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Inflation data ahead of the stock market's best month since 2023
The dollar flirted with its first annual rise on Friday, as traders awaited key U.S. data on inflation and Washington's latest fluttering about tariffs. Investors have tried to ride the roller coaster of news this week after a U.S. federal appeals court temporarily restored tariffs that were temporarily blocked by a U.S. district court. The initial decline in European stock prices on Friday was followed by gains of 0.3% to 0.8% despite this. Unexpected dip Mixed results in German retail sales Inflation numbers Wall Street futures fell ahead of the PCE inflation data, which is due to be released before the opening bell. The main MSCI world index has risen over 5% in the last month, while the dollar is tantalizingly near to its first month of positive growth since 2025. The benchmark 10-year U.S. Treasury rates, which are a proxy of U.S. borrowing cost, rose again in European trading after falling following soft economic data on Thursday and a strong 7-year bond sale. Investors were also alarmed by a provision that was not widely publicized in Trump's proposed budget. This would have allowed the government to tax foreign investments up to 20 percent. Elias Haddad, a Brown Brothers Harriman strategy, said that the foreign tax provision of the One Big Beautiful Bill Act was alarming. He added that the uncertainty increased the risk of stagflation where the inflation remains high but the economic growth stagnates. The Federal Reserve's preferred inflation indicator, Personal Consumption Expenditure data (PCE), is due to be released at 8:30 a.m. ET. This could influence bets about whether or not the U.S. will cut interest rates again this year. Trump invited Fed Chair Jerome Powell for their first face to face meeting since taking office in January. He told Powell that he had made a mistake by not lowering the interest rates. The Fed has responded with a Statement Its decisions "will be based on the latest economic data". OPTIMISM EMERGING The oil prices are on course for a second successive weekly decline on expectations of a further OPEC+ production hike. However, they were still up on the day as well as for the entire month. Nikkei sank overnight, after a near 2% rise the day before. Investors were also worried about Japan's high debt levels in the wake of a disappointing 40-year bond sale this week and tariffs. The yen gained as much as 2 percent from its Thursday low and was trading at less than 144 dollars per yen in London. The euro and the pound both fell 0.3% and 0.1% to $1.13 and $1.3 respectively. Hong Kong's Hang Seng fell 1.2% in Asia. Apple suppliers were also hit by the U.S. reversal of tariffs. Blue chips on the mainland also fell 0.5%, despite both posting solid gains for the month. Korean stocks performed even better than the world index, achieving their best month in November 2023. In the meantime, an index that tracks emerging market currencies has gained 2% in a month. This is the best performance since November 2023. Gold prices on the rise have helped Ghana cedi to rocket by nearly 40% in this month. Rodrigo Catril is a senior FX Strategist at National Australia Bank. He said that Trump's trade agenda was still alive and well, but the legal battle added yet another layer to uncertainty. He said, "The only thing more certain than more uncertainty is more certainty." The Trump administration has said that despite the courtroom dramas, negotiations with the top trading partners are continuing apace. Treasury Secretary Scott Bessent told Fox News in an interview that he would be meeting with a high level Japanese delegation on Friday evening in Washington. However, he admitted that talks with China had "a little stalled".
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Miner Vale missed deadline for expansion of Brazil Nickel complex
After missing the deadline for confirming the bid, Brazilian power grid operator ONS denied Vale's request that it increase electricity consumption at its northern Onca Puma Nickel complex. Vale is preparing to launch a second Onca Puma furnace, a $555-million expansion that will help boost nickel production for the miner in the coming years. Vale said that it would still operate the new furnace, despite being denied the request. From around 160,000 tons of nickel last year, the miner aims to increase its global production to 250,000 tons by 2030. The second Onca Puma furnace is expected to increase annual production by 15,200 tons. ONS documents seen showed Vale asking for an increase in power consumption to 200 megawatts by the beginning of this year. ONS has issued documents over the last year attesting the viability and increase in power consumption at Onca Puma. However, ONS stated that Vale failed to sign the contract by the deadline. Vale submitted a new request to ONS in February. Vale asked for an increase in power consumption at Onca Puma that would begin in June. The national grid operator denied the request saying that the extra power was allocated to a different project in their pipeline. Vale said it was evaluating "technical options" with ONS in order to get its request for Onca Puma expanded approved. The miner expects the matter to be resolved soon. Onca Puma's nominal nickel production capacity is around 27,000 tonnes per year. Vale's nickel production was around 10% at the Onca Puma complex last year. Reporting by Leticia fucuchima from Sao Paulo, and Marta Nogueira from Rio de Janeiro. Editing by Sarah Morland & Chris Reese
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Russia will provide support to the coal industry
The Russian government announced on Friday that it has agreed to support a struggling coal industry by deferring taxes and limiting bonuses and dividends to the top management. Russian coal producers are facing a number challenges, such as international sanctions in relation to Ukraine. According to the Russian government, coal exports dropped by almost 8% last year to 213 millions tonnes, but production increased 1.3% to reach 438 million tons. In 2022, the European Union, who previously relied on Russia to provide around 45% its coal imports for their own use, will ban supplies from Russia. According to the government's measures, Russian coal firms will be granted deferrals of mineral extraction taxes (MET) as well as insurance contributions until 1 December 2025. According to the government, debt-ridden companies may be able to restructure their debts, while taking into consideration the Central Bank of Russia's position. According to NEFT Research, Russia's coal imports are declining because of international sanctions and rising transportation costs. The data cited by the energy ministry showed that, since 2022, the Russian coal industry has lost 1.2 trillion Russian roubles (15 billion dollars) due to sanctions. This includes the loss of lucrative European markets and the difficulty in receiving payment for supplies.
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The oil price outlook is weakened by OPEC+ and lingering trade worries
A poll revealed that analysts have revised their oil price predictions down for the third month in a row as OPEC+'s soaring supply and the uncertainty surrounding the impact of trade wars on fuel demand continue to weigh on prices. In a survey conducted by 40 economists and analysts, a forecast of Brent crude at $66.98 per bar in 2025 was lowered from the $68.98 estimate made in April. U.S. crude, however, is forecast to be $63.35, which is lower than last month's $65.08 estimate. According to LSEG, prices have averaged around $71.08 and $67.56 so far this year. Tobias Keller is an analyst at UniCredit. He said that while tensions between the U.S. Keller said that "on the supply side oil prices are heavily influenced by OPEC+'s production decisions while geopolitical tensions... continue to pose risks of disruption and volatility in price." Eight OPEC+ member countries began to unwind their output cuts in the first quarter of this year. They agreed on higher-than-expected increases for May and July, totaling 411,000 bpd. Sources have said that the members could decide to increase output for July during a Saturday meeting. The move is "driven by a desire not to support oil prices, but rather punish members who do not comply." Compliance will be difficult to enforce, particularly in Kazakhstan", said Suvro Sarkar. Lead energy analyst at DBS Bank. Analysts polled by predict that global oil demand will grow an average of 775, 000 barrels per day by 2025. Many cite elevated trade uncertainty and economic slowdown risk as the main concerns. The International Energy Agency forecasted a 740,000 barrels per day average growth in 2025. Norbert Ruecker is the head of Economics & Next Generation Research at Julius Baer. He said that with U.S. and China oil consumption constrained by fuel-efficiency gains, economic insecurity and the shift towards electric mobility, the "growth of demand" comes primarily from the resource countries themselves. The war between Russia and Ukraine continues to increase the geopolitical risks for oil. Analysts claim that markets have priced in uncertainty. Sarkar said that "potential de-escalation and the possibility of lifting Russian oil sanctions could further lower prices."
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Nigeria offers tax reductions on oil to reduce costs
The Nigerian president Bola Tinubu signed an executive order that introduces a framework based on performance for operators in the oil sector. This is designed to tie tax incentives to cost savings that can be verified. The new Upstream Petroleum Operations cost Efficiency Incentives order 2025 will provide tax relief to operators who implement cost reductions that are industry standard in shallow-water, onshore and deep-offshore fields. The tax credit will not exceed 20% of the operator's tax liability. Tinubu stated in a press release that "This Order sends a message to the world: We are building an efficient and competitive oil and gas industry for Nigerians." It is about creating jobs and securing the future of Nigeria. Analysts believe that success is largely dependent on the implementation. President Tinubu stressed the importance of aligning government agencies in his announcement. Clementine Waltlop, director of Horizon Engage's sub-Saharan Africa division, said that if Nigeria succeeds in this area it could have a significant impact on the country's appeal to investors. This order is an important part of the ongoing reforms by the government to boost competitiveness in the sector. In order to increase the appeal of offshore drilling, Nigeria last year offered a 25% allowance on gas-utilisation investments for equipment and plants for both new and ongoing projects. It also began streamlining its contracting process. While these incentives haven't resulted in new investments, they have encouraged a few farmers to return to their existing fields. (Reporting and editing by David Evans; Isaac Anyaogu)
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S&P reduces Volvo Cars' rating outlook citing US tariffs and competition in China
S&P lowered its outlook on Volvo Cars' BB+ rating to "negative" on Friday from "stable". The company said that the increased competition in China and the U.S. Tariffs were harming the growth prospects of the company. Last month, the Swedish automaker, owned by China's Geely in majority, retracted its earnings guidance. It also announced cost-cutting measures, including the layoff of 3,000 workers, mostly white-collar, due to a drop in demand. S&P stated in a press release that "the negative outlook for Volvo Cars reflects the company's large exposure to U.S. tariffs on imports, and its increasing marginalisation on the Chinese market." We expect Volvo Cars to face pressure on its profitability and cash flow generation in 2025-2026. This will be partially alleviated by an extensive cost-cutting programme. In 2024, the United States will account for 16% of Volvo Cars' sales. China will be responsible for 20%. Volvo Cars only produces one model in the United States and imports the rest. This leaves the company at greater risk of U.S. Tariffs than its European counterparts. S&P also said that a proposed ban by the United States in 2027 on automakers controlled a Chinese entity weighed on outlook. A U.S. Court temporarily reinstated new tariffs on Thursday, after a U.S. district court ordered their immediate suspension the day before. (Reporting and editing by Terje Solsvik, Tomasz Janovowski)
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LME copper set to rise at its fastest pace since September due to tightening supply
Copper prices in London were unchanged on Friday but are on track for their largest monthly increase in eight months, due to tighter supply. This is highlighted by the premium of nearby copper contracts compared with those further away. The benchmark three-month copper price on the London Metal Exchange was unchanged at $9,570 per metric ton as of 1006 GMT. The contract has risen 4.8% in May so far, and is on track to have its best month since September. Prices are supported by the decline in stocks at LME-registered storage facilities The lowest level in nearly a year, with a drop of 45% from mid-February. The Shanghai Futures Exchange monitored copper inventories in warehouses rose 7.2% during the week. The premium for COMEX copper over the LME benchmark is still high, which attracts more metal to COMEX owned warehouses. "The LME Copper is facing a little squeeze because the COMEX stock keeps going up and the LME stock is declining," said Dan Smith. Spread between cash LME and three-month copper contracts Closed on Thursday at $51.6 per ton, the highest premium since November 2022. This indicates concerns about supply. Smith said that the premium, or backwardation as it is also known, reflects the uncertainty surrounding the supply of copper from the Kamoa-Kakula mine in the Democratic Republic of Congo. This mine is the largest copper producer in Africa, and one of the largest in the world, Smith explained. The industrial metals as a whole were under pressure, with the dollar strengthening and the market losing optimism following a recent court ruling which reinstated tariffs that President Donald Trump had imposed. China's Futures Markets are closed until 3 June for the Dragon Boat Holiday, which has reduced the overall trading volume. On the demand side, Saturday's official purchasing managers index (PMI), which is a measure of metals consumption in China, will be the main focus. A poll shows that China's factory output likely declined for a second consecutive month in May. LME aluminium dropped 0.3% to $2.443.50 per ton. Zinc fell 0.4% to 2,663.50; lead lost 0.2% at $1.958; tin declined 1.8% to $30.655 while nickel increased 0.2% at $15.395. (Reporting from London by Polina Devlin; Additional reporting in Bengaluru by Brijesh Patel; Editing by Jane Merriman).
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Iron ore pessimism subsides despite looming Simandou supply
Analysts and traders agree that the prospects for iron ore price are improving due to a smaller than expected global surplus in this year. However, new supply coming from the massive Simandou project, located in Guinea, remains a downside risk on a longer-term basis. More than a dozen analysts and traders interviewed at this week's Singapore International Ferrous Week said that their forecasts of oversupply for this year have been reduced from 50,000,000 tons to between 20,000,000 and 30,000,000 metric tons. The reason is that demand has been resilient this year, thanks to strong steel exports. Buyers stocked up on steel amid signs of a global trade war escalating while cyclones in Australia disrupted the supply. Official data revealed that in the first four month of 2025 China's imports of iron ore fell 5.5% on an annual basis, while its crude steel production increased 0.4%. Iron ore price Steel prices have remained well above $90 a ton. Below that price, high-cost miner struggle to make a profit. This is despite the trade tensions between two of the world's largest economies, which have raised concerns about the future outlook for steel demand. Analysts and traders have revised up their bearish pricing scenarios from $75 to $85 per tonne at the beginning of the year. Analysts say that the medium term demand for Iron Ore will remain strong because China's new fleet of blast-furnaces will need iron ore for another decade. According to the current life cycle of equipment in China, there won't be a big reduction in blast furnaces by 2035. This means that iron ore will remain at a high level," Long Hongming said in a speech delivered on Tuesday. SIMANDOU Simandou is one of the largest high-grade ore mines in the world. It will begin shipping ore to the market by November. This entry should exacerbate the glut on the global iron ore market starting 2026. The increasingly hostile attitude by the military government of Guinea, which has recently cancelled 129 exploration permits for minerals and is in a standoff against Emirates Global Aluminium, caused concern among traders, analysts, and steel mills attending the conference in Singapore. Participants asked whether the government’s aggressive stance would affect the smoothness of the project’s ramp-up to its full production level of 120 million tonnes a year. Simandou is the joint venture of Rio Tinto (the world's biggest iron ore mining company) and Chinese companies, including China Baowu. China Baowu is the largest steel producer in the world by production. Reporting by Amy Lv, Hongmei Li. Mark Potter edited the article.
As markets struggle with US trade ruling, stocks rise and dollar gains are reduced
The U.S. Dollar weakened on Thursday after earlier gains were given up against major counterparts as markets digested a surprise ruling by a trade tribunal that blocked President Donald Trump’s so-called “Liberation Day” tariffs.
The U.S. Court of International Trade ruled late Wednesday that Trump had overstepped his powers by imposing uniform duties on imports.
After the Trump administration appealed and seemed ready to go to the Supreme Court, if necessary, the decision set off a legal battle that could weigh heavily on the markets.
Wall Street saw all three indexes trade higher, after having lost ground the previous session. This indicates that the markets view the decision largely in a positive way. Nvidia rose 4% on Thursday after it reported earnings that exceeded expectations.
The Dow Jones Industrial Average rose 0.11%, to 42,146.94. The S&P 500 increased 0.32%, to 5,907.51, and the Nasdaq Composite increased 0.48%, to 19,192.11.
The STOXX 600 Index for Europe was down by 0.13% after rising earlier during the session. MSCI's broadest Asia-Pacific share index outside Japan closed the night up 0.77%.
The MSCI index of global stocks rose by 0.42%, to 880.
Brian Jacobsen is the chief economist of Annex Wealth Management, based in Wisconsin. He said that "the court's decision to overturn Trump's tariffs was more than a speed bump." While President Trump has the option to appeal or sidestep the ruling, these options are limited and could end up with the same outcome. The stock markets are happy with the ruling."
After the news of the ruling, the U.S. Dollar initially rose against safe-haven currencies. However, it has since pared these gains.
The number of Americans claiming unemployment benefits last week was higher than expected, indicating that the labor market continues to improve.
The dollar fell 0.35% against the Japanese yen to 144.31 and 0.42% against the Swiss Franc to 0.824. The euro rose 0.56% to $1.1355.
The dollar index fell by 0.95%, to 99.44, measuring the greenback in relation to a basket including the yen, the euro and other currencies.
The yields on U.S. Treasury bonds, which had been under pressure due to investors' unease over Trump's tax and spending bill, rose initially but then fell.
The yield on the benchmark 10-year U.S. notes dropped 3.1 basis points, to 4.448%. The yield on 30-year bonds fell 2.6 basis to 4.9521%.
Bond markets may not be as happy. Jacobsen stated that bond investors still counted the revenue even though the tariffs weren't included in the budget bill.
After the International Energy Agency director warned about weaker demand in China, and markets viewed possible U.S. sanctions against Russian crude flow, oil prices declined, retreating from their earlier gains.
Brent crude futures fell 1.53% to $64.91 per barrel. U.S. West Texas Intermediate Crude fell 1.89%, to $60.67 per barrel.
Gold prices increased in volatile trading, partly due to the weaker jobs data. Spot gold increased 0.74%, to $3313.77 per ounce. U.S. Gold Futures rose by 0.49% to an ounce of $3,311.10.
(source: Reuters)