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The IEA warns that China's restrictions on rare earths threaten $6.5 trillion in Western industry
International Energy Agency warns that the full implementation of China’s rare earth export restriction could put $6.5 trillion in downstream production outside of the country at risk. China, the world's largest producer?of?rare Earths, increased export controls in?October of last year, to include additional materials, and introduced new licensing requirements. However, they agreed to postpone implementation for one year. Rare earths is a grouping of 17 metals that are used in small amounts but essential for products such as cars, aircrafts, electronics and weapons systems. The IEA's Global Critical Minerals outlook report stated that if the controls are fully implemented, an estimated $6.5 trillion?of manufacturing across the automotive and high-tech sectors, as well as the defence, energy, and defence sectors, could be affected by supply disruptions. According to the report, nearly half of all economic impacts would be attributed to the U.S. Fatih Birol, Executive Director of the IEA, said: "Our analysis shows that vast amounts of economic value are dependent on relatively small quantities?of critical minerals. Their supply chains remain highly concentrated and therefore vulnerable." The agency warned about the risks posed by China's planned controls on exports of graphite, an important material used in batteries for electric vehicles, which had been announced at the time but later delayed. The report stated that a full implementation of graphite controls would put around $300 billion?of downstream production in countries outside China at risk. China accounts for more than 90% of the global graphite production. Western governments are trying to create alternative supply chains for critical minerals. According to the IEA, public financing commitments of new?projects have more than quadrupled from 2023-2025. They now total $65 billion. New rare earth refinery projects in the U.S. The agency reported that Malaysia and China reduced China's share of the global market from 90% to 85% in the last year. If the planned projects are completed on time, this share could drop to 70% by 2035. Reporting by Eric Onstad. Mark Potter (Editing by Mark Potter).
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Oil prices fall as traders assess the impact of US strikes against Iran
Oil prices fell on Thursday, as traders took profits and assessed the risks of a new U.S. strike on Iranian military installations. This fueled fears of a full-scale conflict and disruptions to supply in the Strait?Hormuz. After reimposing its naval blockade, the United States hit Iran's missile and coastal defence sites on Wednesday. Iran, meanwhile, threatened to cut off regional energy exports by saying that it is engaged in an "existential conflict" with America. Brent crude futures dropped 24 cents or 0.28% to $84.95 per barrel at 0435 GMT after initially increasing for a 4th straight session. U.S. West Texas intermediate futures also fell 15 cents (or 0.19%) to $79.45 per barrel. Brent crude futures had risen by almost $1 in the previous session, and both contracts were still near their one-month highs. Priyanka Priyanka, senior market analyst at Phillip Nova, said that geopolitical risk remains a "strong support" for oil. However, after a rally of this magnitude, traders have adopted a wait and watch approach. The focus has shifted from the actual threat to the possibility of a tangible disruption in oil flows, and the U.S.'s and Iran's response. The price of oil has risen this week, as the Strait of Hormuz is experiencing a supply disruption. This area handled a fifth of all the world's trade in liquefied gas and oil before the conflict began. On Wednesday, the U.S. reinstated its naval blockade against Iran. Fewer ships passed through the Strait of Hormuz. Seven vessels crossed the Strait of Hormuz on Wednesday. This is down from thirteen the day before. Last week, hostilities between Iran and the U.S. re-emerged, threatening to undermine a fragile truce that had been reached in June following several months of fighting. Hiroyuki Kikakawa, the chief strategist at Nissan Securities Investment, said that while mediation efforts are continuing and a full-scale conflict is unlikely, WTI may still reach $85 to $87, depending on the outcome of the conflict. Analysts claim that Iran has indicated it will use its Houthi ally in Yemen to'shut down the Bab el-Mandeb portal to the Red Sea. This would open a new front for Washington and put a second vital energy artery at risk. Also reported on Wednesday, U.S. officials stated that the strikes against Iran could pave way for "more complicated" operations against the nation, adding to the market's jitters. Goldman Sachs predicted Brent oil could reach $110 by the end of the fourth quarter, if the Gulf export recovery continues. However, it could drop to $60 by the year's end if tensions decrease and production increases faster than expected. ING analysts warned in a recent note that supply disruptions have returned 'at a moment when U.S. oil inventories were at a low level since 2022 and for the current season, the lowest since 2018. The market is more vulnerable if there are new oil supply disruptions, especially after the inventory drawsdowns in the second quarter. Reporting by Yuka Obaashi in Tokyo, Colleen Waye in Beijing and Lincoln Feast. Editing by Shri Navaratnam.
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Nickel prices rise on fears over supply via Hormuz
Nickel prices rose by nearly 2% Thursday, as concerns over traffic disruptions through the Strait of Hormuz triggered fears of sulphur shortages. Benchmark?three-month Nickel?on the London Metal Exchange rose 1.83% by 0300 GMT to $17110 per metric ton. The Shanghai Futures Exchange's most traded nickel contract was up 2.01% to 131,640 Yuan ($19.455.53) per metric ton. "Sulphur tightness expectations are fermenting again." This is mainly due to an increase in the cost of nickel's?high pressure acid leaching process", analysts at Chinese broker Jinrui Futures stated in a report. Indonesia, the world’s largest nickel producer, relies on the Middle East to provide about 75% the sulphur needed in sulphuric acids for leaching metals from ore. The U.S.-Iran blockade of the Strait of Hormuz, as well as military operations, have caused a disruption of shipments along this vital shipping route. The copper price was stable, thanks to a weaker U.S. Inflation data and the hope of a more dovish Federal Reserve. The price was also supported due to supply concerns and withdrawals from LME storage facilities. Metal prices rose by 0.17% in London and fell by 0.28% in Shanghai. U.S. Producer Prices posted their largest?decline?in 14 months 'in June. Data released on Wednesday added to a series of U.S. Reports that have cooled expectations regarding Federal Reserve interest rate increases. Reduced borrowing costs tend to boost economic activity and therefore, metal demand. Aluminium rose by 0.43% on the?LME, while?zinc increased by 0.58%. Lead added 0.35%, and tin fell 0.15%. The SHFE showed that aluminium fell 0.13%. Zinc dropped 0.87%. Lead dipped by 0.1%. Tin declined 1.67%. $1 = 6.7662 Chinese Yuan (Reporting and editing by Subhranshu Sahu).
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MORNING BID EUROPE - This AI will make money, right?
Stella Qiu gives us a look at what the future holds for European and global markets. The'monstrous' rally of Asian?chipmakers is now hitting a rough patch. The jitters can be seen in the extreme volatility of South Korea's KOSPI market, where 'wild swings' in chip giants like Samsung?Electronics or SK Hynix are a recurring occurrence. The index fell 6% on Friday, bringing it down to 27% below its peak in June and increasing the pain of some leveraged retail funds. This tumble is a confirmation of investors' concerns at a moment when everyone is concerned about the rising costs of AI capex - can this massive expenditure actually turn a profitable? The world is now watching the second-quarter results of Taiwan Semiconductor Manufacturing Co. (TSMC), which makes the advanced chips sold by Nvidia to 'power the AI revolution'. The expectations are that the chip giant will achieve a net profit increase of nearly 60% for the quarter. Even if it exceeds this, it may still not be enough. To avoid being "punished", a perfect report will be required, along with more than just rosy forecasts. Look at ASML results. While most Asian share markets are in the red due to the shift from memory and hard-ware, European futures seem to be less affected, with a more likely flat opening. Wall Street futures are 0.1% higher after a strong session overnight, thanks to lower inflation and solid bank earnings. Netflix, GE, and a few other banks, such as U.S. Bancorp, State Street and U.S. Bancorp, will release their results later. The U.S. retail sector is expected to grow by a modest 0.2% in June, following a 0.9% increase in May. However, the control group's sales are forecast at 0.5%. A dovish shift in Fed bond markets could be bolstered by any weakness, reducing concerns over demand. There's also the Middle East war, in which the U.S. military has launched another round of strikes against?Iran, while Tehran claims to have targeted an American troop gathering. It's because of this that Brent has risen 18% over the last two weeks, to $85 per barrel. Central?banks around the world are still wary. South Korea raised rates for the first?time?in three-and-a half years. Bond investors are relieved that the Fed's July price hike has been reduced to 10% from more than 40% earlier in the month. The following are key developments that could impact the markets on Thursday. TSMC to report earnings at 0530 GMT The UK's monthly GDP, industrial production and trade balances in May Earnings of Netflix, GE Aerospace Bancorp, State Street and Bancorp Kate Mayberry edited the following: U.S. retail sales for June, and weekly unemployment claims.
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China's Xi will outline AI diplomacy at a key Shanghai forum
Chinese President Xi Jinping will outline an ambitious vision of China's role as a global AI governance leader at a forum this Friday. Huawei is showcasing its most advanced AI computing cluster yet, in a move to create a domestic alternative to U.S. tech. Xi's first-time attendance at the World Artificial Intelligence Conference, or WAIC, underscores Beijing’s view that AI is both a key driver of global economic growth and a technology of strategic importance in the global competition. Huawei's Atlas 950 SuperPoD AI computing system, a large-scale AI computer system with a high performance will be unveiled at the forum from July 17-20 in Shanghai. This launch is the most clear demonstration yet of China’s efforts to build such systems without U.S.-based giant Nvidia’s most advanced chips. The system, which is designed for AI inference and?training on a large scale, links thousands of Huawei Ascend AI processing units through high-speed connections so that they can operate as one computing cluster. DeepSeek V4's latest model was adapted to run on clusters created using Huawei Ascend chips. This shows the progress made by Chinese companies in creating AI ecosystems that are independent of U.S. tech. Chinese chipmakers Biren and MetaX, as well as other Chinese companies were reported to be releasing new "supernode computing clusters" in the domestic media. AI GOVERNANCE Washington and Beijing are preparing for their first government level AI talks under U.S. president Donald Trump's Administration. This gathering is a test to see how China will compete for influence on the rules that govern AI globally. Washington and Beijing presented competing 'visions' for AI governance during a UN AI dialogue last week. Washington argued that sweeping regulations would stifle technology breakthroughs, while Beijing promoted its open-source, low-cost AI models as public goods that would help bridge global AI inequalities. "In this context, WAIC is more than just a tech showcase. It's now a geopolitical platform where Beijing is trying to articulate its AI vision as a national priority, and also a diplomatic tool," wrote George Chen of the Asia Group. Xi compared AI in a speech he gave in January to a "major technological transformation that followed the steam engine." Beijing has explicitly staked its future growth on spreading AI throughout the economy and achieving autonomy in frontier technologies. At the last conference, China proposed a World AI Cooperation Organisation. However, no country has officially announced its membership. The conference will coincide with a "High-Level Meeting" on Global AI Governance to be held in Shanghai. This meeting is expected to announce progress on WAICO as well as the implementation of the Global AI Governance Initiative. OPEN SOURCE PROMOTION Beijing will also?promote China's open source AI models as an alternative low-cost to Western offerings. They argue that they can widen access to the technology. People's Daily published a commentary in which it stated that "AI development must not move towards a monopoly technology, but always remain anchored on the fundamental goal of helping humanity." WAIC will also feature international leaders such as UN Secretary-General Antonio Guterres and Kazakh President Kassym Jomart Tokayev, along with a number of other Chinese tech industry titans. There will be nine Turing Award laureates and Nobel laureates in attendance, including deep-learning pioneers Yoshua Bengio and Richard Sutton. However, there is little representation from the major U.S. technology firms. Unnamed Asian diplomat said: "China is making significant progress in building AI capacity with Southeast Asian countries and is presenting itself as a voice for developing countries that are left behind in AI race." Chinese media reported that AI agent smartphones will be launched at the forum by ZTE's Nubia, and AI startup StepFun. (Reporting and editing by Laurie Chen, Miyoung Kim, and Stephen Coates).
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Administrators say that Australia's sole manganese smelter will close.
Administrators announced on Thursday that Australia's sole manganese smelter in Tasmania, the Liberty Bell Bay Smelter will close immediately after a failed sale. The former British billionaire Sanjeev Gupta owned the smelter. It was placed under voluntary administration by March, after it had ceased operations in mid-last. In a'statement, EY stated that "in the absence of a commercially viable?transaction and the required funding to continue operations, the Administrators made the difficult decision to begin the orderly closure?of the?business with immediate effect." GFG did NOT immediately respond to a comment request. The smelter had been experiencing a period in which it was having difficulty supplying ore due to problems caused by cyclones and setbacks experienced at its key supplier Groote Eylandt Mining Company, South32. Tim Ayres, Minister of Industry, said that despite the federal and state governments' support, including A$10m ($6.99m) in wages and a A$20m?startup package and a continuation of a 10 year concessional power contract?struck last year with GFG Group, a serious buyer could not be found.
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Nuclear fuel company Standard Nuclear raises 150 million dollars in US IPO
Standard Nuclear announced on Wednesday that it has raised $150m in its U.S. initial public offering, after cutting its offer size by more than half. Investors remained cautious over 'valuations. The Oak Ridge, Tennessee nuclear fuel company, which sold 10,000,000 shares at $15 per share, valued it at about $2.41 Billion. The shares will begin trading at the New York Stock Exchange under "STDN" on July 16. Originally, the company had planned to sell 18.25 million shares between $18 and $21 per share. The IPO market is gaining momentum despite the geopolitical uncertainties, as the resilient equity markets are encouraging companies to go ahead with their listing plans. Investors continue to examine valuations. Nuclear-sector 'companies listed recently' have struggled to hold onto their debut gains. X-Energy, Deep Fission and other reactor developers are trading below their IPO price. Companies in this sector will benefit from the U.S. Government's push to expand the nuclear power industry. The goal is to quadruple the country's capacity of nuclear power by 2050 to meet the rising demand for electricity from AI-driven data centres, electric vehicles, and cryptocurrency. Standard Nuclear is a producer of nuclear fuels for advanced 'nuclear reactors. This includes small modular reactors as well as microreactors. The company focuses on scaling up domestic capacity. After the offering, Thomas Hendrix's?Class B shares will give him 60.8% of voting power in the company. Standard Nuclear intends to use the IPO proceeds for working capital, corporate purposes, and possible acquisitions - or investments in complementary businesses, technologie, or assets. Underwriters of the offering include Goldman Sachs, Barclays, and UBS Investment Bank.
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Bonds cheer lower inflation, while Asian shares fall on chipmaker drag
Asian shares dropped on Thursday, as chipmakers stumbled before results from bellwether TSMC. Bonds benefited 'from another benign reading of U.S. inflation which?lessened risk of an impending rate hike. As hostilities escalated in the Middle East, oil prices continued to rise. Washington has continued to strike Iran following the re-imposition of a naval blocade on its ports. Meanwhile, Tehran has warned of an "existential conflict" with America. Brent crude futures increased 0.6% to $85.45 per barrel, adding to the 12% gain this week. The quarterly earnings of Taiwan Semiconductor Manufacturing Co. (TSMC), world's leading manufacturer of advanced AI chip, are the focus. The company's net profit is expected to increase by 59% for the period April-June, marking a fifth consecutive quarter of record earnings. Investors are not happy as ASML shares, the dominant global supplier of equipment used to manufacture high-tech computer chip, ended 0.4% lower despite it raising its sales forecasts for 2026 and pledging a capacity increase. Brian Heavey said, in a JPMorgan note, that he was "seeing aggressive pullbacks in Memory/Hardware". Don't believe there is a 'negative headline' that's driving the semis/hardware sale. "I think it just shows how high semis earnings are." The?selling spread to Asia. MSCI's broadest Asia-Pacific index outside Japan fell 1.7%, while South Korea's KOSPI dropped 6.3% due to SK Hynix's 11% drop and Samsung's 8% decline. Japan's Nikkei dropped 3%. Taiwanese stocks fell by 0.5% while China's Hang Seng Index rose 1.2%. The South Korean central bank increased interest rates to 2.75 percent on Thursday for the first increase in three-and-a half years. This was done to stabilize a falling won and to combat persistent inflationary pressure. The decision was mostly as expected. Wall Street gained overnight, as investors shifted from semiconductors to Magnificent Seven and banks following strong earnings by major lenders. However, Asia is more susceptible to the chip selling-off due to its greater exposure to "semiconductor" stocks. BONDS CHEER COOL INSFLATION The surprising softness of the U.S. consumer inflation data in June was added to the positive figures for the previous day. Markets now price out the likelihood of a rate hike by the U.S. Federal Reserve within the next month to only 10% from 43% at the beginning. The pullback in inflation will likely only be temporary as oil prices are expected to rise due to renewed Middle East hostilities. The Wall Street Journal reported that President Donald Trump was leaning toward expanding U.S. operations in Iran and sending ground forces. Bond investors are however focused on the cooler inflation data. The yields on two-year Treasury bonds increased by 2 basis points, to 4.1493%. They had fallen 14 bps in the previous?two days. Ten-year yields remained at 4.5593% after falling 7 basis points over the last two days. The dollar fell against all currencies except the yen. The dollar index was steady at 100.48 after dropping 0.4% overnight, to the lowest level since June 18. The yen was hovering at 162.08, not far from its 40-year low 162.84, as speculators remain cautious of Japanese intervention. The pound reached a two-month high on the expectation that Andy Burnham will choose a fiscally conservative Finance Minister, if he is named Labour Party leader this Friday. The pound rose 0.1% to $1.3538 after a 1% surge overnight. Gold remained at $4,055 per ounce.
Asian stocks benefit from the drop in US inflation rate
The Asian markets rose on Wednesday, after a surprise drop in U.S. consumer inflation reduced market expectations of interest rate increases. Oil prices also dipped as the U.S. canceled a plan to tax shipping through the Strait of Hormuz.
Investors also cheered the stellar earnings of Wall Street banks, though a 25% decline in IBM's stock price after the company missed its revenue forecast showed just how stretched the market has become.
In early trading, South Korea's chipmaker heavy KOSPI soared 6% and Japan's Nikkei gained 0.4%. MSCI's broadest Asia-Pacific share index outside Japan rose by 1.7%.
The U.S. Dollar fell in?currencies except for the stubbornly low yen. Short-end bonds rose, bringing two-year Treasury yields down to 4.19%, from a 17-month high near 4.3%.
Annualised core inflation was 2.6%, compared to expectations of?2.8%.
In a note to clients, J.P. Morgan analysts said: "For bulls on the market this is better than Goldilocks ever could have imagined."
"Inflation is lower with positive earnings growth. This should ease any concerns about a rate hike in July and could also calm fears for September. This allows the market to rise and broaden at the same time.
The market price for a U.S. rate hike in July has been halved from 36% to 16%.
The Australian dollar, which was testing $0.70, held on to its 0.8% gain.
Brent crude futures remained at $85.50 per barrel after gaining more than 12% in the past week due to a flare up of fighting in the Middle East.
U.S. president Donald Trump reimposed on Tuesday a naval blocade of Iranian ports and threatened to strike power plants and bridges unless Iran resumes their negotiations to end the conflict. However, he canceled a plan to impose a 20% surcharge on shipping through Hormuz.
Overnight, the Nasdaq rose 0.9% while the S&P 500 gained 0.4%. U.S. Futures were slightly higher Wednesday.
ASML's earnings, Europe's most valuable company and data on Chinese industrial production, retail sales, and gross domestic product will be the focus of 'Asian trade' before ASML's earnings, which is the world's largest supplier of AI chips.
BNY, Johnson & Johnson, and Blackrock will report their earnings in the U.S. before the morning bell, and United Airlines, after the market close. (Reporting and editing by Christopher Cushing; Tom Westbrook)
(source: Reuters)