will continue to be operated under the DNOW brand and will remain headquartered in Houston. The DNOW board will be expanded to 10 members by the addition of two MRC Global directors. (Reporting by Arunima Kumar in Bengaluru; Editing by Mohammed Safi Shamsi)
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UN Climate Budget to be Increased by 10%
The U.N. Climate Body's budget will be increased by 10% over the next two-year period. This is a positive step for the organization, as it shows a willingness to collaborate on the issue of climate change. China's contribution has also been raised. Nearly 200 countries, from Japan to Saudi Arabia to small island countries like Fiji, reached a deal at the U.N. Climate Negotiations in Bonn. This agreement came despite significant funding cuts in other U.N. organizations, which were triggered by U.S. cutting its contributions and political pushback against ambitious climate policies by European countries. The countries agreed on a budget core of 81.5 millions euros for the United Nations Framework Convention on Climate Change over 2026-2027. This is an increase of 10% from 2024-2025. The core budget is funded through government contributions. China's contribution has been increased to reflect the economic growth of the country. China, which is the second largest economy in the world, will cover 20% of the budget. This is up from 15%. Only the United States as the largest economy in the world received a higher share of 22%. Donald Trump, however, resigned from the U.N. Paris Climate Agreement and stopped international climate funding. Bloomberg Philanthropies pledged to cover U.S. contributions to UNFCCC budget. The U.S. didn't attend the U.N. Climate talks in Bonn this week, Germany, where the budget has been approved. UN climate chief Simon Stiell welcomed this increase as a "clear signal that governments still see U.N. convened climate collaboration as essential, even during difficult times." UNFCCC facilitates annual climate negotiations between countries, and assists in implementing agreements made. This includes the 2015 Paris Agreement which committed nearly all nations towards limiting global warming. In recent years the organization has suffered a severe financial shortfall due to major donors such as China and the U.S. not paying on time. This led the organization to reduce costs, including canceling some events. UNFCC running costs and staffing are lower than other U.N. agencies facing funding cuts. For example, the U.N. Trade and Development Agency's 400 staff. According to a memo, the U.N. Secretariat is planning to cut its budget of $3.7 billion by 20%. (Reporting and editing by Toby Chopra; Reporting by Kate Abnett)
Extinction rebellion briefly occupies BNP Paribas' entrance during TotalEnergies protest
Around a dozen climate activists from Extinction Rebellion briefly occupied the lobby entrance of the French bank BNP in Paris, Friday morning. They were protesting against BNP's alleged links with TotalEnergies which held its annual shareholders' meeting that afternoon.
Some protesters wearing white masks shouted slogans briefly and tossed fake money around before the police forced them out.
Extinction Rebellion stated in a press release that the action was part a campaign to target TotalEnergies, and its partners.
The article said that several NGOs were criticizing TotalEnergies for not putting the "Say on Climate", or climate strategy, questions to a vote at the shareholder meeting. It also said that this was part "of the fossil fuel industry’s unabashed retreat on its human- and environmental-related commitments."
TotalEnergies announced earlier this year that it would not allow investors to vote on its sustainability report progress and would only consult shareholders if the strategy changes. Instead, the company will hold a debate on climate change during its shareholders meeting.
TotalEnergies stated on Friday that it respects the freedom of speech and protest, but also deplores any form of violence.
BNP Paribas condemned the "aggressive actions of Extinction Rebellion" and all forms physical violence.
BNP Paribas has stated that it is committed to supporting energy transition, and that all new funding that BNP Paribas provides to the energy sector will be almost exclusively allocated to low-carbon sources of energy.
TotalEnergies shareholders meeting began on Friday in Paris, La Defense.
Extinction Rebellion announced that activists would gather in the afternoon at "a symbolic Parisian location" for a "Counter General Energy Assembly," but did not name the location. Reporting by Lucien Libert and Nicolas Coupe; Writing by GV de Clercq
(source: Reuters)