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Asian stocks soar after trade tensions and credit concerns ease
Asian shares rose Tuesday, as the prospect that trade tensions would ease between the two largest economies in the world boosted risk sentiment. Sanae Takaichi is set to be elected Japan's new prime minister. This will lift the Nikkei, but weigh on the yen. U.S. president Donald Trump said he expected to reach a fair deal with Chinese President Xi Jinping, and downplayed the risks of a conflict over Taiwan. In recent weeks, trade tensions between China and the U.S. have weighed heavily on the markets. Investors are now focused on Trump's meeting with Xi next week on the sidelines an economic conference held in South Korea. Investor sentiment was lifted by the lingering optimism that a solution could be in sight. MSCI's broadest Asia-Pacific share index outside Japan reached a four-and-a-half-year-high and closed the day up by 0.94%. China's stocks were up 0.2%, while Hong Kong’s Hang Seng rose 1% in early trading. Investors snapped up stocks of rare earths, critical minerals and other essential materials after Australia signed a deal to supply the United States. The Nikkei 225 index rose to an all-time high and was close to reaching a milestone 50,000 points, as the so called 'Takaichi trading' did not show any signs of slowing down. Takaichi was confirmed as the next Prime Minister of Japan by a parliamentary vote. INVESTORS BUY DIP Investor sentiment also suffered last week, as a series of bad loans in regional U.S. banks sparked concerns about credit risks which threatened to spill over into the wider markets. Risk assets were also affected by the prolonged U.S. shutdown. Investors have bought the dip this week, shrugging off concerns about trade tensions and focusing instead on the upcoming earnings of several large companies. Chris Weston is the head of research for Pepperstone. He said, "The market has easily overcome the wall of concern, as new capital was injected into risks and fresh air into the market's lung." The market was buoyed by the expectation that the Federal Reserve would cut interest rates at its next two meetings. Kevin Hassett, White House Economic Advisor, also commented on the likelihood of the shutdown ending this week. All three major U.S. indexes closed sharply higher overnight, with chip stocks reaching a new record high. Analysts now expect S&P 500 earnings to grow 9.3% on average year-on-year in the third quarter, a marked improvement from their estimate of 8.8% as of October 1. Mixo Das is Asia Equity and Quant Strategist for J.P. Morgan. "I believe the main driver is the aggressive policy easing we are seeing. The economy is nowhere near a recession and the policy is still being eased very aggressively. TAKAICHI WINS VOTE IN THE LOWER HOUSE TO BECOME JAPAN’S PM Sanae Takaichi, a conservative hardliner, was on track to become Japan's very first female Prime Minister after winning an important vote in the lower house of parliament. Analysts expect Takaichi will be pro-stimulus, and against any further increases in interest rates. This is a negative for the Japanese yen and for bonds, but positive for stocks. Last week, the yen fell by 0.4% to 151.39 dollars per dollar. It also suffered against the euro and sterling. Next week, the Bank of Japan will meet. Traders are pricing in a 20% chance of an increase. However, Governor Kazuo Ueda Has so far kept his options open, by giving few clues about the timing of an interest rate increase. Gold prices fell 0.8% in one day, but they were still close to the record highs that have been seen recently.
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Goldman Sachs warns of possible disruption of supply of rare Earths and key minerals
Goldman Sachs warned of the risks that could be posed to global supply chains for rare earths, other critical minerals and metals, highlighting China's dominance over mining and refining and pointing out challenges to nations wishing to establish independent supply chains. China increased export restrictions on rare earths, adding five new elements on October 9 and increasing scrutiny for semiconductor users before an expected summit between Donald Trump and Xi Jinping. CHINA'S SUPPLY CHAIN LEVERAGE Goldman Sachs reported in a Monday note that China controls 69% global rare earth mining and refining. It also said 98% of magnet production is done by China. Rare earth elements have become a geopolitical flashpoint, because they are essential to the high-tech industry and used in everything from computer chips to defence equipment. The bank said that while the rare earths market was worth $6 billion last fiscal year, it is only a fraction of the size of copper, which is 33-times bigger. It also warned that disruptions of 10% to industries dependent on REEs can result in a $150 billion loss in economic output. Inflationary pressures are also exacerbated by shortages. MINERALS MAY FACE CURBS ON EXPORT Goldman Sachs identified samarium as a particularly vulnerable metal to export restrictions. Samarium is used in heat-resistant samarium cobalt magnets that are key to aerospace and defense. The GDP could also be affected by disruptions in the supply of lutetium or terbium, which are widely used. Since China is the dominant player in mining and refining, light rare earths such as cerium, lanthanum and others are future targets. Western producers such as Lynas and Solvay, could help ease the shortages. However, China is still a major supplier. CHALLENGES FOR INDEPENDENT SUPPLY CHAIN Goldman Sachs identifies a number of barriers to building independent REE and magnetic supply chains. These include geological scarcity, technological complexity, and environmental issues. The report said that heavy rare earths are particularly scarce outside of China and Myanmar. Most known deposits are small, low-grade or radioactive. The bank stated that the refining of REEs requires expertise and infrastructure. It takes five years to build a refinery. The Chinese control over critical inputs like samarium also limits magnet production in other countries, including the U.S.A., Japan and Germany. INVESTMENT RISKS AND COMMODITY RISE Goldman Sachs suggests that investors can manage disruption risks by investing in equities. They cite Iluka Resources, Lynas Rare Earths and MP Materials Corp. as the key players. The bank forecast a deficit in supplies of Neodymium-Praseodymium Oxide (NdPrO), critical for making magnets, Goldman Sachs has warned that geopolitical tensions could lead to supply disruptions for commodities like cobalt, natural gas, and oil. (Reporting and editing by Clarence Fernandez in Bengaluru, Anmol Choubey)
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Gold's record-breaking run is halted as investors book profits
The gold price fell on Tuesday as investors took profits following the bullion's recent high, which was fueled by the expectation of more interest rate reductions from the U.S. Federal Reserve. As of 0456 GMT spot gold was down by 0.3%, at $4340.99 an ounce. It had reached a record high of $4381.21 per ounce on Monday. U.S. Gold Futures for December Delivery were unchanged at $4,357.80 an ounce. Tim Waterer, KCM Trade's Chief Market Analyst, said that profit-taking and a decline in safe-haven flows have combined to take the edge of the gold price. Any pullbacks will be seen as opportunities for buying gold while the Fed continues on its current rate-cutting path. According to the CME FedWatch Tool, markets are pricing in a quart-point Fed rate reduction this month and another in December. In a low-interest rate environment, gold, which is a nonyielding investment, does well. Waterer stated that the current gold rally still has room to rise, provided U.S. CPI figures released later this week don't reveal any unpleasant surprises. According to economists surveyed by the, the data is scheduled to be released on Friday, after a delay caused by the government shutdown. The index should have risen 3.1% year-over-year in September. On Monday, the U.S. shutdown reached its 20th consecutive day after senators failed to resolve the impasse for the 10th time in a row last week. Kevin Hassett, White House's economic adviser, said that the shutdown would likely end this week. The shutdown has caused key economic data to be delayed, leaving investors and policymakers with a data vacuum ahead of next week's Fed policy meeting. In Malaysia, U.S. Treasury secretary Scott Bessent will meet Chinese Vice Premier He Lifeng this week in an effort to prevent a rise in U.S. tariffs against Chinese goods. Silver spot fell 1.2% at $51.83 an ounce. Platinum dropped 0.7% to 1,627.53 while palladium rose 0.1% to 1 497.62.
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Oil drops for a second consecutive day, as concerns about oversupply dominate
Oil prices dropped for a second consecutive day on Tuesday, as fears about an excess of supply and the risks to demand resulting from tensions between China and the U.S., the two largest oil consumers in the world, weighed on the market. Brent crude futures were down 17 cents or 0.28% at $60.84 per barrel as of 0343 GMT. The U.S. West Texas Intermediate (WTI), which is due to expire Tuesday, fell 0.52% to $57.22. The December contract, which is more active, was down by 19 cents or 0.33% at $56.83. In Monday's session, prices fell to their lowest level since early May on concerns over a slowing economy due to the recent escalation of the U.S. China trade dispute. WTI and Brent both have moved to Contango Market structures where prices for immediate delivery are lower than those for later deliveries and which indicates typically that supply near term is abundant and the demand weakening. Prices have fallen as the Organization of the Petroleum Exporting Countries and its allies, including Russia (known as OPEC+), have pushed forward with plans to increase oil production. Analysts have predicted a crude surplus this year and in the next. Last week, the International Energy Agency projected a global surplus in 2026 of almost 4 million barrels a day. In a note published on Tuesday, analysts at China's Haitong Securities stated that "the continued weakness of Brent's spread structure monthly indicates that the pressure due to oversupply is gradually manifesting," they said. This will dampen expectations in the market and reduce investors' willingness for gains. Limiting the potential of oil prices to recover. Goldman Sachs analysts said on Tuesday that they expect Brent prices to drop to $52 per barrel by the end of 2026. Goldman analysts attributed this week's drop in Brent oil prices to signs that "the long anticipated global surplus has begun to show" as seen in satellite data of global oil stocks and in inventory data from IEA in the U.S. and the Energy Information Administration. A preliminary poll conducted on Monday, before the weekly reports of the American Petroleum Institute (API) and the EIA, showed that the expectation is that U.S. crude stockpiles increased last week. Ashitha Shivprasad reported from Bengaluru, Sonali Paul edited the story and Christian Schmollinger provided the final edit.
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MORNING BID EUROPE - Markets dismiss worries as risk rally continues
Ankur Banerjee gives us a look at what the future holds for European and global markets Worries about credit risk are now a distant memory. Investors feel optimistic, betting on the Fed cutting rates next week, and that earnings will be good. This - call it optimism - is what has driven stocks in Asia-Pacific to new highs, with Japan's Nikkei coming just short of a milestone 50,000 points. Apple-led gains in U.S. technology shares have led to strong gains overnight for tech stocks from Taiwan and South Korea. Sanae Takaichi, a conservative hardliner, is expected to be elected as Japan's 1st female Prime Minister later on Tuesday. Her appointment has continued to drive Japanese shares higher in hopes that her stimulus plans will benefit equities. Local media reports that Takaichi, an acolyte to former Prime Minister Shinzo Abe will appoint Satsuki Katayama to the position of Finance Chief. Katayama, who has said that the real value of the yen is closer to 120 or 130 per dollar, may not be good news for yen bulls. The last time the yen reached 151.07 was in 2007. In Europe, there is not much on the calendar in terms of economic events. This could be good for risk assets because they can take their cues from the Federal Reserve's lowering interest rates. The traders are predicting a 98.3% probability of a rate cut by 25 basis points next week. Investors are also comforted by the recent comments made by U.S. president Donald Trump about China. Trump has said he hopes to reach a fair deal with Chinese President Xi Jinping, as he prepares for a meeting with Xi at an economic conference next week in South Korea. The news next week will be dominated by the central bank meetings taking place in the U.S., Japan and the meeting between Trump & Xi. After a volatile week in which fears over credit risk impacted sentiment, traders will be focusing on regional bank reports as well. Investors were largely satisfied with the earnings reported by some companies on Monday. The following are the key developments that may influence Tuesday's markets: Earnings: Unicredit, L'Oreal
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Another TSO Enlists Njord Survey for Offshore Wind Support Services
Swedish firm Njord Survey has entered into a frame agreement with Energinet, Denmark’s national transmission system operator (TSO), covering site and route survey services for offshore wind and subsea cable projects.The long-term collaboration reinforces Njord Survey’s position as provider of services to the offshore renewable sector.It follows the agreement company signed earlier in October with German TSO 50Hertz to deliver geophysical and ROV seabed survey service in support of offshore wind developments in Baltic Sea.Swedish Firm to Deliver Carbon-Neutral Surveys for Baltic Sea OW Projects“This partnership strengthens our role in supporting the energy transition across Northern Europe, providing high-quality, carbon-neutral survey data essential for safe and efficient infrastructure development,” said Martin Wikmar, CEO of Njord Survey.
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Shanghai copper gains as signs of US-China tensions easing
Shanghai copper rose on Tuesday as the U.S. President Donald Trump lowered China's intentions towards Taiwan while expecting a fair deal. As of 0249 GMT, the most active contract on Shanghai Futures Exchange rose 0.49% to 85,720 Yuan ($12,034.26) a metric ton. The benchmark London Metal Exchange three-month futures rose by 0.26%, to $10 719.50 per ton. Trump said on Monday that China has no intention of invading Taiwan. He also acknowledged he would raise the issue at the high-stakes summit with his Chinese counterpart Xi Jinping next week in South Korea. Trump said he expected a "strong deal" on trade that would make him and Xi both "happy". The remarks were made during a meeting between the Australian Prime Minister Anthony Albanese and President Obama, at which they signed an important minerals agreement in order to counter China’s dominance of global supply. The U.S. Treasury secretary Scott Bessent will meet with China's vice premier He Lifeng in Malaysia to try and avoid an escalation in U.S. duties on Chinese products. The copper bulls continued to gain Monday despite the deflationary pressure in China and the slowest third quarter economic growth for a year. Traders continue to watch how trade tensions will develop between the two world's largest economies in the lead-up to Trump-Xi's planned meeting in South Korea. Aluminium gained 0.31% among other SHFE base materials, while zinc gained 0.50% and nickel gained 0.62%. Lead was up by 0.41%. Tin posted an increase of 0.81%. The LME also saw a slight increase in zinc, nickel, and tin, but little change for aluminium or lead. $1 = 7.1230 Chinese Yuan Renminbi (Reporting and editing by Harikrishnan Nair; Lewis Jackson)
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Gold's record-breaking run is halted as investors book profits
The gold price fell on Tuesday as investors took profits following the bullion's recent high, which was fueled by the expectation of more interest rate reductions from the U.S. Federal Reserve. As of 0248 GMT on Tuesday, spot gold was down by 0.3%, at $4,340.29 an ounce. It had reached a record high of $4381.21 per ounce on Monday. U.S. Gold Futures for December Delivery eased by 0.1%, to $4.356.40 an ounce. Tim Waterer, KCM Trade's Chief Market Analyst, said that profit-taking and a decline in safe-haven flows have combined to take the edge of the gold price. Any pullbacks will be seen as opportunities for buying gold while the Fed continues on its current rate-cutting path. According to the CME FedWatch Tool, markets are pricing in a quarter point Fed rate reduction this month and another in December. In a low-interest rate environment, gold, which is a nonyielding investment, does well. Waterer stated that the current gold rally still has room to rise, provided U.S. CPI figures released later this week don't reveal any unpleasant surprises. According to economists surveyed by the, the data is scheduled to be released on Friday, after a delay caused by the government shutdown. The index should have risen 3.1% year-over-year in September. On Monday, the U.S. shutdown reached its 20th consecutive day after senators failed to resolve the impasse for the 10th time in a row last week. Kevin Hassett, White House's economic adviser, said that the shutdown would likely end this week. The shutdown has caused key economic data to be delayed, leaving investors and policymakers with a data vacuum ahead of next week's Fed policy meeting. In Malaysia, U.S. Treasury secretary Scott Bessent will meet Chinese Vice Premier He Lifeng this week in an effort to prevent a rise in U.S. tariffs against Chinese goods. Silver spot fell 1.6%, to $51.64 an ounce. Platinum dropped 0.7%, to $1.627.62, and palladium rose 0.5%, to $1.503.17.
MORNING QUOTE AMERICAS-US examine sub-4% out of work, China imports sluggish
A take a look at the day ahead in U.S. and international markets from Mike Dolan After a mad week of G7 rate of interest cuts, new records for stocks, another scramble for AI and a wave of elections, world markets have actually frozen awaiting the U.S. employment report.
The May payrolls report comes just ahead of next week's. Federal Reserve conference and the majority of the labor market updates in. current days have actually shown a steady cooling in work.
For the record, consensus forecasts show non-farm. payrolls development got a touch last month to 185,000 from. 175,000 in April - and the month-to-month rise in typical incomes likewise. ticked greater to 0.3%.
But the unemployment rate is set to stay at 3.9% and if. that holds, Deutsche Bank strategists mention, it will mark. the 28th month listed below 4% - the longest such stretch because the. 1950s.
It would have to be a surprise for recession alarm bells to. sound and would need to jump as high as 4.3% to set off the. oft-cited Sahm rule. Established by previous Fed financial expert Claudia. Sahm, it recommends an economic crisis red flag if the rolling. three-month average unemployed rate increases half a point above the. low of the previous 12 months.
But the cooler labor market seen this week in weekly. unemployment claims, falling vacancies and a contracting service. sector tasks elements has currently seen Fed rate cut. expectations revived to 2 quarter-point moves this year,. starting in September.
And 10-year Treasury yields << US10YT= RR are hovering at. two-month lows and the dollar is on the back foot near. eight-week lows too.
MSCI's world share index stalled ahead of time. of the report after touching an all-time high up on Thursday and. Wall Street stock futures were flat ahead of the bell.
Oil steadied as OPEC+ members Saudi Arabia and. Russia indicated readiness to stop briefly or reverse oil output. increases, however crude was still headed for its 3rd straight. weekly loss as needed issues.
China's stocks were as soon as again in downbeat state of mind. and a notable underperformer in Asia even though the nation's. May export numbers beat forecasts.
However versus international concerns about a fresh Chinese export. push to flatter an economy struggling with still-fragile domestic. usage, the huge concern import development slowing far more. than anticipated to just 1.8% from a 8.4% dive in the previous. month.
Chinese stocks were likewise hit by a report that U.S. legislators. pushed to ban Chinese battery companies with ties to Ford and. Volkswagen from exporting to the United States.
In Europe, stock markets slipped back and the euro was. a little firmer after the European Reserve Bank on Thursday. provided its long-telegraphed first rate cut - however planted some. doubts about the extent and speed of more reducing from here.
Markets do not see another cut before September.
And after the expert system boom re-ignited once again. today, with Nvidia hitting new highs and topping a. $ 3 trillion market cap, attention was now on how the firm's. shares would respond to today's pre-announced stock split.
Nvidia fell back 1% on Thursday, back to being the world's. third most important business the day after it leapt ahead of. Apple to take second location.
Secret diary products that may provide direction to U.S. markets later on. on Friday:. * US May employment report, April consumer credit; Canada May. work report. * European Central Bank President Christine Lagarde speaks
(source: Reuters)