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Goldman: BOJ may opt to sell ETFs gradually on the market.
Goldman Sachs announced on Friday that the Bank of Japan would sell its exchange-traded fund (ETF) holdings gradually in the market rather than opting for other ideas such as transferring them directly to government entities when it decided to unload their holdings in future. As part of its ultra-loose policy to revive a stagnant economy, the central bank bought ETFs from 2010 for a period of 13 years. The BOJ hasn't said when or how it will sell its ETFs worth 252 billion dollars, 37 trillion yen, and 70 trillion yen, which it purchased last year. The BOJ said that when it decided to sell the holdings it would follow three principles. It will dispose of ETFs for a price that is fair, avoids losses to the bank, and does so in a manner that causes minimal disruption in the market. Goldman Sachs reported that experts had suggested various options to unload the BOJ's ETF holdings, including transferring the ETFs to government entities or to the general public. The report stated that "however, the method which satisfies both three conditions will likely be a small-scale sale on the open markets over time." The report stated that to minimise BOJ's losses and their impact on the stock market, it would be reasonable for them to start selling ETFs in fiscal 2026-2027 and to sell at a pace of 600 billion to 1 trillion yen per year. Goldman's economists, including Akira Otani - a former BOJ executive who headed the financial markets department of the bank - compiled the report. BOJ Governor Kazuo Ueda said that the central bank would need more time before deciding how to best unload its ETFs.
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The IEA reports that Russia's fuel revenue fell by 14% in June compared to last year.
The International Energy Agency reported on Friday that the revenue of Russia from crude oil and petroleum products sales in June fell by nearly 14% compared to a year ago, reaching $13.57 billion. The global oil price has fallen in this year due to the economic uncertainty, and the increased production of OPEC+ (the Organization of Petroleum Exporting Countries) and its allies, including Russia. The IEA reported that Russia's crude production remained stable last month at 9.2 millions barrels per daily and that crude loadings remained at 4.68million bpd. The IEA reported that its exports of oil and petroleum products fell by 110,000 barrels per day to 2.55million bpd. The volumes of crude oil and its products remained at a low level for the past five years. The IEA stated in a paper that "the deterioration of exports has continued for most of 2024-2025 and raises concerns about Russia's capacity to maintain its upstream production," The company said that Russian crude prices were lower than the $60 barrel price cap imposed by the West on average in June, despite a trend above this level for ten days. North Sea Dated prices rose more than those of North Sea Dated as concerns about supply boosted crude purchases and tight crude markets continued. Four European diplomats said that the European Commission will likely propose a floating Russian crude oil price cap in a new draft package of sanctions. Kazakhstan, while meeting its OPEC+ production target, has consistently exceeded the agreed limits. An industry source said last week that the IEA reported that Kazakhstan's crude oil production increased by 70,000 barrels per day (bpd) in June. This is 500,000 bpd more than its OPEC+ goal and nearly in line with 1.88 million bpd. (Reporting and editing by Barbara Lewis; Olesya Astakhova and Vladimir Soldatkin)
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IEA: World oil market tighter than looks
International Energy Agency (IEA) said Friday that the world oil market could be tighter than appears, despite an apparent surplus in supply and demand, as refineries increase processing to meet summer demand. The IEA (which advises industrialised nations) expects the global supply to increase by 2.1 millions barrels per day in this year. This is an increase of 300,000 bpd over its previous forecast. The IEA said that world demand would only rise by 700,000 barrels per day, suggesting a large surplus. Despite these changes, the IEA stated that the tightening market was due to the OPEC+'s latest supply increase and rising refinery processing rates aimed towards meeting summer travel demand and power generation. Announced on Saturday The effect of the ban on smoking cigarettes was not very significant. In a report, the agency stated that "the decision by OPEC+ of further accelerating the unwinding production cuts failed in a significant way due to tighter fundamentals." The hefty surplus on our balance sheets also suggests a tighter oil market. This week was a busy one for the earliest part of this week. Ministers and Executives OPEC and Western oil giants have said that the increase in output does not lead to an increase in inventories. This shows that markets are hungry for more oil. The IEA predicts that demand will grow by 720,000 bpd next year. This is 20,000 bpd less than was previously expected. Supply growth will also increase by 1.3 millions bpd implying a surplus. (Reporting and editing by Tomasz Janovski and Joe Bavier.)
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Gold gains and stocks fall after Trump tariffs on Canada
Global stocks dropped on Friday as U.S. president Donald Trump escalated his tariff war against Canada. This left Europe in the firing lines, causing a modest investor rush to safe havens such as gold. Bitcoin also hit a record high. The Canadian dollar dropped after Trump sent a late-night letter on Thursday stating that a 35% duty rate would be applied to all imports coming from Canada starting August 1. He also stated that the European Union will receive a similar letter on Friday. The U.S. President, whose global tariff wave has disrupted businesses and policymaking, proposed a 15% or 20% blanket tariff rate for other countries. This is an increase from the 10% baseline rate. He surprised Brazil this week, which has an excess of trade with the United States. He imposed duties of up to 50% on copper, pharmaceuticals, and semiconductor chips. The markets have not reacted to the current volatility, with the exception of a few pockets of volatility, whether in currencies, commodities or stocks. In fact, the VIX volatility indicator is at its lowest level since late February. In Europe, STOXX 600 fell 0.7%, despite a 2.2% increase this week. Futures for the S&P 500, Nasdaq and Dow fell by 0.6%. This indicates that the record highs of this week will be retreated at the opening later. Fiona Cincotta, City Index's strategist, said that the market was becoming numb. It may not be until hard data is presented to show an impact before we start to see a reaction. "Clearly, we are getting more information that brings with it a certain clarity. "Because there is so many uncertainties, there's still the idea that Trump is open to negotiations, nothing feels final yet," she said. The Canadian dollar increased 0.3% to C$1.3695. The euro, whose value has dropped by nearly 1% since the beginning of July, fell 0.2% to $1.1683. Trump had earlier in the week pushed back to August 1, his deadline for tariffs for many trading partners, to give more time for negotiation. But he also expanded his trade war by setting new tariffs for several countries, including Japan and South Korea. He also imposed a 50% copper tariff. Joseph Capurso is the head of international economy at Commonwealth Bank of Australia. He said that the 35% tariff rate on Canada wasn't as bad as people thought because the United States, Mexico, and Canada Agreement (USMCA) still allows for exemptions to be applied to most imports. Capurso stated, "Now we don't yet know the tariff rate on EU imports... that's what's not known as yet." "If we get something like (the U.S. - China trade war in April), it's going be very destabilising." Wall Street indexes closed at record highs Thursday, as AI chip maker Nvidia smashed records by achieving a market value of over $4 trillion. Gold has risen for the third consecutive day, rising 0.6% to $3342 per ounce. This brings July's gains to 1.2%. Treasuries received less of a boost as a safe haven, due to investor concerns about the long-term stability of U.S. government finance. This led to a selloff which pushed up yields. Benchmark 10-year yields increased 3 basis points, to 4.38%. This is in addition to the rise of Thursday on the backs of data showing that jobless claims fell unexpectedly last week. As the chances of a U.S. - Japan trade agreement dimming, the yen has steadily weakened. The dollar rose 0.4% to 146.76yen on Friday, resulting in the largest weekly gain this year of 1.6%. Bitcoin has risen by 3.8%, to $117.880. This is the highest ever. Investors will closely monitor the second-quarter earnings of corporations next week in order to assess the impact of Trump’s tariffs that began on April 2. JPMorgan Chase will release its results on Tuesday. This marks the beginning of the reporting period. Brent crude fell by nearly 2% to $68.88 per barrel, continuing the day's decline.
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The iron ore market is set to gain for a third consecutive week on the hope of China reforming its supply
Iron ore futures were up on Friday, and headed for their third weekly gain. This was fueled by renewed hope that China's crackdown against a price war would pave the path for another round reforms to reduce steel overcapacity. The daytime trading price of the most traded September iron ore contract at China's Dalian Commodity Exchange was 1.8% higher, closing at 764 Yuan ($106.56). As of 0722 GMT, the benchmark August iron ore traded on Singapore Exchange was up 0.14% at $99.15 per ton. Both benchmarks are up over 3.5% this week. Jiang Mengtian is a principal analyst with Horizon Insights. He said that the iron market's sentiment was mainly fueled by environmental protection related production restrictions at Tangshan, a major steel hub, and hopes for supply-side reforms. The steel market was the biggest beneficiary, as shown by the futures price and the stockpiling of iron ore from downstream consumers. This helped to lift the iron ore price," said Jiang. Ore prices are rising despite weaker demand. Data from Mysteel consultancy showed that the average daily hot metal production, which is a measure of the iron ore demand, fell 0.6% in the week ending July 10. This was the lowest level recorded since April 3. Coking coal and coke, the other steelmaking ingredients, also saw gains. The price of coking coal has risen by nearly 7% this week, after President Xi Jingping's visit to Shanxi. Shanxi is China's largest coal producing hub. Last week, China's top leaders promised to tighten up regulations on aggressive price reductions by Chinese companies. This led to speculations about possible supply reforms in a number of sectors with overcapacity. Jiang said that the price of coal had seen the biggest increase due to its low value previously. The Shanghai Futures Exchange saw a rise in most steel benchmarks. Rebar, hot-rolled steel coils and wire rods all rose by 1.2%. Stainless steel fell by 0.82%. ($1 = 7,1700 Chinese yuan). (Reporting and editing by Amy Lv, Lewis Jackson)
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Gold prices rise on demand for safe-havens as Trump escalates his trade war
Gold prices rose on Friday for a third consecutive session, after U.S. president Donald Trump announced new tariffs against Canada and threatened broader tariffs against other trading partners. As of 0755 GMT, spot gold rose 0.5% to $3339.99 an ounce. U.S. Gold Futures rose 0.8% to $3351. We're seeing a growing demand for gold, as a safe haven. Investors are looking for a safe asset, despite the stock market's highs. Any dip in gold will be seen as an opportunity to buy now," said Carlo Alberto De Casa. Trump announced on Thursday that the U.S. will impose a tariff of 35% on imports coming from Canada, and plans to impose blanket duty rates of 15% or 20 % on other trading partners. The announcement follows a 50% tariff announced on Wednesday on U.S. imports of copper and a similar tax on Brazilian goods, as well as tariff notifications sent to other trading partners earlier. Trump said that the European Union would receive a letter about tariff rates on Friday. This puts into question the progress in trade negotiations between Washington and the 27 nation bloc. The prospect of a slowdown in the economy has boosted demand for safe-haven assets like gold. Analysts at ANZ noted that the Fed's more dovish stance is also boosting investors' appetite. The data on Thursday revealed Weekly jobless claims dropped unexpectedly in the U.S. to a low of seven weeks, which indicates stable employment levels. Christopher Waller, the Federal Reserve governor, reiterated on Thursday his belief that the central bank can cut interest rates during its policy meeting in late August. The President of the Fed Bank of San Francisco is also a Fed Bank official Mary Daly Two rate cuts are still on the table this year. Gold that doesn't yield is more appealing because of lower rates. Silver spot rose 0.9%, to $37.37 an ounce. Platinum fell 1%, to $1.346.81, and palladium increased 1.3%, to $1.156.44. (Reporting and editing by Joe Bavier in Bengaluru, Brijesh Patel from Bengaluru)
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Reliance claims that India must increase its petchem production to counter China's dominance.
A senior Reliance Industries official stated on Friday that India must increase its petrochemical capacity to meet the local and global market demand, and to contain China's increasing dominance in the sector. The margins on petrochemicals have been shrinking around the globe as China's capacity growth has created an excess. Some refiners can produce petchems up to 40-50% of the total output, which is more than twice what India typically produces. India's petrochemical consumption for now is only a fraction of global average, but it is expected to increase as the nation's economy grows. Many analysts believe that India's economy is growing at the fastest rate of any major country, while China is stagnating, and its demand for gasoline and gasoil has peaked. The use of these two auto fuels in India is still increasing, but at a slower rate as the country tries to switch to cleaner fuels. Vikram Sampat is senior vice president, strategy and business, for Reliance Industries' polyester chain. He told an industry gathering that China had taken over the "entire petrochemical sector" and India must take action. He said, "If we do not act now, China will grow." Sampat stated that Reliance's overall portfolio has a 20% petrochemical production capacity. Analysts predict that Indian refiners are going to increase their focus on the petrochemicals in order to maintain margins and grow as demand for fossil-fuel transport fuels reaches its peak. Sampat expects that refiners will redirect 30-50% of gasoline production to petrochemicals if the petrol demand spikes. If diesel demand peaks the percentage of output that goes into petrochemicals can rise as high as 50%-70%. (Reporting and editing by Barbara Lewis; Nidhi verma)
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Copper's positive long-term trajectory remains unchanged despite US tariffs, Barrick CEO states
Mark Bristow, CEO of Barrick Mining Corp, said that copper miners are still optimistic about the future prospects of the metal, despite a 50% tariff looming in the United States, which will cause short-term volatility. The company is expanding operations in Zambia. U.S. president Donald Trump announced on Wednesday that he will impose a new copper tariff starting August 1, to encourage the domestic development of a critical industry for defence, electronics, and automobiles. The announcement pushed U.S. Comex Copper Futures to a record high. Analysts predict that prices outside of the U.S. may be affected as countries such as Chile, which is the top copper producer in the world and the United States’ largest supplier, move their supplies elsewhere to respond to the tariffs. Bristow, speaking to journalists late Thursday in Zambia's capital Lusaka, said that the copper price would be volatile, just like all other commodities. We will need to find a way to overcome this instability. He said, however, that despite the fallout of U.S. policy decisions on tariffs, copper's trajectory over time remained unchanged. Bristow stated that "we are experiencing a shortage of supply and a growing demand, particularly in the data centres and the move to cleaner energy. He said: "So everyone agrees that the demand for copper is growing faster than the supply." Barrick, which is the second largest gold producer in the world by output, after Newmont's, is investing to boost its copper production. The company is implementing a $2 billion project to double the annual production of its Lumwana Copper Mine in Zambia from 140,000 metric ton to 240,000 by 2028. Barrick will extend the life of the mine to 2057. Bristow stated that most copper companies are only interested in marginal expansion. "We're very happy that we committed to investing ahead of the tightening."
MORNING BID EUROPE - New tariff drama shakes complacent markets
Stella Qiu gives us a look at what the future holds for European and global markets.
On Friday, the markets were jolted from what appeared to be a dull day in summer when U.S. president Donald Trump went on TV to inject new drama into his simmering wars of trade and to disrupt Wall Street's recent upward trend to record highs.
Trump stated that tariff letters would be sent to Canada and Europe "today or tomorrow". He also floated the idea of increasing the tariff rate for other countries who do not receive a tariff letter from 10% to 15% or 20%.
He posted his letter to Canada in social media shortly after, stating that from August 1, a 35% duty rate would be applied to all Canadian products.
The market nerves were calmed slightly when an official from the administration clarified that goods covered by United States-Mexico Canada Agreement would be excluded. Wall Street futures fell 0.8%, and EUROSTOXX futures fell 0.7%. Last, they were down around 0.3%.
The currency markets were also roiled, but once the dust settled the dollar had gained 0.3% against the loonie, and the euro was down 0.2%.
As the chances of a U.S. - Japan trade agreement dim, so has the yen. The dollar rose 0.6% to 147.12yen on Friday, and is heading for the largest weekly gain this year of 1.7%.
The yen has fallen for the seventh consecutive week against the euro, and is at a five-month high against the Australian dollar.
Investors suspect that trade talks aren't going well between the EU and Trump, now that Trump has said the EU too will receive a letter. EU officials said they hoped to reach a deal by August 1.
Investors will be focusing on the second-quarter U.S. earnings report next week in order to assess the impact of Trump’s tariffs.
Fast Retailing, the owner of Uniqlo, has warned that tariffs could have a major impact on its U.S. operations later this year. It plans to increase prices to cushion the blow. Tokyo's stock market saw a drop of almost 7%.
The following are key developments that may influence the markets on Friday.
UK May monthly GDP
Canadian Employment Statistics for June
Eurozone Final CPI for June
Possible Trump letter to the EU on tariffs
(source: Reuters)