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Oil prices rise as the market looks at US-China trade negotiations and lower US output
Investors focused on U.S. China trade talks and signs that U.S. oil production is declining. Brent crude futures rose 44 cents a bar, or 0.7% to $62,59 a bar by 0400 GMT. U.S. West Texas Intermediate crude gained 50 cents or 0.9% at $59.59 a gallon. The benchmarks fell to a 4-year low after OPEC+ decided to increase output. This fueled fears of an oversupply, at a time that U.S. Tariffs are increasing concerns about demand. Brent crude is trading higher on news that the U.S. will begin trade talks with China this weekend, extending a rally in oil, said commodities strategists from ING. "While negotiations could help improve sentiment on the oil market we will need to see substantial progress in lowering tariffs to increase the outlook for demand," ING said. In recent weeks, the lower oil price has prompted several U.S. companies to reduce their rigs. Analysts believe this will support prices by reducing production over time. Daniel Hynes, senior commodity strategist at ANZ Bank, believes that the latest announcements suggest a decline in output over the next few months. Last month, we warned that the falling oil prices and decreasing drilling activity would increase the risk of U.S. output dropping. Market sources cited American Petroleum Institute data on Tuesday to report that crude stocks dropped by 4.5 millions barrels during the week ending May 2. The U.S. Government will release data about stockpiles at 10:30 am ET. ET (1430 GMT). The average expectation of the analysts polled is that U.S. crude stock will decline by 800,000 barrels for last week. The signs that demand was improving also helped to support prices. China's consumers increased their spending on May Day and when the market returned from the holiday. Analysts expect companies in Europe to report a 0.4% increase in their first-quarter earnings. This is an improvement from the 1.7% decline analysts expected just a week earlier. It is expected that the Federal Reserve will leave interest rates in the United States unchanged on Wednesday, as tariffs continue to roil economic prospects. Reporting by Nicole Jao from New York, and Jeslyn Lerh from Singapore; Editing and rewriting by Stephen Coates and Kate Mayberry
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Toyota's earnings are cushioned by the demand for hybrids but a US tariff threat looms
Toyota's profits are expected to remain steady when it reports its annual earnings on the 15th of this month. However, investors will be alert for any signs that U.S. Tariffs could have an impact. Investors will pay close attention to the impact of President Donald Trump's Tariffs on Toyota's future profits. The levies will likely deal a severe blow to automakers doing business in the U.S. What Toyota says about Toyota Industries will also be of interest, after the automaker announced last month that they were considering a possible buyout. Seiji Sugiura is a senior analyst with Tokai Tokyo Intelligence Laboratory. "The focus will be on the guidance for fiscal year ending in March 2026," he said. "I do not know whether Trump's tariffs will be considered or not." According to the average seven analysts surveyed, the Japanese automaker will deliver a 2% increase year-on-year in operating profit, which would be equivalent to $7.86 billion. This would be the first rise in three quarters. The company's sales data has already shown that the momentum was maintained at the beginning of the year. Toyota's sales worldwide rose by 5% between January and March compared to a year ago, thanks to strong demand in the United States and Japan, its two biggest markets. Toyota's operating profits for fiscal 2024 are expected to be lower than last year's record. The automaker increased its forecast of operating profit for the fiscal year that just ended in February to 4.7 trillion Japanese yen. This would represent a 12% drop year-over-year. Toyota's strong demand for hybrids like the Prius, Camry and other gasoline-electric vehicles has validated its bet on this technology. However, it also poses a challenge to the automaker as suppliers are struggling to keep up. POTENTIAL TARIFF HIT Tokai Tokyo’s Sugiura said that the company's operating profit for fiscal 2025 could be affected by 800 billion yen as a result of the impact of tariffs on Toyota’s U.S. bound exports from Japan. The estimate doesn't factor in any wider impact of Trump's tariffs such as a possible U.S. economy slowdown, or on Toyota exports from Canada and Mexico to the largest economy in the world, where they have production bases and make some of their most popular models. Toyota previously stated that it would continue its normal operations and focus on reducing fixed costs. It did not take more radical measures, such as raising car prices to respond to tariffs. Toyota, according to sources familiar with the situation, is looking at producing its next-generation RAV4 SUV on American soil to protect itself from the potential risk of U.S. exchange rates and tariffs. The demand for this car also appears to be outstripping supply. Toyota shares are down 13% this year compared to the Nikkei index's 8% drop over that time period. Analysts are also waiting for an update from Toyota on its strategy to unwind cross-shareholdings, as regulators and investors have been putting pressure on Japanese companies in recent years to sell stakes they hold in business partners and affiliates. The structure of any deal will determine how Toyota's price is affected by a possible investment into a potential purchase of Toyota Industries. Toyota Industries was a company that has been around for nearly 100 years, from which Toyota Motors was spun-off. James Hong, Macquarie's head of mobility analysis, explained. Toyota Industries owned around 24% of Toyota as of September of last year. Toyota Industries also held more than 5% Denso, a major Toyota supplier, and a Toyota group company. He said that investors would view any additional investment by Toyota in its supplier as a negative, but steps to address cross-shareholdings and dual listing concerns could be seen as positives for the entire market, including Toyota. $1 = 143.7500 Japanese yen (Reporting and editing by Muralikumar Anantharaman).
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Shell and Google Enter PPA to Extend Life of First Dutch Offshore Wind Farm
Shell and Google have signed a power purchase agreement (PPA) for the electricity produced at 108 MW NoordzeeWind project, extending the lifespan of Netherland’s first offshore wind farm.The agreement will extend the lifespan of the NoordzeWind offshore wind farm by at least four years beyond its original decommissioning date.Google purchased 100% of the wind farm's 108 MW capacity, which enabled Shell to pursue permit extensions and invest in crucial upgrades, preventing the premature loss of valuable clean energy.Shell NoordzeeWind is the oldest and first offshore wind farm to undergo a life extension in the Netherlands.“The initiative helps to keep existing carbon-free energy resources on the grid that would otherwise have retired.“To date, we’ve supported over 1 GW of clean energy generation capacity in the Netherlands through PPAs.“This investment in offshore wind, including our largest offshore wind project ever, reflects our broader commitment to a carbon-free future and our hope to inspire similar partnerships giving new life to clean energy assets facing retirement,” Google said.
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Officials say four people were injured in a fire at a coal processing plant in Russia’s Far East.
Early on Wednesday, Russian authorities and officials of the company said that four people had been injured in an early morning fire at a coal-processing plant in Russia's far northeast. Mechel, a Russian mining company, said in a press release that its workers had been evacuated from the coal processing plant at Neryungri, in the Republic of Sakha (also known as Yakutia), after a fire started in a warehouse containing finished goods. Mechel and Yakutugol own the Neryungri Plant. Yakutugol is the largest coal mining firm in the Sakha Republic. According to Russian media reports, the Neryungri coal plant began operations in 1984 and has a capacity of 9 million tons per year. In a video posted on Telegram, Denis Gerasimenko said that more than 50 firefighters and twelve pieces of equipment had been involved in fighting the fire. Gerasimenko stated that the problem lies in the construction of the building, and the presence of a load which is flammable. A number of Russian Telegram channels reported that an explosion had occurred at the plant. We were unable to independently verify reports of an explosive. (Reporting and writing by Lidia Kel in Melbourne, Editing by Christopher Cushing & Kate Mayberry
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Stocks rise on US-China talks, China rate reduction
U.S. stocks futures and Chinese stock markets both rose on Wednesday as investors welcomed news of a high-level meeting between U.S. officials and Chinese counterparts as an opportunity to reduce tariffs. China also cut interest rates and promised to support the stock market. Scott Bessent, U.S. Treasury secretary, said that the meeting scheduled for this weekend in Switzerland would be a de-escalation. S&P 500 futures were up about 0.9%, and Hong Kong's Hang Seng rose 1.7% at mid-morning. China blue chips were up 0.5%, while Japan's Nikkei index was largely flat. Ray Attrill, head of Foreign Exchange Research at National Australia Bank, said: "It seems that both sides are willing to reach out and meet on a high-level. I wouldn't have thought it could be anything other than positive." It's positive for Asian foreign exchange in general. The dollar rose a little against the yen, euro and yuan. China's rate reductions weighed down on the yuan. The South Korean won, which was gaining ground with the surge of Asian currencies, has fallen by more than 1 percent. Gold dropped 1.4%, while oil rose 0.5%. China's central banks governor announced a 10 basis-point cut in the benchmark interest rate, and a 50 basis-point cut to bank reserves on Wednesday. This will allow more money into the banking system. Investors interpreted the announcements of the financial regulator as a coordinated effort by the authorities to promote the property market. It's reminiscent of the press conference that started the stimulus euphoria back in September. Homin Lee is a senior macro-strategist at Lombard Odier, based in Singapore. Later on Wednesday, the U.S. Federal Reserve will meet to set interest rate cuts. The markets indicate that there is almost no chance for a move to be made on Wednesday, and only 33% of a reduction in June. This is down from 64% one month ago. India and Pakistan are nuclear-armed neighbors and the fighting has been intense for more than 20 years. India fired gunfire and shells over the border in Kashmir, while India also hit targets in Pakistan. Attrill of NAB said that it would add another layer to the geopolitical tensions and likely cause India's currency to fall. The euro was supported above $1.13, with German conservative leader Friedrich Merz being elected chancellor after his alliance with Social Democrats suffered a shock defeat in the initial round.
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Financial Times - May 7
These are the most popular stories from the Financial Times. These stories have not been verified and we cannot vouch their accuracy. Headlines After three years of negotiations, UK and India reach a trade agreement UK closes on US trade deal with lower tariff quotas and cars After rival complaint, a Czech court stops an $18 billion deal for nuclear reactors Brussels wants to force EU gas companies to reveal their Russian contracts View the full article Britain and India have signed a free trade agreement that has been long sought after. The tariff wars sparked by U.S. president Donald Trump forced both sides to speed up efforts to increase trade in whisky and cars, as well as food. Officials in London and Washington say that the U.S. has made progress in negotiations with Britain on a possible trade agreement, which would include lower tariffs for steel and automobiles. After a complaint by a rival bidder, a Czech court blocked CEZ from signing an 18 billion dollar contract with South Korea's KHNP for the construction of a nuclear power plant. The European Commission wants to tighten up on fuel imports by Russia in 2027.
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Gold falls on US-China Trade Talk Hopes; traders focus on Fed policy
The gold price fell on Wednesday, as investors awaited the Federal Reserve policy meeting that would be held later in the afternoon. As of 0225 GMT, spot gold was down by 1.2% to $3,388.67 per ounce. The metal rose by nearly 3% the previous session. U.S. Gold Futures dropped 0.7% to $3 397.70. "Gold is pulling back amid broad-based "risk-on" movement across markets... This pro-cyclical setup could echo optimism amid signs that the U.S. has begun real trade negotiations with China," said Ilya SPivak, Tastylive's head of global macro. This weekend, U.S. Treasury secretary Scott Bessent will be in Switzerland for talks with chief Chinese economic official He Lifeng. Last month, both countries imposed tariffs of equal value on each other. This triggered a trade conflict that fueled fears of global recession. On Tuesday, U.S. president Donald Trump announced that he will be reviewing potential trade agreements over the next two week to decide which to accept. Later in the day the Federal Open Market Committee meeting is expected to be the focus of the market, as the U.S. Central bank will likely hold rates steady. Spivak said that the FOMC would remain vague in order to maintain as much flexibility as is possible when it comes to determining what impact this trade war may have on growth and inflation. The traders expect 80 basis point rate cuts in this year starting in July. The remarks of Fed Chair Jerome Powell will also provide clues as to the timing of any future rate cuts. In an environment of low interest rates, gold, which is traditionally viewed as a hedge to economic and political uncertainty, thrives. Silver spot fell by 0.9%, to $32.93 per ounce. Platinum dropped 0.6% to $979.07 while palladium was down 0.4% at $970.28. (Reporting and editing by Sumana Nady and Sonia Cheema in Bengaluru)
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Sino-US trade talks and Chinese stimulus have boosted iron ore prices to a 2-week high.
Investor sentiment was boosted by China's recent stimulus measures, and the hopes that trade frictions between the two world's largest economies will be eased. As of 0154 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.78% higher. It was 711 yuan (US$98.47) per metric ton. Earlier in the session, the contract reached its highest level since April 24, at 726 Yuan per ton. The benchmark June Iron Ore traded on the Singapore Exchange rose 0.81%, to $98.3 per ton. It had previously reached a peak of $99.85. The People's Bank of China will reduce the amount of cash banks are required to hold as reserves, for the first time in 2025. This is part of a policy designed to boost the economy during a prolonged trade war with the United States. The magnitude of the stimulus package somewhat exceeded our expectations, and that is the main driver of the price strength, said an iron ore trader in Singapore. He requested anonymity because he was not authorised to talk to the media. Prices were also supported by positive signals about the possible easing of global trade tensions. U.S. Treasury secretary Scott Bessent, and chief trade negotiator Jamieson Grer will meet China’s top economic official on Saturday in Switzerland. This could be a first step in resolving the trade war that is disrupting the global market. The benchmark steel prices on the Shanghai Futures Exchange have gained some ground. Rebar rose by 0.39%, while hot-rolled coils rose by 0.59%. Stainless steel also gained 0.67%. Other steelmaking ingredients listed on the DCE, however, posted losses due to weak fundamentals. Coking coal and a coke both lost 0.16 and 0.2% respectively. ($1 = 7.2208 Chinese yuan). (Reporting and editing by Amy Lv, Lewis Jackson)
Sparta Capital urges Wood Group to seek sale, reconsider UK listing
Activist shareholder Sparta Capital Management is pushing British engineering services firm Wood Group to think about either selling itself or to reevaluate its UK listing, according to a letter from the fund supervisor on Tuesday.
Shares in the FTSE 250 business were last up 0.1% at 0915 GMT at about 142 cent.
A representative for the hedge fund decreased to discuss the letter and also decreased to confirm just how much stock Sparta Capital held in Wood Group. Wood Group also decreased to comment.
Wood Group's share price performance has actually not matched that of U.S.-listed engineering peers Jacobs Solutions and KBR , the hedge fund said in its letter to the company, published on Tuesday.
In the last 12 months, Wood Group's shares have lost some 37% in value, compared to a 8.6% gain for KBR shares and a. increase of 24% in Jacobs Solutions.
UK mid-caps have chronically underperformed global equities. in the last few years, Sparta Capital said.
Wood Group's future, could be best supported by different. owners, and we advise you to carry out a strategic review and. explore the very best method to increase investor worth, consisting of a. sale of the company, the letter stated.
Last year, U.S.-based Apollo Global Management. deserted a $2.1 billion takeover of Wood Group after multiple. efforts without citing any factors.
Wood Group's share price now trades at a discount rate to that. deal, the letter noted. The company's market capitalisation was. $ 1.21 billion at Monday's close, while Apollo's bid had actually valued. it at $2.1 billion.
Sparta Capital is a multi-strategy mutual fund introduced. in 2021 by ex-Elliott Management financier Franck Tuil, and is. based in London.
Wood Group prepared to cut hundreds of tasks almost a year. after the collapse of takeover talks, according to March. reports.
(source: Reuters)