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Exxon exceeds profit expectations with higher production despite low oil prices
Exxon Mobil's second-quarter profit beat Wall Street estimates on Friday, as increased oil and gas production enabled the U.S. top oil producer to overcome lower crude oil prices. According to data compiled and analyzed by LSEG, adjusted earnings for the second quarter totaled $7.1 billion or $1.64 a share. This was higher than analyst consensus estimates of $1.56 a share. The oil producer reported that the production of oil and gas was at its highest level for any second-quarter since Exxon Mobil was formed in 1995 by the merger. Energy sector is struggling with volatility in prices as OPEC+ producers increased production, driving Brent crude global benchmark down by 11% for the first quarter. The global tariffs imposed by U.S. president Donald Trump have caused concerns over a weakened global economy and oil consumption. Exxon CEO Darren Woods stated that the second quarter "once again proved the value and competitive advantage of our strategy, which continues to deliver for our investors regardless of market conditions or geopolitical development." Exxon distributed $4.3 billion as dividends, and purchased $5 billion of shares in the last quarter. This buyback puts Exxon on track to reach its annual share purchase goal of $20 billion. Exxon's main production areas are the Permian Basin, the largest U.S. Oilfield, and the Stabroek block off the coast of Guyana. Exxon previously stated that the cost of production in these fields is low, which allows them to remain profitable, even when oil prices are lower. Exxon, one of their partners in Guyana lost a court case against Hess last month. This cleared the way for Chevron, a rival company, to complete its purchase of Hess. Exxon claimed it had the contractual right to buy Hess's 30% stake in Stabroek Block. Woods stated in a press conference that Exxon had sought legal opinions from third parties neutral to the matter of the joint operating agreements that govern the partnership between Exxon Hess, and China's CNOOC, in Guyana. Woods stated that "in every case - and I mean literally every case - we were told our rights were very clear." Woods stated that although the arbitrators agreed that Exxon's argument was commercially reasonable, they said that it relied on an argument based solely on text. The company will take action to strengthen contracts in future if necessary. Sheila Dang, Houston; Marguerita Choy, Ni Williams and Sheila Dang.
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Orano, a nuclear fuels manufacturer, does not expect any impacts from the EU-US agreement
According to Orano's CEO Nicolas Maes, the trade agreement between the European Union (EU) and the United States will not affect the company, because the U.S. government has not yet imposed any tariffs on its uranium fuels. According to the agreement announced on Sunday, the EU has agreed to buy nuclear energy products as well as U.S. natural gas and oil liquefied for a total of $750 billion in the next three year. Maes stated that "we have examined the material and have found that isotopes and uranium as well as enriched uranium have been exempted from the ban." He said that the provision of the agreement for the export of nuclear fuel by the U.S. into Europe was surprising given that the U.S. imports the fuel for its nuclear power plant, not exports it. Maes stated that "the U.S. nuclear market is structurally imported and not exported." Orano also stated that the plans of the company to expand its nuclear enrichment facility in Oak Ridge Tennessee should not be affected either by the trade agreement or the executive order signed by U.S. president Donald Trump deregulating the nuclear industry. Trump signed an Executive Order in May to reduce regulation and speed up new licenses for nuclear power plants, reactors and reactors. He also wanted to reinvigorate the uranium enrichment and production industry. Maes stated that Orano would maintain its nuclear security standards, but the order could result in easier communication between the nuclear safety authority (the nuclear safety authority) and the utilities during their permitting process. He reiterated an earlier comment, stating that the final investment decision for the project will be made in 2027. Reporting by Forrest Créllin. (Editing by Dominique Patton, Barbara Lewis and Barbara Lewis.)
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Gold to suffer third weekly loss due to stronger dollar and reduced Fed rate cuts
Gold prices were stable on Friday but are on track for a third successive weekly loss, due to a stronger dollar, and lowered expectations of U.S. interest rate cuts. Meanwhile, uncertainty over U.S. tariffs against trading partners provided support. As of 0733 GMT, spot gold was unchanged at $3,288.89 an ounce. Bullion has fallen 1.4% this week. U.S. Gold Futures declined 0.3% to $3339.90. Gold is now more expensive to other currency holders due to the dollar index reaching its highest level since 29 May. Gold remains weighed down by lower bets on Fed rate cuts through 2025. The U.S. weekly jobless claims and PCE data this week also reinforced the Fed's unwillingness to commit to a cut in rates," said Han Tan. Fed kept rates at 4.25% to 4.50% on Wednesday, dampening expectations of a rate cut in September. U.S. president Donald Trump slapped tariffs on exports of dozens of trading partner countries, including Canada. Brazil, India, and Taiwan. He is pressing forward with his plans to reorder global economy before a Friday deadline for trade deals. Tan stated that "the precious metals should be supported despite the uncertainty of the impact of U.S. Tariffs on global growth." Inflation in the United States increased in June, as tariffs on imported goods began to increase the price of certain goods. Investors will now be assessing the Federal Reserve’s policy direction as they await the U.S. employment data due on Friday. July job growth is expected to have slowed, and the unemployment rate is projected to increase to 4.2%. In an environment of low interest rates, gold, which is often viewed as a safe haven during times of economic uncertainty, performs well. The physical gold demand on key Asian markets has improved this week, as the price drop has sparked a renewed interest in buying. However, volatility is keeping some buyers cautious. Silver spot fell by 0.7%, to $36.50 an ounce. Platinum dropped 0.8% to $1,278.40, and palladium was off 0.2% at $1188.28. All three metals are headed to weekly losses. (Reporting and editing by Harikrishnan Nair in Bengaluru, Anmol Choubey)
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China's copper production in 2025 is set to reach a record high despite shortages of feedstock
Analysts say that China's refined output of copper is expected to reach a new record in 2025 as its giant smelting industry powers through the global shortage of ore copper, which is forcing out some overseas competitors. Five analysts estimate that the refined copper production in China will increase between 7.5% to 12% and surpass the record of 13,64 million metric tonnes set last year. Copper is essential for power, construction, and manufacturing. Growing output in China, the world's largest producer and consumer, is sucking up copper concentrate. This is the main ingredient used by smelters. It is increasing pressure on competitors, and cementing China’s dominance in the industry. Concentrate supply began to tighten in late 2023, as mine closures and rapid expansion of smelting capacities in China exacerbated anaemic growth. Processing fees, the amount smelters pay to convert concentrate into metal, fell to record lows. Profitability was also cut and some smelters outside China were forced to stop production. Alice Fox, commodities analyst at Macquarie Group, explained that Chinese smelters were able to increase their output faster than imports of concentrates because they had depleted inventories, and used scraps from government consumer goods exchange programmes. Fox stated that "Chinese refinery production was impressively high year-to-date despite low treatment costs and tight concentrates." China's refined output of copper grew by 9.5% during the first half of this year. Many of its modern smelting facilities offset losses in part with increasing revenue from the sale of byproducts such as sulphuric acids and rare metals. Analysts had predicted that global ore supplies would increase by 0.3% to 0.87% in 2025. However, China's imports of copper concentrate grew 6.4% during the first half of this year. This left smelters with insufficient ore for processing in other regions. Sinomine Resource Group, a Chinese company, announced last month that it temporarily suspended operations at its Tsumeb facility in Namibia due to a shortage of concentrate. Glencore's Philippine copper smelter was put into maintenance by Glencore in February due to the challenging market conditions. Analysts predict that global refined copper production will grow between 0.9% to 2% this coming year. According to Benchmark Mineral Intelligence, China's share of the global refined copper output will increase to 57% in this year. BETTER DEMAND The growth in China's output is being driven by stronger-than-expected exports plus growing investment in the power grid sector, both of which are leading analysts to revise up their copper demand forecasts. BMI has increased its forecasts for China's growth in copper demand this year from 2.9% to 3.8%. This is compared to a forecast at the start of the year of 2.9%. Macquarie raised its forecast from 2.4% to 4.2%. It is expected that the big increase in production will also pull down China's refined imports of copper, which stood at 3,74 million tons in 2024 or around 20% of China's national demand. BMI predicts that imports will drop by 8% by 2025. Imports of refined copper have dropped by 8.6% during the first six months of this year. This is partly because traders shipped more cargoes into the United States in order to avoid the tariffs on copper that U.S. president Donald Trump has threatened since February. The market has been able to counteract the increasing supply of copper with the benchmark prices up 8.8% this year. Trump surprised the markets on Wednesday by reducing tariffs on copper wire and pipes to 50%. This was a far cry from the restrictions he had threatened, and it excluded copper concentrates, cathodes, and ores. Zhao Yongcheng, BMI's Zhao Yongcheng, says that the lower-than-expected tariffs will not have a significant impact on Chinese copper demand or production.
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Ireland's AIB is seeing a slower growth in loans due to SMEs and US renewables woes
AIB Group anticipates a slower loan growth in 2019 due to a subdued lending environment to Irish small business and fewer renewable energy projects being funded by the United States. However, it reiterated its forecast for growth to return to 2026 or 2027 on Friday. AIB, Ireland's dominant lender, kept its guidance for net interest income and stated that it expects a return on tangible assets (ROTE) of over 20%, compared to an earlier forecast which was significantly ahead of the 15% target. After a series of rate cuts by the European Central Bank, first-half after-tax profit fell by 16% from 1.1 billion euro in 2024 to 927 millions euros ($1.1 billion). AIB shares fell 2.6% in the early trading. After the growth slowed in the first half, it was reduced to 3%. The bank still expects a compound annual growth rate of 5% in the next two-year period. AIB has identified the U.S. market as one of its major growth areas and has targeted it as a strategic area for growth. The U.S. President Donald Trump’s tax and spending bill, passed last week, speeds up the phase out of tax credits for solar and wind projects by several years. Donal Galvin, AIB's finance chief, said that the bank had "read the mood" and already reduced its expectations of activity in the U.S. during the first half. He said that the bank will invest in solar but that wind projects are no longer feasible. Galvin, who is the CEO of the bank, said that it will pivot its focus to projects in Ireland, Britain and mainland Europe. This market, Galvin added, was very active, but also highly competitive. He said he expected to see a pickup in lending for small and medium-sized businesses in Ireland after Sunday's U.S. - European Union tariff deal. Galvin said that the worst-case scenario had been avoided, so they now have some certainty in their plans.
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The weekly iron ore loss is a sign that China's stimulus has faded
The iron ore futures price was little changed Friday, but set to lose weekly value as the expectations for more stimulus from China, the top consumer, for its struggling property sector, faded. This dimmed demand prospects for this steelmaking component. The September contract for iron ore on China's Dalian Commodity Exchange closed the daytime trading 0.19% lower, at 783 Yuan ($108.60), a metric tonne. This marked a fall of 2.1% in a week. By 0700 GMT, the benchmark September iron ore traded on Singapore Exchange had risen 0.49% to reach $100.25 per ton. The price has fallen 2.9% this week. The Chinese Politburo's meeting in July, which sets the course of the economy for the rest of the year, did not provide any stimulus to the property sector. This is a major obstacle for industrial materials like steel. Analyst Zhuo Guqiu at Jinrui Futures said that the meeting had set a positive tone in the economy, and therefore, it was less urgent to implement more stimulus policies. China's purchasing manager's index (PMI), which fell to its lowest level since April last year, also raised concerns about demand. In July, it was 49.3, missing the median forecast of 49.7, according to a survey, and down from 49.7, in June. This shows a weakening in demand both at home and abroad. Zhuo, of Jinrui Futures, said that falling demand was also a factor in affecting prices for the main steelmaking ingredient. The average daily hot metal production fell by 0.6% compared to the previous week and reached 2.41 million tonnes in the week ending July 31. This was the lowest level for three weeks. Iron ore demand is usually gauged by the hot metal production. Coking coal and coke, which are both steelmaking ingredients, were down by 8.88% and 3.3% respectively. The Shanghai Futures Exchange has seen a decline in most steel benchmarks. Rebar fell 1.2%, hot-rolled coil and wire rod dropped 0.6% while stainless steel remained unchanged. ($1 = 7.2110 Chinese Yuan) (Reporting and editing by Eileen Soreng, Subhranshu S Ahu and Lewis Jackson)
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Nippon Steel warns about a full-year loss after $1.3 Billion Q1 shortfall
Nippon Steel revised its forecast on Friday for the full fiscal to a loss of 40 billion yen (266 million dollars) from a profit of 200 billion yen previously. This was partly due to costs associated with its acquisition by U.S. Steel. After 18 months of trying to get the U.S. Government to approve the deal due to concerns about national security, Nippon Steel closed its $14.9billion acquisition of U.S. Steel in June. Nippon Steel announced that its full-year results would be affected by a special loss related to the U.S. Steel transaction, namely a loss of 231.5 bn yen relating to the transfer of 50% of the joint venture AM/NS Calvert, to partner ArcelorMittal. Nippon Steel reported a loss of 195.83 Billion Yen for the three-month period ending June 30. This was higher than expected by analysts. Analysts surveyed by LSEG had predicted Nippon Steel would post quarterly losses of 25.7 billion yen. It reported a quarterly net profit of 157.56 billion yen a year ago. Nippon Steel also decided to split its stock at a ratio five shares per one share, effective October 1. S&P, the global rating agency, downgraded Nippon Steel last month to 'BBB+,' from a previous 'BBB+,' with a "negative" outlook. The reason given was an increase in financial stress following Nippon Steel's acquisition by U.S. Steel. ($1 = 150,5440 yen)
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Oil prices rise as tariff concerns and Russian supply threats compete for attention
The oil prices were not much different on Friday, after having fallen more than 1% the previous session. Traders were digesting the impact of increased U.S. Tariffs which may slow down economic growth and reduce global fuel demand. Brent crude futures fell 7 cents or 0.1% to $71.63 per barrel at 0656 GMT. U.S. West Texas Intermediate Crude was down 10 Cents, or 0.14 %, to $69.16 per barrel. Brent prices will still rise by 4.9% this week, while WTI will climb by 6.4%. This is after U.S. president Donald Trump threatened earlier in the week to impose tariffs on Russian crude buyers, including China and India, as a way to put pressure on Russia to end its war with Ukraine. Suvro Sarkar is the energy sector team leader at DBS Bank. He said that the recent bullishness of oil prices was largely due to the completion of trade agreements, with a few notable exceptions. Further progress in trade negotiations with China could boost the confidence of oil traders in the future. Investors were focused more on Trump's new tariffs, which are largely higher, that will be imposed on U.S. trade partners from August 1. Trump signed an Executive Order on Thursday that imposed tariffs of 10% to 41% for U.S. imports coming from dozens countries and territories, including Canada and India. Analysts have warned that the new levies could limit economic growth because they will increase prices and affect oil consumption. There were signs on Thursday that the existing tariffs in the U.S. are already driving up prices. The U.S. is the largest economy and the biggest oil consumer. Inflation in the United States increased in June, as tariffs increased prices of imported goods like household furniture and recreational products. The data supports the view that the price pressures will increase in the second half and the Federal Reserve may delay interest rate cuts to at least October. The oil price could be affected by maintaining interest rates, as high borrowing costs can hinder economic growth. Trump's threat to impose secondary tariffs of 100% on Russian crude buyers has supported the price because there was concern that this would disrupt oil trade and remove some oil off the market. DBS' Sarkar stated that India's slowing down of Russian imports could lead to a curtailment in supply, but this would be largely negated by Chevron's resumption of oil production Venezuela, record U.S. output, and growing U.S. supplies. JP Morgan analysts wrote in a note published on Thursday that Trump’s warnings of sanctions against China and India for their continued purchases of Russian crude oil could put 2,75 million barrels of Russian seaborne exports of oil at risk. Both countries are among the top three crude oil consumers in the world. Analysts said that the Trump administration will find it impossible to sanction the second largest oil exporter in the world without driving up oil prices. They were referring to Russia. Reporting by Georgina Mccartney in Houston. Christian Schmollinger, Mark Potter and Christian Schmollinger edited the article.
US futures gain on earnings, but yen reverts post-BOJ gains
U.S. Futures outperformed other markets on Thursday as traders considered a range of economic indicators, including central bank rate decisions and inflation data, in addition to last-minute talks about a trade agreement ahead of U.S. president Donald Trump's deadline of August 1.
Next, we will look at the U.S. PCE Inflation data, which is the Federal Reserve's preferred measure. This data will be analyzed for any signs of Trump's policy on inflation.
Jerome Powell, the Fed's chair, said that it would be necessary to wait until more data is available before making any further moves.
Further information
Trump's criticism on Thursday.
U.S. stock futures traded sharply higher on Thursday ahead of this data, helped by Microsoft's and Meta Platforms' better-than expected results after the bell Wednesday.
Dan Coatsworth is an investment analyst with AJ Bell. He said that Microsoft and Meta have achieved earnings that most companies only dream about. "They have smashed the market expectations by a mile and made investors scream in joy."
Nasdaq Futures rose 1.25% and S&P500 futures increased by 0.9%.
In Europe, earnings were also a focus. The region's banks rose by 0.75% after positive results came from France's Societe-Generale. Defence names rose by 2.9% due to a surge at Rolls-Royce.
However, the broad Stoxx 600 benchmark was flat. Miners were weighed down after U.S. Comex September copper futures fell 22% to $4.37 per lb. This was the largest fall in history after Trump announced that the U.S. will impose a tariff of 50% on copper wire and pipes, but this did not meet expectations of broad restrictions.
Chinese stocks have also fallen after official PMI gauges revealed weaker economic activity than expected in July. China's blue-chip CSI 300 index ended 1.8% down, its largest single day decline since April 7. Hong Kong's stock index also closed 1.6% down.
BOJ FOCUS
In Asia, the Bank of Japan had a lot to digest earlier in the day. It held its interest rates at the same level and raised its inflation forecast. This was accompanied by cautious optimism about Japan's economy.
The yields on Japan's short-dated bonds rose at one time to their highest level since early April. However, they have now fallen back to the lowest levels seen since early April after the BOJ policy statement caused market participants to lower expectations of any future rate hikes.
The Nikkei closed just under 1% higher.
As traders reduced their bets about rate cuts by the European Central Bank, short-dated bond rates rose.
Investors in Asia considered whether Trump's announcement of a 25% duty on India, made in the middle trade negotiations, should be taken serious.
The benchmark Nifty 50 index in India is just barely in positive territory, after recovering earlier losses.
The Korean won rose 0.3% following Trump's announcement that the U.S. will impose a 15% tariff for imports from South Korea. In return, South Korea would invest $350 billion into U.S. projects as well as purchase $100 billion of U.S. products in energy.
The announcement is part of a series that was rushed to be made before the deadline of Friday, April 2, in order to avoid Trump's "Liberation Day", a tariff-blitz.
Brent crude futures, which expire Thursday, fell 40 cents, to $72.86 per barrel. U.S. West Texas Intermediate Crude for September CLc1 dropped 33 cents to reach $69.66.
On Wednesday, both benchmarks posted gains of 1%. (Reporting and additional reporting by Ankur B. Banerjee. Nell Mackenzie, Gregor Stuart Hunter. Jamie Freed and Mark Potter edited by Mark Heinrich.
(source: Reuters)