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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.
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Focus on China's important meeting brings iron ore to a steady state
Iron ore prices were largely in a narrow range on Tuesday as investors focused their attention on a meeting between China's top leaders that will determine the economic policies of the second largest economy of the world for the next five-year period. On Monday, the Communist Party of China began a four day closed door meeting that will culminate in the outline. However, the full plan with its development goals won't be published until March 2026. The meeting was held after data revealed that China's property crisis-hit sector continued to be a drag on the steel consumption. This also affected prospects for consumption of iron ore, an important steelmaking ingredient. As of 0214 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange was unchanged at 768.5 Yuan ($107.89). It reached the lowest level at 760 yuan since August 20. As of 0207 GMT the benchmark November iron ore traded on the Singapore Exchange had not changed much at $103.55 per ton after having hit its lowest level since October 1, at $102.85. BHP Group, meanwhile, expressed optimism about global iron ore consumption on Tuesday despite warnings of a slowing growth in China. China's crude output of steel fell to a 21 month low in September due to weak demand and shrinking margins. BHP's first-quarter iron-ore production, which is the third largest supplier in the world, was slightly below expectations due to maintenance work at Port Hedland. Coking coal, coke and other steelmaking components fell by 2.67% and 2.01% respectively. The Shanghai Futures Exchange steel benchmarks have mostly fallen as a result of the lacklustre demand. Wire rod dropped 0.8%, rebar fell 0.56% and hot-rolled coils dipped by 0.4%. Stainless steel gained 0.44%.
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Nikkei reaches record highs as trade tensions ease
Asian stocks rose Tuesday, as the prospect of an easing of trade tensions between two of the world's largest economies increased risk sentiment. The Nikkei also reached a new record high due to the near certainty that Sanae Takaichi will be the next Japanese prime minister. 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 by 0.86%, reaching a new record high. It was also on the verge of surpassing 50,000 points before a vote in parliament later that day. This vote is expected to confirm fiscal dove Takaichi to be the next Prime Minister of Japan. 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 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-over-year in the third quarter, a marked improvement from their estimate of 8.8% as of October 1. TAKAICHI SET TO BECOME JAPAN'S PM Takaichi, a conservative hardliner, is almost certain to be the first woman prime minister of Japan if the vote in parliament takes place later today. Investors anticipated Takaichi as the likely next premier after Ishin's backing. The yen last strengthened by 0.1% to 150.61 dollars, up from 150.61 in the previous session. Analysts expect Takaichi will be pro-stimulus, and against any further increases in interest rates. This is a negative for yens and bonds, but positive for stocks. The euro remained steady at $1.164925. The dollar index remained unchanged at 98.575. Due to U.S. rate cuts and safe-haven flows, gold prices were near records highs. Spot gold prices eased slightly to $4350 per ounce. This is just below Monday's record high of $4381.21.
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South32's quarterly manganese production in Australia beats expectations, shares rise by 6%
South32 reported a higher-than-expected output of manganese for the first three months on Tuesday. This was after its Australian operations recovered from weather-related interruptions. The shares of the world's largest manganese producer rose as much as 6.3%, to A$3.315. This is their highest level since March. The diversified mining company said that it had executed a successful operational recovery plan in its Australian manganese sector and increased export shipments following the damage caused by Tropical Cyclone Megan last year. The company announced that the unit had completed an insurance settlement relating to the effects of the tropical storm. An additional $153 million was also agreed under external insurance recoveries. This brings the total approved to $503 millions. Jefferies analysts said that although the cost of the extra assets was higher than their estimation, the performance of the core assets as a whole was strong. The domestic manganese division produced 854,000 wet metric tonnes during the quarter compared to zero output last year. South Africa's manganese production fell by 551,000 wmt during the first quarter of the year, compared to the previous year. The company has maintained its production forecasts for fiscal 2026 across all of its operations. Graham Kerr, CEO of Graham Kerr Metals Ltd. said: "We remain focused on maintaining the operating momentum and capitalising upon strengthening market conditions for base metals." The threat of closing the Mozambique aluminum smelter remains a concern for the company, which has said that the negotiations to secure affordable electricity have not advanced. Reporting by Sneha Kumra and Nichiket Sonil in Bengaluru, Editing by Shreya Biwas and Alan Barona
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Oil prices drop on fears of oversupply
Oil prices dropped on Tuesday due to concerns over excess supply, and the risks of demand arising from tensions between U.S.A. and China, two of the world's largest oil consumers. This was despite President Donald Trump saying he expects to reach a deal. Brent crude futures were down 14 cents or 0.2% at $60.87 per barrel at 0005 GMT. The U.S. West Texas Intermediate (WTI), which is due to expire Tuesday, fell 0.1% to $57.45. The December contract, which is more active, was down by 13 cents or 0.2% at $56.89. Donald Trump, the U.S. president, said Monday that he expected to reach a fair deal with Chinese President Xi Jinping. The disagreements regarding tariffs, market access and technology are still unresolved before their meeting scheduled for South Korea next Monday. "I believe we'll have a very good trade deal." "Both of us will be pleased," Trump said. Ritterbusch and Associates stated in a report that the trading outlook for crude oil is bearish. They recommend selling at price increases rather than buying on pullbacks. They added, "But we also feel there is enough geopolitical unrest to occasionally offset the oil balances which are becoming increasingly negative each week." A preliminary poll conducted on Monday, before the weekly reports of the American Petroleum Institute (API) and the Energy Information Administration, showed that U.S. crude stockpiles probably increased last week. A drone attack in Russia forced the Rosneft controlled Novokuibyshevsk Refinery to stop primary crude processing Sunday. Separately, an attack on the Orenburg Gas Plant forced Kazakhstan to reduce output at its Karachaganak Oil and Gas Condensate Field by 25 to 30%. Trump has reiterated that India will face "massive tariffs" if it does not stop buying Russian crude. India is now the largest buyer of discounted Russian crude oil after Western sanctions against Moscow. The International Energy Agency's bearish forecast last week, which predicted that the global oil market would face a surplus in 2026 of almost 4 million barrels a day as OPEC+ and its rivals increase production while demand is sluggish, has contributed to the fall. Ashitha Shivaprasad, Bengaluru. Sonali Paul, editing.
What is Trump's new reciprocal tariff regime?
U.S. president Donald Trump has shattered a global trading system that dates back more than 75 years with a new 10% U.S. baseline tariff on all goods and higher reciprocal rates of tariffs for countries that, according to his administration, have high barriers against U.S. imported goods.
Here are some of the key features of Trump's new tariff regime, as detailed by his executive order.
High Tariffs on Major Trade Partners
The reciprocal rate is meant to capture policies like currency manipulation, lax laws on pollution and labor, and burdensome regulations which keep U.S. goods out of foreign market.
The European Union is hit with a tariff of 20% by the United States. This will increase to 45% in Vietnam, 24% in Japan, 25% in South Korea, and 26% in India.
China, with a $295 billion trade surplus in 2024, will receive a reciprocal tariff of 34%. Treasury Secretary Scott Bessent stated that this rate would increase to 54% if combined with Trump's February 20% duties imposed due to the U.S. overdose crisis. Trump promised to impose a 60% tariff on Chinese goods as part of his election campaign in 2024.
Britain, Brazil, and Singapore, who had trade deficits last year with the U.S., were still given the 10% baseline rate. White House officials claimed that many countries would have higher deficits with the U.S., if they had fairer policies.
The U.S. Office of the Trade Representative reported that Russia would not be on Trump's list despite a $2.5 Billion goods trade surplus in 2024 with the U.S.
REPRIEVE MEXICO AND CANADA
The tariffs on goods from Canada and Mexico have not been reciprocated because Trump has maintained his 25% fentanyl duty, as well as 10% for Canadian potash and energy.
The tariff exemption will be in effect for all goods that comply with the U.S., Mexico and Canada Agreement on Trade. This is a welcome relief to U.S. automobile manufacturers. Trump previously stated that the USMCA exclusion granted a month earlier would expire on Tuesday.
Officials said that the fentanyl tariffs would remain in place until conditions regarding drug trafficking and migration at borders improve. If they are removed, a 12% import duty will replace them for products not complying with USMCA origin rules.
METALS, AUTOS TARIFFS A DIFFERENT THING
Certain tariffs will not stack on top the reciprocal duty. Imports subject to a separate 25% tariff under Section 232 of Trade Act of 1962, such as autos, auto parts, and steel and aluminum, will be excluded.
This exemption also applies to other sectors that are subject to Section 232 investigations or could be investigated in the future, such as copper, lumber and semiconductors. In a future annex, other products will be listed as exempt, such as certain minerals, energy, and energy products.
IMPLEMENTATION AND AUTHORITY
The baseline 10% tariff will go into effect on April 5 at 12:01 am EDT (0401 GMT), while the higher reciprocal tariffs will be in effect the following day, at the same time.
Trump has invoked the International Emergency Economic Powers Act, the 1977 law he used in February to justify his tariffs against Chinese, Mexican and Canadian products over fentanyl. IEEPA was not used for tariffs prior to Trump's current administration, but only to impose economic sanctions.
Trump declared a state of national emergency in accordance with IEEPA due to the "large, persistent and growing" U.S. goods trade deficit which grew more than 40% by 2024, reaching $1.2 trillion.
The executive order stated that "This trade imbalance reflects asymmetries of trade relationships which have contributed to atrophying domestic production capacity in the United States, particularly that of its manufacturing and defense-industrial bases."
CHINA'S EXEMPTION FOR SMALL PACKAGES IS ENDED
Trump signed a separate executive order ending the duty-free exemption "de minimis", which was granted to packages coming from China or Hong Kong that were valued under $800. This loophole had been exploited for years by Chinese ecommerce giants, including Shein Holdings and PDD Holdings Temu, to avoid tariffs in the U.S. by shipping directly to consumers.
Trump's administration attempted to close the de minimis exception earlier this year. It blamed it for allowing unscreened fentanyl-precursor chemicals to enter the U.S., an assertion that was verified by a last year investigation.
The administration decided to delay the exemption in order for the Commerce Department and Customs and Border Protection to implement adequate measures. The decision to close the loophole was first reported earlier Wednesday. Reporting by David Lawder, Editing by Lincoln Feast.
(source: Reuters)