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China stock market to rise on trade deal
China's stocks will open strongly on February 2, reacting to a U.S. China deal that will delay and slash the tariffs, and de-escalate tensions in trade between two of the world's largest economies. The agreement reached between U.S. officials and Chinese officials following weekend talks in Geneva exceeded market expectations, and led to an explosive rally in the U.S. Dollar and global stock markets. The news broke just after the mainland closed Monday, causing Hong Kong to rise ahead of its closing. On the news, the Hang Seng China Enterprises Index jumped more than 3%. Hong Kong's Hang Seng Index closed at a six-week high. Overnight, U.S. stock prices rose by nearly 3%. On Tuesday, the yuan was little different from Monday's level after it had risen 0.6%. Ting Lu wrote that the deal was "a pleasant surprise for markets and economies on both sides of Pacific Ocean." Ting is chief China economist with Nomura. It could be the beginning of an inevitable collision between the two biggest economies. The markets may need to consider the medium- to long-term risk after enjoying a recovery. After talks with Chinese officials at the Geneva International Conference, U.S. Treasury secretary Scott Bessent said that both sides agreed to a 90-day suspension of their tit for tat policies. Both sides announced on Monday that the U.S. would reduce its extra tariffs on Chinese imports from 145% to 30% and Chinese duties will drop to 10%. Before the news broke, China's blue chip CSI300 Index rose 1.2% and the Shanghai Composite Index gained 0.8%. China's stocks have fully recovered from the sharp drop in prices last month, triggered by President Donald Trump’s punitive measures against tariffs on "Liberation Day". The blue-chip CSI300 Index has risen 0.2% from its April 2 levels. The truce is a boon for Chinese consumer electronics manufacturers and other major U.S. exporters. Gold miners are likely to suffer, as the price of yellow metal, which is a safe haven asset, will drop on hearing the news. China's agricultural sector, which is vulnerable to increased imports from the U.S. The agreement's impact on China's rare-earth companies is not yet clear. The U.S. did not mention the sector, which is strategically significant. However, the U.S. stated that China would commit to "suspending the non-tariff measures or removing them". (Reporting and editing by Hong Kong Newsroom, Jamie Freed).
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Oil prices drop from 2-week highs following US-China tariff war
The oil prices fell on Tuesday, from the two-week high they reached in the previous session. This was after the U.S. & China agreed to temporarily reduce tariffs. This sparked optimism that the trade war between two of the largest economies in the world would end. The U.S.-China agreement to reduce steep tariffs by at least 90 day sent Wall Street stocks, U.S. dollars and crude oil prices sharply higher Monday. The dispute is not over, but the underlying issues that caused it remain. These include the U.S.-China trade deficit and U.S. president Donald Trump's demands for Beijing to take more action to combat the U.S. crisis of fentanyl. Brent crude futures fell 14 cents or 0.2% to $64.82 a barrel at 0011 GMT. U.S. West Texas Intermediate crude (WTI), which is a derivative of WTI, fell by 13 cents or 0.2% to $61.82. The benchmarks for both closed Monday with a 1.5% gain, their highest settlement since April 28. These gains are coming at a time when the global oil market is experiencing turmoil. Investors were worried that the U.S. China trade war would slow economic growth and reduce oil demand. The Organization of the Petroleum Exporting Countries decided to increase oil production by more than expected. (Reporting and editing by Jacqueline Wong; Stephanie Kelly)
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US House Republicans try to kill EV loan and tax credit program
As part of a broader tax reform bill, Republicans in the U.S. House of Representatives proposed Monday to kill the electric vehicle credit and repeal fuel efficiency regulations designed to encourage automakers to build more zero-emission cars. The proposal is scheduled for a House Ways and Means Committee Hearing on Tuesday. It would repeal the $7,500 tax credit for new vehicles and the $4,000 credit for used vehicles on December 31, but it would keep the credit for new cars for an extra year for automakers who haven't sold 200,000 electric cars. Genevieve Cullen - the president of the Electric Drive Transportation Association - criticized the plan, saying plans to "abandon U.S. energy leadership by gutting federal investments in electrification is catastrophically shortsighted." She said that the proposal would give "an enormous advantage" to Chinese competitors and threaten U.S. jobs and manufacturing. In 2024, the U.S. Treasury will award more than 2 billion dollars in rebates at the point of sale for EVs. The proposal keeps in place the key tax credit for battery production for automakers and batteries makers. However, a new provision would prohibit credit for vehicles made with components manufactured by certain Chinese companies or produced under a licence agreement with Chinese firms. This provision would come into effect in 2027 and could prevent credit for vehicles powered by Chinese batteries licensed by American companies like Ford Motor or Tesla. The House Republicans propose also to end a loan program which supports the production of certain vehicles with advanced technology. The plan would cancel any funding that was not obligated and would also repeal corporate average fuel efficiency standards and greenhouse gas emissions rules through 2027. This portion will be handled by the Energy and Commerce Committee. Among the outstanding loans that President Joe Biden finalized during his last weeks as president are $9.63 Billion to a Ford Motor joint venture with South Korean battery manufacturer SK On to build three battery manufacturing facilities in Tennessee and Kentucky, $7.54 Billion to a Stellantis-parent Chrysler and Samsung SDI joint venture for two EV Lithium-ion Battery plants in Indiana and $6.57 Billion to Rivian to start building smaller and less expensive EVs by 2028. (Reporting and editing by Leslie Adler; reporting by David Shepardson)
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Elliott wins ISS Support in Phillips 66 proxy battle
Elliott Investment Management won a major victory in the board fight it waged against Phillips 66 on Monday when Institutional Shareholder Services, a prominent proxy advisory firm, recommended that investors elect each of its four activist nominees for director. Elliott, which has a stake of approximately $2.5 billion in Phillips and is valued at $48, billion, wants to see the refiner make changes, including spinning off or selling the midstream business. It also wants to see investors re-energize the board to accomplish these goals. Analysts and investors believe that the hedge fund has gained significant support with the backing of ISS, following a similar recommendation by Glass Lewis, ISS's smaller competitor. Glass Lewis encouraged investors to elect at least three of Elliott's nominees during the May 21 meeting. When voting on controversial issues such as who sits on board, investors often consider the recommendations of proxy advisory firms. The ISS report stated that "despite the fact that the board was reformed since the pandemic outbreak, there are strong indications the board does not want to exercise independent supervision of management." The dissident's slate is strong, and has the independence and experience that PSX needs. The proxy battle between Elliott and Phillips 66 has been one of the most heated in recent years. Both sides have spent a lot of time and money trying to convince shareholders that they are the best candidates. Neither Phillips 66 or Elliott responded immediately to the report. Four directors will be elected by investors from the 14 member board.
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Petrobras announces $2.1 Billion in dividends and a first-quarter profit increase on the back of one-offs
Petrobras, Brazil's largest oil company, announced a first-quarter net profit of $35.2 billion, an increase of 48.6% over the same period last year. Non-recurring events boosted this figure. The company also announced dividends worth $2.1 billion. If not for one-off events such as fluctuations in the exchange rate of the real against the dollar, state-owned oil company would have seen a 12.1% decline in its net profits over the same period to 23.6 billion reais. Magda Chambriard, Petrobras' Chief Executive Officer, said in a press release that the company's financial results and operational performance were "robust." EBITDA (earnings before interest, tax, depreciation, and amortization) for the oil producer was 61 billion reals, an increase of 1.7% year-on-year. Petrobras reported that adjusted EBITDA was 62.3 billion reais without non-recurring effects. LSEG polled analysts who had predicted an EBITDA of 62.9 billion dollars. Petrobras announced in a separate filing that its board of directors had approved the payment to shareholders of 11,72 billion reais ($2,1 billion) as dividends and interest. This is equivalent to 0.91 reals per share. The earnings report revealed that the amount was due to investments, as measured by capital expenses (capex), a measure which is of great interest for investors. It rose from $3 billion a few years ago to $4.1 billion, a significant increase. In a statement, the company's Chief Financial officer Fernando Melgarejo said that the majority of the investments were concentrated in presalt projects in Buzios, Atapu and Buzios. He added that Petrobras had invested 22% its annual guidance. Petrobras investments are special Investors' attention After they exceeded the firm's estimates in 2024 there was concern about dividends being reduced. Petrobras reported that net revenue for the quarter increased 4.6%, to 123.1 billion reals, a slight decrease from the 124.9 billion reals analysts had expected. The company had already published an operational report Last month The country's oil, gas, and gas liquids output fell by 0.2% to 2,77 million barrels per day. $1 = 5.6699 Brazilian reais (Reporting and editing by Gabriel Araujo in Rio de Janeiro, Andre Romani and Chris Reese in Sao Paulo)
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Oil jumps and soy gains with US-China tariff relief
After the United States and China suspended trade tariffs for 90-days, the markets felt some relief. Two of the world's largest economies have agreed to temporarily reduce their reciprocal tariffs while they negotiate to stop a damaging trade conflict that has caused financial markets to rumble and raised fears of recession. The U.S. is reducing the extra tariffs on Chinese imports from 145% to 30% and Chinese duties on U.S. imported goods will drop to 10% from 125%. The new tariffs are a return to the pre-Liberation Day level and represent a de-escalation better than expected, said ING commodities analyst EwaManthey. She was referring to April 2, when U.S. president Donald Trump announced a slew levies against trading partners. Brent crude and U.S. WTI futures, which were up by around 1.5% last week, are now adding around 1.5% to their gains. The benchmarks both rose to their highest levels since April 28. Ole Hansen, analyst at Saxo Bank, said that crude oil was initially the biggest winner. The news helped to stabilize the demand outlook. According to LSEG, the benchmark Dutch front month contract reached a intraday high at 36.25 Euros per megawatt-hour (MWh). This is the highest level since April 16. The U.S. soybean crop has been hit the hardest by the trade dispute, as China, the top soy importer in the world, shifts purchases from the U.S. to Brazil, the second largest exporter. CBOT soybeans, the most active Chicago Board of Trade product, settled at a 19-1/2-cents-higher price of $10.71-1/4 a bushel. This was their highest level since early February. Gold prices dropped to $3,207.3 per ounce, and last fell 2.7%, at $3,233.78. The price of industrial metals rose, as fears about growth and demand eased. However, traders noted that the market was still cautious. The benchmark copper price on the London Metal Exchange was up by 0.6% at $9,502 per metric ton. Aluminium gained 2.3%, to $2,473. Callum Macpherson, Investec's head of commodities, said: "Tariffs were lowered temporarily, but it is unclear what will happen next and whether the U.S. will be able reach a long-term agreement." The longer the uncertainty continues, the more impact it will have on the economy. Reporting by Seher Daeen in London and Robert Harvey in New York; additional reporting from Stephanie Kelly in New York, Nora Buli and Pratima Deai in London and Brijesh Pattel in Bengaluru. Editing by Kirsti Donovan and Sonali Patel.
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Boulder can sue Exxon and Suncor for climate change, says Colorado's top court
Colorado's highest Court rejected ExxonMobil’s and Suncor Energy’s attempts to dismiss a case filed by the City of Boulder to hold fossil fuel companies accountable for climate change. In a decision reached by a majority of 5-2, the Colorado Supreme Court ruled that federal law does not prevent Boulder and the surrounding counties from claiming the energy companies have violated state laws by misleading the public regarding the dangers of fossil fuels. This was only the second instance in which a state's supreme court allowed one of many lawsuits brought by local and state governments against large energy companies regarding climate change to proceed. Hawaii Supreme Court has allowed Honolulu's lawsuit against Exxon Sunoco, and other companies to proceed. The U.S. Supreme Court declined to review the decision in January. In a press release, Boulder Mayor Aaron Brockett stated that "this ruling confirms what we have known all along: Corporations cannot mislead and avoid accountability for damages they've caused." Exxon Suncor representatives did not respond when contacted for comments. Boulder sued the companies in 2018. The lawsuit alleged that the companies had violated state laws, and caused a public nuisance and private nuisance through misleading the public regarding the role fossil fuels played in exacerbating the climate change. Boulder claims that it should be required to pay the costs incurred to protect their community from climate changes. The companies deny any wrongdoing. The companies had fought to get the case heard at federal court for many years. State courts are considered to be a more favorable venue by plaintiffs. After years of litigation, and after two trips to U.S. Supreme Courts, the case was ultimately sent back to state court where a judge refused to dismiss the suit. The companies claimed that Boulder's suit would interfere with federal regulations of greenhouse gas emission under the Clean Air Act, and hinder the federal government's capability to conduct foreign relations. Justice Richard Gabriel said that a lawsuit is not a regulation just because it may have an effect on the behavior of actors in a particular field. Justice Carlos Samour expressed his dissension, saying that Boulder's lawsuit sought to regulate interstate air quality and could result in "regulatory confusion." (Reporting and editing by Alexia Garamfalvi, Sonali Paul, and Nate Raymond from Boston)
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Official: BYD's factory in Brazil will be "fully functional" by the end of 2026.
In a video posted on Monday, Augusto Vasconcelos, Bahia's state labor secretary, said that the new factory of Chinese electric car manufacturer BYD in Brazil would be "fully operational" by December 2026. Its operations had been delayed due to an investigation into possible labor abuses. He added that the factory would start to produce cars by the end of the year from semi-finished kit. Vasconcelos said in a video posted on social media that a new schedule was being set up so that the factory would be fully operational by December 2026, with an expectation of 10,000 jobs. Vasconcelos revealed that the news came as Bahia governor Jeronimo Rodriguez traveled to China along with President Luiz inacio Lula Da Silva to discuss plans for BYD, and the auto industry. BYD said that operations will start with the assembly in 2025. The factory is ramping up as it "progressively nationalizes the most popular models in Brazil", according to a BYD statement. According to a press release from January, BYD sold 76,713 cars in Brazil in the past year. This represents a 328% increase compared to 17,937 vehicles sold in 2023. BYD is investing in Brazil, its largest market outside China, to transform a former Ford plant into a complex capable of producing 150,000 electric vehicles per year. In December, allegations of abuses on the jobsite tarnished the project. The Chinese company is betting on Brazil by acquiring mining rights in areas that are rich in lithium. This mineral is used to make batteries for electric cars. According to Julio Bonfim of the Metalworkers Union of Camacari in Bahia, the plant was supposed to start making cars at the beginning this year. However, delays caused by the labor investigation and heavy rains impacted the timeline. BYD will hire 1,000 workers to assemble vehicles using kits imported from China this year. This is far less than the 10,000 that the Chinese company originally promised. BYD claims that the project will directly and indirectly create 20,000 new jobs. Bonfim, despite the delay, said that the new timeline was good news and that he expected the hiring to increase next year as the company prepares to manufacture vehicles exclusively in the country. (Reporting and editing by Brad Haynes, Aurora Ellis, and Fabio Teixeira)
US Nuclear regulator starts special inspection at Quad City nuclear power plant
U.S. Nuclear Regulatory Commission has begun a special inspection of the Quad Cities Generating station in Marseilles (Illinois) after discovering inoperative safety-related vacuum breaks, the agency announced on Monday.
Constellation Energy operates the two-unit nuclear power plant.
According to a press release from the NRC, operators discovered that vacuum breakers designed to maintain structural integrity of containment systems during major events had become inoperative because certain valves hadn't been reopened following testing during a recent fueling outage.
The report said that the incident compromised the system's capability to regulate the containment pressure. This warranted a special inquiry, and the system had been restored.
Jack Giessner, Administrator of Region III, said that while this incident did not impact the safe operation of the plant it was warranted for the regulator to conduct an independent review. This is because there were questions about the performance of employees at the plant which compromised the safety system's ability to perform its function.
The NRC's inspectors said they will evaluate Constellation’s response. They will also assess the company’s understanding of the incident, its scope of assessment actions, as well as the adequacy and design of their procedures and systems.
The findings of the inspection will be published in a report that will be available to the public. It will be posted electronically on the NRC website. (Reporting by Anjana Anil in Bengaluru; Editing by David Gregorio)
(source: Reuters)