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Dollar struggles as investors consider tariff truce
The dollar wobbled on Wednesday as the relatively benign U.S. Inflation data fueled prospects for rate cuts from the Federal Reserve this year, even though investors were still trying to gauge if the worst trade conflict was over. Financial markets were nervous as Donald Trump's trade war with China appeared to be on hold, following a truce between the two countries. Tony Sycamore, IG analyst, said: "I am a bit cautious about chasing this rally at this point." We'll have to wait and see what happens in terms of headlines, the framework for further tariff negotiations with foreign countries, but at this stage the worst-case scenarios has already been priced out. MSCI's broadest Asia-Pacific index outside Japan rose 0.9% early in the day after U.S. shares climbed into positive territory for this year, wiping out losses caused by Trump's chaotic tariff rollout. Hong Kong's Hang Seng index climbed in early trading, lifted by tech shares after Chinese ecommerce retailer JD.com reported strong results. This week, investors will focus on the earnings of Tencent and Alibaba. Equity futures showed a retreat in the European and U.S. market. Investors who were worried about inflationary impacts of U.S. Tariff Policies, which severely undermined expectations of Fed rate reductions in the near future, also found some relief from data overnight that showed softer than expected U.S. Consumer inflation. Although traders expect the inflation rate to rise as tariffs increase import costs, there is still uncertainty about the future as Washington continues to negotiate with its trading partners. The global mood improved after the U.S.-Britain trade agreement last week. It was further boosted when U.S.-China announced on Monday that they would suspend their trade war and reduce reciprocal duties for 90 days while they negotiate an arrangement more permanent. Trump has also touted potential deals with India, Japan and South Korea. The Fed warned of increasing economic uncertainty and indicated it was prepared to wait a while to evaluate the impact of U.S. Tariffs before cutting interest rates. The U.S. Dollar, which has been hammered recently due to economic and political uncertainty, fell 0.2% against yen and remained unchanged at $1.1866 against the euro. The dollar index was barely changed following a 0.8% decline in the previous session. The Nikkei 225 index of Japan fell 0.7% on Wednesday, reversing a 1.4% gain. Retail sales for April, due Thursday, will be the next big indicator of the health of the U.S. economy. On the same day, Russia and Ukraine will hold talks in Istanbul in hopes of reaching a ceasefire after three years in Europe's deadliest conflict since World War Two. Bank of America’s Global Fund Manager Survey (FMS) revealed on Tuesday that global asset managers had their largest underweight position against the dollar in nearly 19 years as Trump’s trade policy reduced investor appetite for U.S. investments. The yield on the benchmark 10-year Treasury note fell 2 basis points to 4.4768. U.S. crude fell 0.3% to $63.48 per barrel while spot gold dropped slightly at $3244.79 an ounce.
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Early 2030s will see the global cobalt market swing from surplus to deficit.
The Cobalt Institute published a study on Wednesday that showed demand for cobalt would rise faster than the supply. This will allow the market to decrease the surplus of 2024 in the coming years, and then swing to a deficiency in the early 30s. The future of cobalt in the short-term depends on the decision that the Democratic Republic of Congo, the world's largest producer of the mineral, which is used to manufacture the lithium-ion battery packs that power electric cars, makes after the four-month ban on exports, which was imposed late February. The ban was imposed by the central African nation to combat the glut on the market, which had seen cobalt prices fall to a 9-year low end-February. Prices have risen 60% since then to $16 per lb. ,. Indonesia will increase its production faster than the DRC, despite the uncertainty surrounding the DRC export ban. The DRC is losing market share from last year, when it accounted for 76% of the global primary cobalt supplies. Benchmark Minerals Intelligence prepared a report for the Cobalt Institute that showed the DRC's market share would reach 65% by 2030. Indonesian share is projected to rise from 12% to 22% in 2024. The EV market is expected to drive the demand for cobalt to 400,000 metric tonnes by early 2030s, with a 7% CAGR. Cobalt consumption in 2018 reached 222,000 tonnes. In 2030, cobalt consumption will be 57% higher than in 2024, with growth slower for other sectors such as laptops, mobile phones, superalloys and other industrial segments. The report stated that in 2024 the cobalt markets would be in surplus by 36,000 tons or 15%, up from 2023's 25,000 tons. (Reporting and editing by David Evans; Polina Devitt)
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Volkswagen suppliers are on the list of RPT-Beijing's first export permits for rare earth magnets
Sources in the industry said that China had granted export permits to four rare earth magnet manufacturers, including Volkswagen, the German automaker. This was the first time since Beijing restricted shipments a month ago. It is a sign the flow of critical materials will not be stopped. Three sources confirmed that Baotou Tianhe Magnetics - which produces magnets for electric and hybrid cars - received a license from Volkswagen at the end of April. Three sources said that Baotou Tianhe Magnetics, which makes magnets used in electric and hybrid car motors, received a licence for Volkswagen at the end of April. Volkswagen responded to questions by saying that it was in constant contact with its suppliers. It had also received information that the Chinese government has granted export licenses to a small number of magnet suppliers. Two sources confirmed that Zhongke Sanhuan had received at least one license. Baotou INST Magnetic, Earth-Panda Advanced Magnetic Material and Baotou INST Magnetic were all granted at least one license. Sources declined to name themselves due to the sensitive nature of the issue. Requests for comment from the four magnet manufacturers and China's Commerce Ministry were not immediately responded to. Beijing has not yet confirmed whether all four companies have received export licenses. According to one source, export permits are only granted for suppliers who have customers in Europe or Vietnam. The permits were issued prior to the Monday truce in the trade war with Washington, according to industry sources. This is likely to make approvals easier for U.S. clients. Beijing issued the permits within a month of its earlier restrictions on seven rare-earth elements and related materials in response to U.S. president Donald Trump's tariffs. The industry had expected a lengthy wait. Sources said that the permits were the very first ones issued since Beijing implemented its restrictions. China is the dominant supplier of rare earths used in clean energy, defense, and auto manufacturing. Companies have very few alternative suppliers. Volkswagen's involvement and lobbying by other large Western users demonstrate this dependence. Elon Musk revealed last month that Tesla was in discussions with Beijing about licenses for its Optimus robotics. Reporting by Beijing Newsroom and Christoph Steitz, Frankfurt; Editing done by Lewis Jackson, Tony Munroe and Kirby Donovan
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Trump praises Saudi Crown Prince, signals renewed alliance
Four years ago, Saudi crown prince Mohammed bin Salman was unable to meet with the then-President Joe Biden. Biden said that he wanted the Gulf nation to be a pariah because its leader had allegedly ordered the killing of a Washington journalist. Donald Trump praised Saudi Arabia's de-facto ruler in a gushing manner on Tuesday. He called him "an incredible guy" and "a great guy", and did not mention the human rights situation within the country. "I like him very much." "I like him too much," Trump exclaimed as the cameras flashed, and the crowd applauded. The summit was held in Riyadh to kick off his first major overseas visit of his second term. The affectionate display for a leader who has a controversial history was reminiscent of Trump's first tenure, when he formed an alliance with bin Salman which grew stronger through mutual flattery and deals. The relationship is still based on shared interests. Trump wants to achieve major economic gains and revive the U.S. presence in the region. Bin Salman, meanwhile, seeks advanced technology, military assistance, and a powerful partner in his efforts to modernize Saudi Arabia, and assert regional leadership. Trump announced at the summit a $142 billion deal on defense and a $600 billion Saudi investment package that included artificial intelligence, infrastructure, and energy. Trump's relationship with the Crown Prince has sparked criticism by U.S. legislators, human rights organizations and foreign policy analysts. They viewed it as a prioritization of economic interests above human rights. Bin Salman denied any involvement in the murder of journalist Jamal Khashoggi and cited reforms like expanding women's right as proof that progress had been made. However, analysts say these reforms have been undermined by continuing crackdowns against dissent and freedoms. Trump's relationship with bin Salman has a much warmer tone than that of his predecessor in the White House. Biden's relationship took a more friendly turn with bin Salman, too. From initial criticism to a pragmatic cordiality. BIDEN PICKS RESET In 2019, the Democratic President promised to make Saudi Arabia "a pariah" on the international stage because of Khashoggi's murder and its human rights record. Geopolitical realities, such as the soaring oil prices in 2022 due in part to Russia's invasion in Ukraine, have highlighted the need for Washington and Riyadh to work together. Biden decided it was time for a new strategic relationship and visited the crown Prince in July 2022. Some criticized the gesture as being too friendly, given concerns about human rights. White House officials insisted that it was to reduce Biden's chances of contracting the COVID-19. The relationship improved rapidly as his administration sought to broker a deal that would normalize Saudi-Israeli ties in exchange for an expanded U.S. Defense Agreement. The effort was halted by the attack on Israel by Hamas in 2023 and Israel's subsequent conflict with Gaza. During Trump’s visit to the United States on Tuesday, the Crown Prince personally welcomed the U.S. President, escorting up an escalator, and then driving him in golf carts ahead of a State Dinner. Trump, in a move that underlined their close relationship, pledged to lift U.S. Sanctions on Syria. He said that bin Salman had requested this dramatic action. Trump said: "Oh, I do for him." The crown prince then placed his hands on his heart, and a standing applause followed. (Reporting from Gram Slattery and Nandita in Riyadh, with additional reporting by Andrea Shalal; Writing by Nandita, and Editing by Colleen, Jenkins, and Cynthia Osterman.)
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Mexico expects early USMCA review to give clarity to investors and consumers
Mexico's Economy Minister said that the country hopes to begin a trilateral review with the U.S., Canada and other countries in the second half this year. This will provide more clarity for consumers and investors. On the sidelines of an event organized by the Ministry of Finance with local firms, Economy Minister Marcelo Ebrard said to journalists: "We expect that we will start discussions in second half of this year." He added, "We hope that they will happen as quickly as possible and we can come to an agreement as soon as." Next year, the USMCA will be reviewed. The US President Donald Trump wants the agreement renegotiated in advance. Ebrard stated that the early review of trade policies could make it "easier" and "clearer" for consumers and investors to understand. Ebrard announced on Monday that he expects the review to start earlier than scheduled. He said, "That would be convenient for us." It would be clearer to us as to how the treaty will function in comparison to other parts around the world. The USMCA is still in force despite the ongoing U.S. Tariffs. It currently impacts the shipments of steel and finished automobiles from Mexico to the United States. Ebrard said that Mexico was working on negotiating more favorable terms to export steel, aluminum and automobiles to the United States.
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Vermont Governor suspends electric vehicle regulations
Vermont Governor Phil Scott suspended the state's requirements for electric vehicles sales in passenger cars, medium- and heavy-duty trucks and on Tuesday amid concerns over the feasibility of California's zero-emission rules. Vermont is among 11 states, including New York, Maryland, and Massachusetts, that have adopted California’s zero-emission vehicle rule, which aims to eliminate the sale of gasoline only vehicles by 2035. California's rule requires that 35% of the light-duty cars in 2026 be zero-emission vehicles. Scott cited automakers' warnings that the EV regulations could restrict the supply of gas-powered cars to dealers in the State. Scott said, "It is clear that we do not have enough charging infrastructure or technological advancements in heavy-duty trucks to meet our current goals." Maryland Governor Wes Moore delayed the enforcement of the rule until 2028, citing concern about tariffs and infrastructure funding. In May, the U.S. House of Representatives voted to ban both California's 2035 EV Plan And its plans will require a rising Number of zero-emissions trucks Move to repeal the legal approval of the rules granted by U.S. Environmental Protection Agency, under the former president Joe Biden. California argued that it was unclear when the Senate would take up these measures. Biden's decision cannot be reversed Fast-track rules Major automakers have argued that the rules, requiring at least 80% EVs in 2035, and no more plug-in hybrids than 20%, are not feasible and have lobbied to stop them. California claims that they are necessary to reduce pollution, and believes the vote was illegal. The Alliance for Automotive Innovation (which represents General Motors Toyota Volkswagen Hyundai and many other major automakers) warned that car companies may be forced to reduce their overall vehicle sales to increase the proportion of EVs sold. California rules require EVs to account for 68% of all new vehicles sold by 2030. (Reporting and editing by Chris Reese, Nis Williams, and David Shepardson)
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Senator says that the US Department of Health will reverse federal layoffs for coal safety workers
Shelley Moore Capito, West Virginia Republican senator and former federal employee who screens coal miners for black lungs disease and conducts research on other respiratory diseases who were terminated in a sweeping government layoff have their jobs permanently restored. Capito stated in a press release that she received an assurance from Health Sec. Robert F. Kennedy, Jr., that the Department of Health and Human Services had reversed the terminations of staff at the National Institute for Occupational Safety and Health in Morgantown, West Virginia. In a press release, she stated that "my understanding is from Secretary Kennedy that over 100 Morgantown workers will return to their jobs permanently." NIOSH operates a coal mine surveillance unit, which has been effectively closed since February due to sweeping layoffs by Elon Musk’s Department of Government Efficiency. This is despite the fact that black lung disease, a deadly respiratory condition, has resurged in coal miners. Reports had stated that these potential job cuts as well as the cuts made at the Mine Health Safety Administration put coal miners in danger, despite the fact that President Donald Trump was calling for a revival of this industry. Status of NIOSH employees has been changing. Some workers were brought back from administrative leave in the beginning of this month only to find out a few days later that their employment was terminated permanently. Capito stated that she spoke with Kennedy several times, urging him to rescue the program. John Howard's letter to NIOSH staff today said that former employees were being called back. This includes employees from the director's office of NIOSH, the Respiratory Health Division, which includes the coal mine monitoring unit, the National Personal Protective Technology Laboratory, the Division of Safety Research, and the Division of Compensation and Analysis Support. Two sources familiar with the story said that 21 of the 28 DECA staffers who handle compensation claims for former nuclear workers with cancer were brought back. Uncertain is the percentage of NIOSH staff that have been recalled. Over 90% of NIOSH staff were terminated earlier in the month. Kennedy will appear before Congress on Tuesday, and he's likely to be asked about the mass layoffs that occurred at HHS.
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US inflation data boosts global equity markets; dollar falls
On Tuesday, the dollar dropped and major U.S. indexes rose after news that U.S. Consumer inflation increased less than expected in May when President Donald Trump announced a series of tariffs which has caused havoc on international markets. European shares rose for the fourth session in a row, while global stocks also gained. Crude oil prices increased, thanks to a temporary reduction in U.S. - China tariffs. The U.S. announced on Monday that it would suspend its trade war with China for 90 days. They will reduce reciprocal duties, and remove other measures as they negotiate a permanent agreement. The agreement has reignited the appetite of investors for stocks, commodities, and cryptocurrencies. Tuesday's inflation numbers have also helped fuel this move. The Bureau of Labor Statistics reported that its consumer price index increased by 0.2% in April. This brings the annual growth down to 2.3%, from 2.4%. Economists polled had predicted a rise of 0.3% per month and 2.4% annually. Bill Adams, chief economics officer at Comerica Bank, Dallas, wrote in a letter that the report was a good one. In 2025, inflation should be manageable by most consumers and business. S&P 500, Nasdaq and Dow Jones advanced due to softer than expected inflation figures and a easing in U.S. China trade tensions. The S&P500 rose 42.36, or 0.72 percent, to 5,886.55 while the Nasdaq Composite gained 301.74, or 1.61 percent, to 19,010.09. Under pressure from UnitedHealth, the Dow Jones Industrial Average dropped 269.67 points or 0.64% to 42140.43. The company had suspended its annual forecast after its CEO resigned and UnitedHealth had suspended its annual projection. Dollar retreated from its sharp gains of the previous session due to the inflation data. Last seen down by 0.79% versus a basket. The euro increased by 0.94% to $1.1191. Peter Cardillo is the chief market economist of Spartan Capital, a New York-based firm. The European stock market ended the day slightly higher with a 0.1% gain, their highest level since March. Emerging Market Stocks fell by 5.03 points or 0.43% to 1,156.82. The broadest MSCI index of Asia-Pacific stocks outside Japan closed at 603.95, while Japan's Nikkei gained 1.43%, to 38183.26. After the Geneva talks, the U.S. announced it would cut tariffs for Chinese imports from 145% to 30%, while China announced it would reduce duties on U.S. imported goods to 10%, from 125%. The change in U.S. China trade relations has caused traders to reduce expectations of Federal Reserve rate reductions, believing that policymakers will have more flexibility to lower rates as inflation risks decrease. The traders are now pricing in a 56 basis point reduction this year. This is down from the forecasts of over 100 basis points made in April when concerns about Trump's tariffs reached their highest level. Cardillo stated that "the Fed is on the right track and until there are any real changes in terms of ending the trade war by June, a rate cut in June remains in doubt." Economists and fund managers have stated that the 90-day break is welcomed, but it hasn't changed the larger picture. Christopher Hodge is the chief U.S. economics at Natixis. The ratings agency Fitch estimates that the U.S. tariff rate has dropped to 13.1% from 22.8% before the agreement, but is still above the 2.3% at the end 2024. The yield on the benchmark U.S. 10 year note rose by 1.6 basis to 4.473%. The yield on the 2-year U.S. note, which moves typically in line with expectations of interest rates for the Federal Reserve rose by 0.2 basis to 4.004%. Spot gold increased 0.61%, to $3,253.51 per ounce. U.S. Gold Futures closed 0.6% higher, at $3,247.80. Brent crude futures settled on $66.63 per barrel, an increase of $1.67 or 2.57%. U.S. West Texas Intermediate Crude finished at $63.67 up $1.72, or 2.78%.
Stocks tick higher after U.S. inflation data
Worldwide shares ticked greater after U.S. inflation data revealed no worrying signs of fresh up momentum last month, as anticipated, though financiers were still in the dark about when the Federal Reserve would start cutting rate of interest.
U.S. stock index futures reversed earlier losses and edged greater ahead of the opening bell on Wall Street.
The U.S. Commerce Department said the personal consumption expenditures (PCE) cost index, widely viewed as the Fed's. favoured inflation indicator, increased 0.3% last month,. unchanged from March.
The good news is, it's not worse. And that's precisely what. we require with inflation information right now, stated Art Hogan, chief. market strategist at B Riley Wealth.
Oil was a little weaker, the dollar relieved,. and U.S. Treasury yields drifted lower after the. release.
The longer you get the market inflation lingering close to. 3%, the more difficult it is for the Fed to make a case for cutting. rates. Definitely there's absolutely nothing in these numbers that advances. the Fed's rate cutting concept, stated Joseph Trevisani, senior. expert at FX Street.
Ealier, data revealed euro zone inflation rose. more-than-expected in May, though analysts said this was. not likely to stop the European Reserve bank from decreasing. obtaining expenses on Thursday, however may cement the case for a time out. in July.
German federal government bond yields increased to their. highest in over 6 months.
The big driver in the market at the moment is the exact same old. story of when is the Fed going to pivot and begin cutting. rates, said Mark Ellis, CEO of Nutshell Asset Management.
Although stock exchange have actually carried out strongly in May, simply. in the last week it appears extremely stressed. I'm anticipating that to. diminish today, and seasonally the very first week of June is quite. good for markets, Ellis added.
The MSCI All Nation Stock index edged up. 0.15% to 782.27 points, however was down almost 2% on the week after. yields on government bonds rose, though the criteria is still. up more than 7% for the year.
In Europe, the STOXX index of 600 companies was. last up 0.3%, however likewise heading for a second week of declines,. however was still likely to show gains for May.
Ellis stated expectations that the ECB will move before the. Fed in cutting rates, the opposite to what has historically. occurred, is mostly priced into markets.
Analysts said they anticipate little influence on Wall Street from. news that Donald Trump has actually become the first U.S. president to be. founded guilty of a criminal offense ahead of a November vote when he will attempt. to recover the White Home from Democratic President Joe Biden.
ASIA WEAKER
MSCI's broadest index of Asia-Pacific shares outside Japan. was down 0.5%. The index was set for a gain of. about 2.7% in May, increasing for the fourth straight month.
China stocks were down 0.4%, while Hong Kong's. Hang Seng index was off 0.8%.
China's manufacturing activity unexpectedly fell in May, an. official factory survey showed on Friday. The soft outcome kept. alive require fresh stimulus as a protracted property crisis. continues to weigh on businesses, customers and investors.
Traders are likewise looking over their shoulders for any tips. of intervention from the Tokyo authorities as the Japanese yen. flirts with levels that resulted in believed bouts of. intervention late in April and early this month.
The yen was last at 156.83 per dollar, having touched. four-week lows of 157.715 on Wednesday. The currency deteriorated to. its lowest in 34 years at 160.245 on April 29, sparking at least. two presumed rounds of interventions.
Core consumer rates in Japan's capital rose 1.9% in May on. increasing electricity bills but rate growth excluding the effect. of fuel relieved, heightening unpredictability on the timing of the. reserve bank's next rate of interest walking.
The dollar index, which measures the U.S. currency. versus 6 others, was trading at 104.41, on course for a 1.4%. decrease in May, snapping a four-month winning streak.
The euro was firmer at $1.08777.
In products, Brent petroleum futures were down. 0.12% at $81.76 a barrel after a surprise integrate in U.S. gas. stocks weighed on the market, although U.S. West Texas. Intermediate (WTI) crude was somewhat firmer at $77.93.
Gold firmed and was set for a fourth straight month-to-month. gain, trading at $2,351 per ounce.
(source: Reuters)