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Copper reaches a two-week high amid uncertainty over tariffs and Iran risks
The market rose more than two weeks on Tuesday, as the?unresolved U.S. Tariff uncertainty and the tightening of supply outside the United States supported it. Middle East peace talks also remained a focus. As of 0258 GMT the benchmark?copper?three-month contract on the London Metal Exchange rose 0.32% to $13,876.50 per metric ton, its highest level since May 15. The Shanghai Futures Exchange's most traded copper contract rose 1.32%, to 106,050 Yuan ($15.682.77) per ton. The White House amended tariffs on certain copper, aluminum, and iron imports, and lowered duties on some agricultural and industrial equipment. However, the order did nothing to resolve the larger copper tariff question that has caused regional dislocations in the market. Analysts at ING Economics said that "Tariff uncertainties is likely to support the market sentiment." COMEX copper premiums over LME have widened. This has continued to encourage shipment into U.S. storage facilities. LME cash copper is now cheaper than three-month LME. Also, the gap between supply and demand has narrowed in recent months. Middle East remains in the spotlight after Lebanon announced a ceasefire between Hezbollah & Israel. However, fighting continues in southern Lebanon. The U.S.-Iran conflict has not been resolved by the limited de-escalation. According to?Iranian State Media, Tehran has halted indirect peace talks with Washington. A senior Iranian commander also threatened to disrupt the 'Bab el-Mandeb Strait. Metals are more exposed to energy risk due to the conflict, but aluminum is more directly affected as the Gulf produces around 9% global output. LME aluminium increased by 0.91%, to $3,750, after reaching a four-year high of $3,775. Shanghai Aluminium rose by 0.88%, to 24,530 Yuan. Tin has also risen. London tin jumped 1.15% and Shanghai tin soared?3.45%. Zinc, nickel, and lead all saw a slight increase on the 'LME. On the SHFE, nickel rose 0.54%, while lead fell 0.18%. ($1 = 6.7622 Chinese Yuan Renminbi) Reporting by Dylan Duan, Lewis Jackson and Ronojojo Mazumdar.
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Gold prices steady amid uncertainty surrounding US-Iran Peace Negotiations
Investors waited for more details about the U.S. Iran talks and parsed out a partial ceasefire between?Hezbollah & Israel. As of 0217 GMT, spot gold remained unchanged at $4,481.53 an ounce. U.S. gold for August delivery rose 0.1% to $4,512.20. "At the beginning of this week there were a lot of expectations that we might get a 60 day extension of the ceasefire at the weekend. Ilya Spirak, global macro head at Tastylive, said that both sides seem to have dug in their heels and "we are still without a deal". Lebanon announced on Monday a partial ceasefire in the conflict between Hezbollah, Israel and Hamas. This would be a 'limited de-escalation' of a conflic? that has claimed thousands of lives and fueled the war against Iran. Iranian state media had earlier reported that Tehran would halt indirect negotiations with the U.S., and could end the ceasefire citing the conflict in Lebanon. Donald Trump of the United States said, on the other hand, that negotiations with Iran are "ongoing at a rapid rate." Investors will be waiting for the U.S. Nonfarm Payroll and Employment Reports, due in the next few days, to assess the resilience of the labour market in light of the mounting concern about inflation caused by the Middle East conflict. The Federal Reserve's policymakers will also be focusing on the remarks of Cleveland Fed President Beth Hammack, and?Fed governor Michael Barr to gauge future monetary policy?path. "On the upside the main barrier here appears to be around $4,900. Spivak stated that if (gold) confidently reestablishes its foothold at the $5,000 mark then we will?know gold is once more?engaging with it's longer-term dynamics. (Reporting by Pablo Sinha in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu) Spot silver increased 0.5% per ounce to $75.21, platinum rose 0.5% at $1,932.50 while palladium dropped 0.4% at $1,356.90. (Reporting and editing by Rashmi aich and Subhranshu Sahu in Bengaluru.
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Authorities report four deaths as a result of a major Russian attack on Ukraine
Authorities said that Russian attacks in?Ukraine early on Tuesday killed four people in Dnipro and damaged two apartment blocks in the capital,?Kyiv?. This was after weeks of warnings from Moscow about a major attack. Kyiv mayor Vitali Klitschko confirmed that a suspected missile attack on a 24-storey building caused a collapse. People were likely trapped beneath the rubble. The mayor reported that a fire broke out in the Podil area on the property of a?non-residential building and that a nine-storey residential apartment was on fire as debris had apparently hit the roof. In the Obolon district, cars have been set ablaze after falling missile debris hit them. Two other fires are burning in the open, one of which is near a kindergarten," Klitschko stated on Telegram. After air raid warnings, thousands of Kyiv residents sought refuge in metro stations and other shelters. Early on Tuesday, air raid warnings were issued for most of the country. Oleksandr hanzha, the regional governor, said that a second attack in Dnipro was responsible for four deaths and 16 injuries. All of the injured were hospitalized and reported to be in a moderate condition. The two-story building that was damaged was partially destroyed. On Monday, Ukrainian President Volodymyr Zelenskiy re-iterated warnings about a possible massive Russian attack and asked residents to pay particular attention to air raid alarms. "Intelligence warnings regarding Russian strikes remain in effect. Zelenskiy stated in his evening video address that a massive strike was possible and they had prepared one. Our defenders will be ready to defend the country 24/7, using the current supplies available. Last week, Russia warned it would launch "systematic attacks" against targets in Kyiv that were linked to the Ukrainian military and decision-making centers. It also urged foreigners not to stay. The statement said that the action was taken in response to a drone strike last month in the Russian-controlled Luhansk Region of Ukraine, which resulted in 21 deaths. Ukraine has denied responsibility for the attack. Oleh Syniehubov, the Governor of Kharkiv in Ukraine's northeastern Kharkiv Region, said on Telegram that six people, including a girl aged 11 years, were injured overnight by?Russian artillery. The reports could not be independently verified. Russia has attacked Ukraine's infrastructure and power supplies, while Ukraine has intensified its attacks on Russian oil facilities?this past year. This has sometimes resulted in casualties. Both sides deny that they are targeting civilians. Since Russia's full-scale invasion of Ukraine in February 2022, the war in Ukraine continues. The conflict has not been resolved, as the U.S. government of Donald Trump is focused on the Middle East. Reporting, writing by Jekaterina Glubkova, Lincoln Feast and Shri Navaratnam; editing by Himani Sarkar & Shri Navaratnam
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Oil prices rise as markets remain on edge due to uncertainty surrounding US-Iran negotiations
The oil prices held onto most of their sharp gains from the previous session in the early trade of Tuesday due to uncertainty?over the status of the ceasefire talks between Iran and the United States?and a potential reopening of Strait of Hormuz. U.S. president Donald Trump stated on Monday that talks with Iran are ongoing. Meanwhile, Tasnim News Agency reported that Tehran has suspended indirect negotiations?with Washington. Brent crude futures rose 6 cents or 0.06% to $95.04 per barrel at 0001 GMT. U.S. West Texas Intermediate dropped 17 cents or 0.18% to $91.99 per barrel. Both benchmarks gained more than 5% the previous session, but lost gains after U.S. president Trump claimed that he was not informed that Iran had suspended talks with Washington or that Israel had agreed that it would withdraw?any troops preparing to strike southern Lebanon. Trump said in a separate CNBC interview on Monday that he didn't mind if the talks ended. According to a report by X, Trump posted on social media shortly after that talks with Iran continued. He also told ABC News in a Monday interview that he expected a deal "over the next few weeks" to extend the ceasefire. Tim Waterer is the chief market analyst for KCM Trade. He said that the market was focused on the progress and setbacks of U.S. and Iranian negotiations. The market also looked at the substance and tone of statements from both parties (especially Iran's threats about the Strait of Hormuz) and the actual tanker movements in the waterway. Waterer said that the status of U.S. Iran negotiations will determine if the current risk premium remains embedded in oil price or begins to unravel. Lebanon announced on Monday a partial ceasefire in the conflict between Hezbollah, Israel and other parties. This would be a de-escalation in a conflict which has sparked a wider?war against Iran. Tony Sycamore is a market analyst for IG. He said, "With headlines still flying out of the Middle East and until there's more evidence that a peace agreement has been reached, oil prices will remain volatile." Since the start of the Gulf War, Iran has effectively stopped all non-Iranian shipping in and out. This has resulted in a 50% increase or more of prices for oil and gas. U.S. crude oil exports reached a record high of 5.6 million barrels/day in May, as the Middle East Crisis boosted demand from Asian and European refiners for U.S. oil. A preliminary poll released Monday shows that U.S. crude stocks are expected to be down by?about 3 million barrels for the week ending?May 29. This is a continuation of the previous week's decline. Distillates and gasoline are also likely to have decreased. Shipping executives gathered in Athens, Greece on Monday to discuss the need for a peace agreement between the U.S.A. and Iran that would include clear rules to allow vessels to resume their normal operations through the Strait of Hormuz. (Reporting and editing by Sonali Paul in Bengaluru, Pooja menon from Bengaluru)
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Asia stocks shiver as Middle East fears offset AI optimism
Asian stocks started trading cautiously on Tuesday, as there was uncertainty about whether the ceasefire agreement in the Middle East conflict would cap the optimism that had been generated by AI. MSCI's broadest Asia-Pacific share index outside Japan fluctuated as trading began, with the last 0.5% lower. This was led by a 2.2% drop in Korean shares following an initial higher opening. S&P 500 futures fell 0.3% while the Nikkei225 in Japan dropped 0.7%. Analysts from Westpac stated in a recent research note that "conflicting news" coming out of the Middle East had left the?markets?whirling. Iran announced that negotiations with the U.S. were suspended only to have President Trump follow up with reassurances in the last few?hours that the talks are still continuing "at a fast pace". Brent crude remained'steady' around $95 per barrel following Lebanon's announcement of a partial ceasefire on Monday between Hezbollah, Israel and Lebanon. This could pave the way for renewed efforts to bring an end to the three-month conflict between the United States. The S&P 500 closed overnight 0.3% higher, after ISM's Manufacturing PMI rose from 52.7 to 54.0, in May, exceeding expectations that it would reach its highest level in 4 years. This was likely due to businesses placing orders in advance, in response to rising prices and shortages caused by the war against Iran. David Rosenberg, president and founder of Rosenberg Research, Toronto, wrote in a client note that "the equity market is in boom-mode" despite rising energy prices and real interest rates. The S&P 500 has now been up for nine weeks in a row. This streak was last seen in late 2023. AI suppliers in Asia made gains after Anthropic, a?AI developer, said that it had filed confidentially for an IPO in the United States. This could result in a trillion dollar valuation. Alphabet's shares fell 0.7% following the announcement that it was looking to raise $80 Billion in equity offerings. This includes an investment from Berkshire Hathaway. The U.S. Dollar Index, which measures the strength of the greenback against a basket of six currencies, has held steady at 99.18. It is still firmly in the range that it's been occupying for the last three weeks. The yield on 10-year Treasury bonds in the United States is now 4.455%, a decrease of 2.0 basis points. Gold fell 0.1% to $4,479.17. Bitcoin was down by 0.2% to $71,232.83 while Ether was unchanged at $2,002.03. (Reporting and editing by Gregor Stuart Hunter)
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The buffer of savings for US consumers is gone. What now? McGeever
Savings levels are plummeting as corporate America continues its?AI boom. This growing chasm could have serious political implications for President Donald Trump. Egal how you define the issue of inequality - two-speed, K-shaped, or haves and has-nots, it's becoming more apparent. Last week, two data points brought this to a'sharp focus: personal savings and profits of corporations. In April, the personal savings rate dropped to 2.6%, a four-year low. The rate has been cut in half over the last year, and is now at its lowest level since 2008. Zoom in and you can see how thin the cushion of savings is for American consumers. The savings rate of consumers has never been so low since 1950s records started. Inflation, fueled by energy prices that are still high, is now surpassing wage growth for first time in 3 years. Americans' rapid depletion of savings in order to maintain their spending cannot last. The consumer confidence index, which is closely monitored by the government, has also fallen to its lowest level ever. It's reasonable to expect that the most important and largest pillar of the economic system, household consumption, could be under pressure soon. Wall Street doesn't have many questions at the moment, as U.S. stocks continue to reach record highs. It's not surprising, given the state of corporate America. Last week, figures released showed that U.S. profits for corporations as a percentage of output in the first quarter increased to 18.4%. This is the second highest reading since records started in the 1940s. The pre-tax profit as a percentage of GDP remained near the record high 14%. Even as many Americans' financial situation becomes more precarious, corporate profits have never been higher. Phil Suttle, an economist, says that these trends "are not sustainable from a political or economic perspective". How they are resolved is an unresolved issue, but in my opinion, both consumption and profits have significant downside risks. Masking the Pain It makes perfect sense. Who is spending the most? The estimates of Moody's analyst that the top decile income accounts for 50% all consumer spending have been disputed. A more accurate estimate could be between 35-40%. It's still a substantial amount. The top 10% of Americans own 90% of U.S. stock, and the top 1% represent half of all the wealth in the U.S. stock market. U.S. equity prices have risen 30% for these asset owners in the last 12 months. The asset-owning wealthy can continue to support aggregate expenditure as long as the stock prices remain high. This will keep headline GDP near a healthy 2 percent rate. This masks the growing?strain on the lower half of the U.S. populace, which is squeezed by rising borrowing costs, inflation and shrinking savings. Look at the increasing struggles of consumers to pay off their debts. Troy Ludtka, SMBC Nikko Securities Americas, notes that auto loan delinquencies 90 days and more reached a record high of?5.6% during the first quarter, while credit card delinquencies increased to 13.1% - the highest level since 2011. The interesting question is when does the lowest point of the K stop the economy as a whole? What is the limit of this inequality? Ludtka makes a point. Unsustainable Path Limits may not be as much a matter of economics but rather a matter of politics. Trump's ratings for his economy have plummeted since he launched military strikes against Iran three months back, mostly due to the rising cost of living. Polls indicate that the Republicans are likely to lose control of the House of Representatives and possibly the Senate in the midterms, with the "cost of living" being a major concern for many voters. The AI-fueled capex boom and the rapid growth of corporate profits may increase these political pressures even if the economic situation continues to be relatively stable. The ultimate question is, how long can the average American'stay afloat' and continue to spend now that their saving buffers are rapidly disappearing? How extreme will the U.S. public allow this "K"-shaped dynamic to become before they push back with policy demands Trump's Republican Party could find out this in November. You like this column? Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Zelenskiy claims that the Ukrainian military can strike Russian logistical systems throughout occupied territories
Volodymyr Zelenskiy, the President of Ukraine, said on Monday that Ukraine was now capable of 'hitting Russian logistical?throughout occupied areas of Ukraine' and had caused shortages of fuel throughout Crimea and Russian-held regions. In his video nightly address, Zelenskiy said: "Our troops can now reach Russian military logistic across the?entire depth of the temporarily-occupied territories." "In reality, there are virtually?no roads safe for the occupiers in the south and the east of our country." In recent months, Ukraine has intensified its?strikes against targets at medium range and others hundreds of kilometers away from Ukraine's border. It is focusing on Russia’s oil industry. Zelenskiy stated that between January and May, Ukrainian forces struck 15 Russian oil refineries. He said that Ukraine's actions provided "further evidence that there will not be peaceful times for the occupier?on our land." This is also reflected by shortages. Above all, fuel shortages are a problem in Crimea and other areas which remain under occupation. After Ukrainian drone attacks slowed down road supplies in the south-eastern part of Ukraine, drivers in Crimea, a Ukrainian peninsula that was annexed to Russia in 2014, faced a rationing of gasoline on Monday. (Reporting and editing by Chris Reese; Oleksandr Kozoukhar and Ron Popeski)
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Gold drops as inflation fears rise over Middle East conflict
Gold prices dropped on Monday, as tensions in the Middle East increased inflation fears and reinforced expectations that central banks may continue to tighten monetary policy. Gold spot was down 1% to $4,489.34 an ounce at 1:50 pm EDT (1750 GMT), following a two-week peak on Friday. U.S. Gold Futures closed 1.9% lower, at $4,506,30. Holders of other currencies will now pay more for metals that are priced in U.S. dollars. Jim Wyckoff, an analyst at American Gold Exchange, said that if bond yields continue to rise and rates start to stabilize or trend downward, gold will remain under pressure. Iran claimed it attacked a U.S. base after U.S. strikes on Iranian military targets over the weekend. U.S. president Donald Trump said, however, that talks with Iran were "continuing at a rapid rate." Oil prices rose, increasing inflation concerns linked to the Iran Conflict, which could cause central banks to increase interest rates in order to reduce rising price pressures. According to CME Group’s FedWatch tool, traders have estimated that there is a 54% probability of at least one rate hike in the U.S. by year's end. Gold is often considered a hedge against inflation, but its appeal tends to diminish in an environment of high interest rates because it doesn't generate any yield. The market will be watching a series of U.S. job data releases that are due to be released this week as well as?remarks by Federal Reserve officials. Ole Hansen, analyst at Saxo Bank, said: "Once geopolitical stability is achieved and energy shocks begin to subside, we expect investors will refocus their attention on the structural themes that have supported the bull market for gold in recent years." He said that central banks will continue to be net buyers in the next year. Spot silver remained flat at $75.26 per ounce. Platinum gained 0.7%, reaching $1,929.60, and palladium increased by 0.9%, to $1366.44. Morgan Stanley stated in a Friday note that palladium was moving towards equilibrium as the supply constraints were offset by a weakening of auto demand. (Reporting and editing by Shailesh Kuber and Barbara Lewis; Ashitha Shivaprasad, Bengaluru)
Asia stocks fall as Middle East fears offset AI optimism
Asian stocks fell in Tuesday's choppy trading, as concerns about the?durability of a Middle East truce? tempered AI optimism.
MSCI's broadest index of Asia-Pacific stocks outside Japan, which fluctuated between gains or losses when trading began, fell by 0.6%. Korean shares were the biggest regional losers, falling as much as 3,3% after a higher opening. S&P 500 futures fell 0.5% while Nikkei225 in Japan dropped 1.9%.
"This is not a revaluation of the AI trade, it's a profit-taking following a blistering-fast run," said Fabien YIP, a Sydney-based market analyst.
She said that the U.S.-Iran ceasefire talks have been a series of false starts, with today's failure to make progress being no exception. The market is accustomed to the constant back and forth.
Brent crude fell 0.6% to $94.45 per barrel on Monday after Lebanon announced that Hezbollah had agreed to a partial ceasefire with Israel. This retracted some of the gains made Monday after reports that Tehran had stopped indirect negotiations with America.
The markets remain cautious regarding progress in U.S. and Iran peace talks to end the three-month-long war, due to the fragility the April ceasefire.
The?S&P500 closed overnight 0.3% higher, after ISM's Manufacturing PMI rose from 52.7 in May to 54.0, exceeding expectations to reach its highest level in four years. This was likely due to businesses front-loading their orders in response to rising prices and shortages caused by the war with Iran.
David Rosenberg said in a client note that "the equity market is in a boom mode" despite rising energy prices and real interest rates. The S&P 500 has now been up for nine consecutive weeks, a streak that we last saw in late 2023.
KOSPI CAPER
AI suppliers in Asia gained after Anthropic, a?AI developer, said that it had filed a confidential application for an initial public offering (IPO) in the United States. This could result in a valuation of trillions of dollars. Alphabet's shares fell 0.7% after-hours after the tech giant announced that it was looking to raise $80 billion in equity offerings. This includes an investment by Berkshire Hathaway.
South Korean equities exhibited a high degree of volatility, with the benchmark KOSPI fluctuating sharply between gains and losses as key companies like Samsung Electronics or SK Hynix flipped back and forth.
South Korea's consumer prices data was also included in the mix for markets. Inflation accelerated to a two-year high in May, and this boosted expectations of a rate increase next month. Last week, Bank of Korea indicated that it would soon adopt a more restrictive stance in order to control inflation and stabilize the won.
The U.S. dollar index, which measures greenback strength against a basket of six different currencies, has held steady at 99.21. It is still firmly within the range that it has been in for the last three weeks.
The yield of the 10-year Treasury Bond in the United States was 4.447%, down 2.8 basis point. In choppy trading, gold was up by 0.1% to $4,487.53.
Cryptocurrencies have fallen to their lowest levels in two months. Bitcoin fell 1.7% to $70,174.13 while ether dropped 1.9% to 1,964.90. (Reporting and editing by Gregor Stuart Hunter)
(source: Reuters)