Latest News
-
The Trump tariff pause has led to a rebound in copper prices, but there is still concern about China.
After the U.S. suspended most tariffs for 90 days, copper and other base metals saw a sharp rebound on Thursday. Some investors were concerned about the rally because U.S. president Donald Trump escalated the trade war against top metals consumer China. The benchmark three-month copper price on the London Metal Exchange LME rose 3.6%, to $8.926 per metric tonne at 0945 GMT. On Monday, volatile LME copper fell to $8,105 per ton, down from its peak of $10164.50 on March 26. This was the lowest price in over nine months. Trump has paused most of the heavy duties he just imposed, which gave a boost to the financial markets. However, he increased tariffs on Chinese goods to 125%, up from 104%, the level at which they were introduced on Wednesday. Carsten Menke, an analyst at Julius Baer Zurich, said: "This is a typical knee-jerk financial market reaction." The relationship between China and the US is still a problem in industrial metals. We haven't seen much improvement there." He said that U.S. importers had pre-bought Chinese products in recent months, anticipating tariffs. There will therefore be a hangover. Your purchasing manager at Walmart would say that we are fully stocked. This is especially true if you don't have a clue about the direction of your own economy. So, I believe we will see a softening of demand for industrial metals in the coming months. The Shanghai Futures Exchange's (SHFE) most-traded contract for copper gained 3.9%, reaching 75,300 yuan per ton ($10,254.66), after hitting an eight-month-low on Wednesday. The data released on Thursday showed that the Chinese economy is still in a fragile state. Consumer prices dropped for the second consecutive month in March, while deflation at factories increased. ($1 = 7.3430 Chinese yuan renminbi) (Reporting by Eric Onstad;Editing by Elaine Hardcastle) ($1 = 7.3430 Chinese Yuan Renminbi)
-
UK energy regulator to reject penalty exemptions for National Grid and SP Energy joint venture
Ofgem, the British energy regulator, said that it did not think an electricity transmission project by National Grid Electricity Transmission & SP Energy Networks qualified to be exempted from penalties related delays. A joint venture between National Grid units and Iberdrola, a Spanish company, had asked for a 480 day exemption from penalties in relation to delays in the completion of the Eastern Green Link 1 due to global supply-chain issues and capacity shortages. The project includes subsea cables and underground cables that link Scotland with north-east England. It is an important part of Britain’s goal to decarbonise the electricity sector by 2030. Ofgem, however, said that it would consider denying the request because supply issues were not present at the time the EGL1 bid was made and the companies had taken measures to reduce the impact of these constraints. Ofgem approved a funding package of 2 billion pounds ($2.57billion) for the project back in November. The regulator stated that construction of EGL1 started in March, and now expects it to be completed in April 2029. This is 16 months behind schedule, which will result in penalties of four months for Output Delivery Incentive. Financial incentives are used to promote timely and efficient delivery of projects. If projects are not delivered on time, a fine of up to 10 percent of the total project cost can be imposed. The joint venture will be exempted from penalties for delays if approved until April 25, 2020. Currently, it is exempted until December 31, 2020. EGL1 will be providing further evidence during Ofgem’s consultation period on supply chain issues, including the impact of delivery times. Raechel Thankam Job in Bengaluru and Shashwat awasthi, editing by Janane Venkatraman, Saad sayeed.
-
Kazakhstan warns that investment could shrink due to a 'global storm'
Kassym Jomart Tokayev, the Kazakh president, said that he has instructed his government urgently to complete work on a new plan to protect Central Asia from global economic shocks. Kazahstan, the only Central Asian country targeted by President Donald Trump, was subjected to additional tariffs of 27 percent earlier this month. Despite Trump's Wednesday reversal of many of the heavy duties, the countries still face a tariff of 10%. Kazakhstan is also vulnerable to falling oil prices, as the U.S. continues to put pressure on China. Kazakhstan is among the top 10 oil producing countries in the world. According to the World Bank, its economy grew 4% in 2012. Tokayev was quoted as saying, "The current events in the world could be a sign of an economic storm around the globe," by the government's press service on Thursday. "This will affect all countries including Kazakhstan." We must be prepared for any situation, and act pragmatically and confidently. According to the U.S. Trade Representative, the total goods trade between Kazakhstan & the U.S. will reach $3.4 billion by 2024. Kazakhstan's Central Bank raised its key rate of interest to 16.5% during its March meeting, while annual inflation was 10% last month. Tokayev stated that the government is working to ensure that its development agenda will stay on track, but warned of possible difficult days ahead. "There will be a battle for investment in the current climate." He was quoted saying, "We need to be very well prepared here." (Reporting and writing by Mariya Goreyeva, editing by Kate Mayberry).
-
Stocks rally in relief after Trump's tariff pause
On Thursday, global shares surged after U.S. president Donald Trump announced he would temporarily reduce the heavy duties he just imposed on several countries. In a shocking reversal, Trump announced on Wednesday that he would pause many of his new tariffs for 90 days following a market crash which erased trillions from global stocks. George Lagarias is the chief economist of Forvis Mazars. He said, "You have had a relief rally since realising that the market pressure resonates with President Obama." Lagarias said, "The main takeaway is that there will be limits and thresholds which he (Trump), will probably respect." Trump's reversal has pushed stocks higher around the world, beginning with a 9.5% rise in the S&P 500 index on Wednesday. The European stock market is following suit. The STOXX 600, the pan-continental index of global stocks, is up 5.3% and on course to its largest one-day increase since March 2020. The major indexes of London, Paris, and Frankfurt have risen between 4.1% to 5.6%. In Asia, Japan’s Nikkei gained more than 8% while a broad gauge of Asia-Pacific shares excluding Japan gained 4.4%. Wall Street futures have taken a break after the rally as investors try to understand the economic policies of the U.S. government. The world's political and financial leaders are looking with horror and not amusement at a government that prioritizes the signing of a executive order to increase the water power in shower heads on the day the bond market crashes and investors doubt the long-term credibility of the administration after it has flipped-flopped the biggest of its policies, tariffs," Martin Whetton said, Westpac's head of financial markets. Nasdaq Futures dropped 2%, while S&P500 futures declined 1.7%. In the Wednesday cash session, both indexes posted their largest daily percentage gains for more than a decade. The dollar fell around 0.9% against the Swiss franc and the yen, not sustaining its previous jump. Khoon Goh is the head of Asia Research at ANZ. He said: "I believe the initial move was simply massive short covering, and this gave the world a little breathing space. Except for China...because markets started to price the worst-case scenarios." Trump's decision to reverse the tariffs on specific countries is not final. The White House announced that a 10% blanket duty will continue to be applied to almost all U.S. imported goods. This announcement does not seem to affect existing duties on steel, aluminium and autos. He said he would also increase the tariffs on Chinese imports from 104% to 125%, which came into effect Wednesday. China raised the additional duties on American goods to 84% on Wednesday and imposed restrictions against 18 U.S. firms, mostly in defense-related industries. Investors, however, have a limited view of the latest escalation in Sino-U.S. Trade tensions. They are focusing on the 90-day window Trump granted to dozens countries. Hong Kong's Hang Seng Index rose 2%, while China's CSI300 blue chip index rose by 1.3%. Wong Kok Hoong is the head of Maybank's equity sales trading. The China + 1 route is still intact. "As the tariffs on the rest of world are 10% for 90 days and companies/businesses will have the time to adjust their supply chain routes." The onshore yuan is still at its lowest level since December 2007, 7.3518 dollars. The People's Bank of China set the midpoint, or the rate at which the yuan can trade within a 2% range, prior to the market opening. This is the lowest since September 11, 2023. BONDS SALE The steep drop in U.S. bond prices this week showed signs of slowing down on Thursday. The benchmark 10-year Treasury rate dropped by 10 basis points to 4.2985% after reaching a high of 5.150% the previous session. Fears of fragility on the world's largest bond market were reignited by a violent U.S. Treasury sale in previous sessions. The "sprint for cash" reminiscent of the COVID era had rekindled fears. Lagarias, a Forvis Mazars analyst, said: "It is sensible to discount risk assets in the United States by a certain amount." German Bunds, the only safe haven on the bond market, were sold off Thursday. The 10-year yield rose 8 basis points to 2.659%, while the 2-year rate rose 14 basis points to 1.855%. Investors worried about the continuing growth shock caused by the worsening Sino/U.S. Trade War, drove oil prices down elsewhere. Brent crude futures fell 2.3% to $63.97 a barrel while U.S. Crude dropped 2.2% to $60.95. Spot gold continued to climb, and it was up by 0.9% last at $3.109 an ounce.
-
Some China producers begin maintenance due to the falling alumina prices
The falling prices are causing Chinese alumina manufacturers, who rushed to increase capacity last year after prices surged due to a shortage of bauxite as a raw material, to be squeezed. Some have shut down their capacity in April for maintenance. Alumina prices on the Shanghai Futures Exchange have fallen by almost half since their December 4 record. This is due to expanded capacity of the key ingredient in aluminium production and the eased supply of bauxite. Mysteel, a provider of information, predicts that China's alumina production capacity will increase by 20% this year, or 19,8 million metric tonnes. Mysteel's data shows that 60% of the existing capacity operates at a loss, averaging around 300 yuan per ton. Research firm Aladin reported that small-scale maintenance was carried out in April to reduce alumina output by around 5% in comparison to March. This will be mainly in Shanxi province and Shandong provinces where there is insufficient bauxite locally, forcing producers to import more expensive bauxite. According to Mysteel, China's alumina production rose by 1% from March 2024. Analysts and traders say that despite the fact that alumina refineries are reliant on long-term contracts with aluminium melters, it is unlikely they will make large-scale cuts this year. Our long-term customers would find another supplier if we started maintenance to reduce production. We'd also lose our credibility, said a trader at a medium-sized alumina refining plant, who declined to be identified as he was not authorized to speak to media. Alumina prices are also being pushed down by the increased supply of bauxite. Customs data revealed that bauxite imports into China increased by 26% in the first two month of this year. Zijin Tianfeng Futures stated that the 40 million ton expansion of bauxite production planned for this year by Guinea and Australia would be more than enough to offset the 14 millions tons lost last year due Guinea Alumina Corp suspending bauxite imports.
-
New Zealand and Australia discuss free trade with EU and others
New Zealand and Australia announced on Thursday that they were each working with other countries on a potential joint response to bolster free trade in the face of a barrage U.S. Tariffs. Christopher Luxon, the New Zealand Prime Minister, said that he spoke with leaders from Singapore, Vietnam, and Malaysia as well as with the head of the executive of the European Union about international trade. Luxon, in a speech he gave on Thursday, floated the idea that members of the European Union and Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP) could work together. The global trade system has been upended after U.S. president Donald Trump announced last week sweeping tariffs on dozens countries. Some of these countries responded with retaliatory duties, causing massive volatility on the markets. On Wednesday, Trump announced a dramatic reversal. He would suspend for 90 days the high tariffs that he had placed on many countries. Penny Wong, Australian Foreign Minister, said that government ministers have held discussions with Southeast Asian countries, Japan, Korea and India about a possible joint response to Trump’s tariffs. In an interview with ABC, she stated that "there is a group who sees the benefits of free, open and fair commerce." Luxon stated in posts to X that he had separate phone conversations with Singapore Prime minister Lawrence Wong and Vietnamese Prime Minister Pham Minh Chinh, as well as Malaysian Prime Minister Anwar Ibrahim, about bolstering free trade based on rules to stimulate economic growth. He also said that he spoke with Ursula von der Leyen, President of the European Commission about "what EU and New Zealand could do together to support trade rules which underpin Kiwi jobs and New Zealand growth". New Zealand, Singapore and Malaysia are all members of CPTPP. Other countries include Australia, Canada and Chile as well as Japan, Mexico, and Britain. Luxon had earlier said in an address to the Wellington Chamber of Commerce that "one possibility" is that the CPTPP members and the European Union could work together to promote rules-based trading and make specific promises on how this support will be implemented in practice. He said he will be heading to Britain in late April to meet with Prime Minister Keir starmer and discuss trade, geopolitical and security issues. He said, "We cannot make the case for New Zealand by staying at home." "We must position ourselves to be advocates for both our economic interests and institutions that support them." Trump has imposed 10% tariffs on Australia and New Zealand. This is the lowest of the levies he has for all imports to the U.S. Canberra, and Wellington both say they will not retaliate. Last year, about 12% of New Zealand and 5% Australia exports were sent to the U.S.
-
Saudi Arabia outperforms Gulf counterparts in early trade, as Trump pauses the tariffs
Saudi Arabia's stock exchange led its Gulf counterparts higher on Thursday morning, following global shares. This was after U.S. president Donald Trump made the unexpected decision to suspend most of his recently implemented tariffs. Trump announced on Wednesday a 90-day suspension of many of his new tariffs. However, he increased the tariff rate on China from 104% to 125%, effective immediately. Saudi Arabia's benchmark stock index rose 4% on its way to the biggest intraday gain since March 2020. The increase was boosted by Al Rajhi Bank's 3.8% and Saudi National Bank's 3.9% increases. Saudi Arabia is currently subject to a minimum tariff of 10%. Saudi Aramco was among the other companies that gained 2.6%. According to SPA state news agency, the oil giant discovered 14 small oil and gas reservoirs and fields in the Eastern Region of the Kingdom and the Empty Quarter. Saudi index, which had its largest intraday drop in almost 5 years on Sunday, is set for its worst week since May despite its sharp gain. Dubai's main stock index rose 2.6% with Emaar Properties, the blue-chip developer, up 4.7%. The top lender Emirates NBD was up 3.7%. ADNOC Gas led the way with a 4.6% increase in Abu Dhabi. The oil prices, which were the driving force behind the Gulf financial markets, fell as Trump intensified his trade war with China. Qatar National Bank, the Gulf's largest lender, increased its share by 2.6%. The lender's net profit for the first three months was 4,26 billion riyals, which is more than analysts expected.
-
Equinor creates new unit to capitalize on the soaring demand for power
Equinor, a Norwegian company, announced on Thursday that it is merging its renewables division with its gas to power plants and energy storage assets in order to increase its electricity business. Equinor said that the move was a response to a surge in demand for energy, fuelled by artificial intelligence, the growth of data centres and the green shift. The vast majority of Equinor's income still comes from oil and natural gas. In a press release, CEO Anders Opedal stated that by combining renewable energy with flexible power offerings we could strengthen our competitiveness in the market and create value. It added that the company is working on three "mega-offshore wind projects" in Britain, America and Poland and has an increasing number of assets for onshore renewables. Storage and other solutions will be crucial for deploying large amounts of green energy needed to decarbonise electricity. Equinor's statement said that while the demand for renewable energy will continue to increase, flexible power would ensure reliability and stability of the power offered to the market. In a worst-case scenario, global electricity consumption in data centres will reach 945 terawatts by 2030, according to a report released on Thursday by the International Energy Agency. Equinor weakened its energy transformation plan earlier this year due to industry challenges. Essi Jacobsen and Essi Lehto contributed to the reporting. Terje Solsvik, Mark Potter and Terje Solsvik edited the report.
Investors see the beginning of a tectonic move away from US markets
The global money flows are being upended by a historic trade war, the proposed European fiscal bazooka of $1.2 trillion and China's rise as the leader in the tech race. This could be a turning point, with investor capital moving away from the United States.
China released more stimulus on Tuesday and pledged to make greater efforts in order to mitigate the impact of a escalating U.S. Trade War. The likely next German government had agreed to the largest overhaul of fiscal policy since the reunification.
German bonds plunged in the biggest sell-off in decades on Wednesday as the 30-year yields jumped by a quarter percentage point. The selloff continued on Thursday.
The U.S. trade war, which began this week, is hurting the mood both inside and outside of the world's largest economy.
Investors have bet heavily on the "U.S. exceptionalism" for the past three years. The country has been ahead of other countries in terms of economic growth, stock market prices, artificial intelligent and many other areas.
Tim Graf, State Street Global Markets' head of macro strategy in EMEA, said: "The U.S. has changed, and the world is now saying that we must adapt, as the U.S. no longer is a reliable trade partner. We have to look after our own defence needs."
A rare divergence on global stock markets has been fueled by the change in sentiment.
The S&P 500 index has fallen 1.8% in the past year. However, European shares have risen almost 9% to a new record high. Tech stocks in Hong Kong are up nearly 30%.
The euro has soared above $1.07 for the first time in four months, and many banks have backed away from their calls to drop it to parity with the dollar.
According to weekly data released by the Commodity Futures Trading Commission, investors have cut their bullish dollar bets in half since the inauguration of U.S. president Donald Trump in January.
Dario Perkins is the managing director of global macro for TS Lombard.
The aggressiveness and threat of tariffs by Trump has forced other countries to spend even more.
In his first 44 working days, Trump has completely rewritten the playbook of foreign relations that had been in place since 1945. He's also launched a trade war with his largest trading partners, and forced European leaders into a radical rethinking of how they fund security.
The U.S. economic growth is slowing down due to tariffs and trade uncertainties. Companies that are more susceptible to slower growth have started to show cracks.
In the past month, an index of U.S. bank stocks has dropped 8% while its European counterpart has increased 15%.
Investors are diversifying away from the U.S. markets by pouring money into Europe.
Spending Big
The dollar looks less attractive as Europe and China are poised to spend large amounts.
"We were long the dollar versus the euro, and we closed this position more than a week back. Mark Dowding is chief investment officer of RBC's BlueBay Fixed Income team. The behaviour of Trump has reduced the appeal of U.S. assets generally.
The government has taken several steps to encourage spending at home after investors sold Chinese assets in the past year. As the economy slowed, and wealthy consumers closed their wallets, it took several measures to encourage domestic consumption. Many still saw China as an uninvestable country in the absence a jumbo-stimulus plan, as tensions from a real estate bubble burst that affected both companies and homeowners remained.
Lipper data shows that the almost uninterrupted outflows of China-focused funds following Trump's victory in November have reversed to some $3 billion in early February.
Megacap tech stocks are a major draw for the U.S. Stock Market. Nvidia has been a leader in the AI investment revolution, and is one of the most valuable companies on the planet.
It was not until late January that a low-cost Chinese AI model, previously unknown, made a serious impact on the AI arms race.
DeepSeek's appearance has not only challenged assumptions about AI costs and efficiency, but also revealed how far behind Western companies China was.
Hong Kong tech stocks are up 24% since January 27. A basket of U.S. megacaps is down 12%.
Yang Tingwu is vice general manager at asset manager Tongheng Investment. He said that China's stock markets are already immune to increased U.S. Tariffs, as the growing strength of China is supporting domestic assets.
Yang stated that "China's technological clout has expanded if you look at TikTok or Xiaohongshu, as well as DeepSeek."
In response to the imminent sale of TikTok U.S. operations, American users are rapidly migrating to Xiaohongshu.
For some, the dollar's appeal will last over time due to a resilient U.S. economic climate and higher interest rates.
Nate Thooft is the CIO of Multi-Asset Solutions & Global Equities for Manulife Investment Management. He said: "I think there's a change in play. We view it as a tactic versus a major secular shift." Recently, he upgraded his maximum underweight position on European stocks to neutral.
(source: Reuters)