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Morning Bid Europe-Surprise Japan Trade Deal raises others' Hopes
Stella Qiu gives us a look at what the future holds for European and global markets. As U.S. earnings start to suffer from increased tariffs, Donald Trump surprised investors by announcing an agreement with Japan. The prospects for an agreement between the U.S.A. and the European Union are improving now that representatives of the 27-member group will be in Washington on Wednesday for further talks. The optimism led to a 1.1% rise in European stock futures. South Korea's officials are in the U.S. to continue trade negotiations. They will be studying the Japan agreement. Next week, U.S. officials and Chinese officials will meet in Stockholm to discuss a possible extension of the tariff deadline. The Japan agreement included a reduction of 15% in tariffs on auto exports to America, from 25% previously. This deal lifted the shares of Japanese automakers. Toyota Motor jumped 15%, and Mazda Motor rose 17%. The Nikkei, the broad benchmark index, rose 3.2% and reached its highest level in over a year. Meanwhile the yield on the 10-year Japanese Government Bond benchmark increased by 9 basis points. This was due to the reduction of uncertainty that helped clear the way for the Bank of Japan's return to interest rate increases. The dollar fell against the yen initially, but rose 0.2% at the end to 146.9yen. This was after the Mainichi local newspaper reported that Prime Minister Shigeru Shiba had decided to resign due to the losses suffered in the upper house elections on Sunday. Investors will focus on the earnings reports of Alphabet and Tesla, two of Magnificent 7, which have been driving the market rally largely due to AI optimism. Investors have been evaluating U.S. earnings for signs of slowdown and the impact of Trump's tariffs. So far, they are mixed. General Motors fell 8.1% after it reported that tariffs had taken a $1 billion toll on its quarterly results. The following are key developments that may influence the markets on Wednesday. Eurozone consumer confidence flash July Earnings from Alphabet (including Tesla), IBM and IBM
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Iron ore falls on China's property weakness, but stimulus stems the losses
Iron ore futures declined on Wednesday. The weakness of China's real estate sector overshadowed the support provided by recent government stimulus plans and infrastructure projects. As of 0311 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.49% lower. It was 813 yuan (113.49 USD) per metric ton. The benchmark August Iron Ore at the Singapore Exchange fell by 0.61% to $104.7 per ton. China's outstanding real estate loans reached a record high of two years in June following a series property measures designed to stabilize the sector. The property slump continues to be a drag on the economy, despite the continued support of policy. Property investment fell in the first half year. New home prices declined in June by the most in eight months. Analysts from ANZ believe that the announcement of a $170-billion hydropower project could be a major boost for the struggling concrete sector and steel industry. Costs of the project are expected to be four times higher than those of Three Gorges Dam. Japan launched an investigation on anti-dumping of stainless steel sheets imported to Japan from China and Taiwan after data revealed that these imports are sold at prices 20-50% less than those in China. As a result, Japanese steelmakers are struggling to set up prices that reflect the rising costs. This is resulting in a decline in profit. Coking coal and coke, which are used to make steel, also increased in price, by 9.24% each and 2.2% respectively. Prices of coking coal remained high due to rumours about possible government inspections which could cause supply disruptions. This was coupled with the demand for hydropower projects. The benchmarks for steel on the Shanghai Futures Exchange have mostly fallen. Hot-rolled coils fell by 0.15%. Wire rods dropped by 2.48%. Stainless steel increased 0.04%. Rebar traded at the same level.
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Oil prices pause slide on US-Japan trade deal
The oil prices rose in Asian trade Wednesday, after three straight sessions of declines. A U.S.-Japan trade agreement signaled progress on tariffs. However, gains were limited by the fading hope for a breakthrough during an EU and China summit. Brent crude futures were up 21 cents or 0.31% to $68.80 per barrel at 0351 GMT. U.S. West Texas Intermediate Crude Futures rose 17 cents or 0.26% to $65.48 a barrel. The benchmarks fell about 1% the previous session, after the EU announced it was considering countermeasures to U.S. Tariffs. Hopes for a deal before the August 1 deadline faded. On Tuesday, President Donald Trump announced that the U.S. had reached a deal with Japan that included a 15% tariff for U.S. imports coming from Japan. He said that Japan agreed to invest $550 billion dollars in the U.S. The industry is not expecting much from the EU-China Summit on Thursday, which will be a test of the EU's resolve and unity amid rising trade tensions between Beijing and Washington. The price decline of the last three sessions has abated, but I do not expect much of a boost from the news of a U.S. Japan trade deal. As the delays and hurdles reported in the talks with China and the EU will continue to drag on sentiment," Vandana Hari said. The Chinese Ministry of Commerce reported that the European Union trade chief and China's minister for commerce had an "in-depth and candid" discussion about economic and trade issues as well as the other challenges facing both sides ahead of the Summit. Separately U.S. crude oil and gasoline inventories fell last week. Market sources cited American Petroleum Institute data on Tuesday. They added that distillate stocks increased by 3.48 millions barrels. The ING analysts said in a report that the low crude inventory will help support prices, even though a large surplus will be expected later this year. The U.S. Energy Secretary said that sanctions against Russian oil could be considered to end the conflict in Ukraine, which is another positive sign for the crude markets. The EU agreed on Friday to its 18th package of sanctions against Russia. This included a lower price cap for Russian crude. Analysts said that the absence of U.S. involvement would hamper the effectiveness of this package. (Reporting from Mohi Nrayan in New Delhi; additional reporting from Colleen H. Howe in Beijing. Editing by Muralikumar Anantharaman, Jamie Freed and Muralikumar Anantharaman)
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Malaysia PM announces new steps to combat rising living costs
Malaysian Prime Minister Anwar Ibrahim announced on Wednesday new measures in response to the growing discontent of the public about rising living costs. These included a cash gift for all adults and a pledge to lower fuel prices. Anwar was asked to resign by protesters who planned to demonstrate in Kuala Lumpur, Malaysia's capital, on Saturday. They were concerned about the escalating price of goods and services, as well as the failure to implement promised reforms. Anwar's government has implemented a number measures this year to boost revenue. These include a minimum-wage hike, higher electricity tariffs for heavy users of power, and new taxes on imported luxury goods and fruits. Anwar said that the measures were targeted primarily at large companies and wealthy individuals. However, critics expressed concerns about the possibility of higher costs being passed on to consumers including those with lower and middle incomes. Anwar announced on Wednesday that all Malaysians over 18 will receive an one-off 100 ringgit (US$23.67). The cash assistance will be distributed from August 31. He said the government would spend 15 billion ringgits ($3.55 billions) of cash aid by 2025. This is an increase from the 13 billion ringgits originally allocated to that year. The police have stated that they expect between 10 and 15 thousand people to attend Saturday's protest, which was organised by opposition parties. Anwar stated, "I accept the complaints and acknowledge that the cost-of-living remains a problem that needs to be addressed even though we've announced various measures so far." He said that he will launch new initiatives on Thursday to help those who are in poverty. Anwar stated that the government would also reveal details of a long-awaited program to eliminate blanket subsidies for the widely used RON95 transportation fuel by the end September. Anwar stated that once the changes to subsidy are implemented, Malaysians can expect to see fuel prices drop to just 1.99 ringgits per litre from the current 2.05 ringgits, Anwar added. He added that foreign nationals will be required to pay the unsubsidised prices of the market for fuel. Anwar announced that additional funds would be allocated to a government program aimed at improving access to goods and necessities. He also promised to improve existing aid measures. Malaysia's inflation has fallen this year but there are still concerns about the rising prices of food and other basic necessities. The latest data released showed that consumer prices rose 1.1% compared to a month earlier in the previous year. However, food and beverage costs increased at a faster rate of 2.1%. $1 = 4.2250 Ringgit (Reporting and editing by David Stanway, Danial Azhar, Rozanna Latiff)
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Nikkei surges as Trump announces Japan Trade Deal
The Japanese stock market reached a record high of one year on Wednesday, as the country signed a deal with the United States to lower tariffs on autos. This also revived hopes for an EU-US trade agreement that would boost European stock futures. Donald Trump said late Tuesday that a deal reached with Tokyo would see Japan pay a 15% lower tariff on all shipments to the U.S. The agreement came after the U.S. reached an agreement with the Philippines, where the U.S. will collect a tariff of 19% on imports. Trump said that representatives of the European Union would be in Washington for trade talks on Wednesday. This sparked hopes for a trade deal with Europe as markets worried about wider EU countermeasures in the face of receding hopes for a Washington deal. Futures on the EuroStoxx 50 index rose by 1% while Wall Street futures gained about 0.1%. Charu Chanana is the chief investment strategist for Saxo. She said that expectations for a breakthrough in U.S.-Japan negotiations were low. Trump's announcement was a mild surprise, providing relief to Japanese stocks on a near-term basis. The deal is a strategic one, as it allows Japan to avoid immediate tariff increases, while Trump's focus shifts elsewhere. Nikkei gained over 3% in Japan as automakers' shares surged after news that the agreement would lower auto tariffs to 15% from proposed 25%. Mazda Motor rose 17%, while Toyota Motor increased 13.6%. South Korean automakers have also increased their production as the Japan agreement has fueled optimism about possible progress in the tariff negotiations between South Korea & the United States. The yields on 10-year JGBs increased by a massive 8.5 basis points to 1.585%. However, the reaction of the yen, which was trading at 146.99 dollars per yen, was less pronounced. Investors reacted calmly to a report in the media that Japanese Prime Minister Shigeru ishiba was stepping down at the end of August. Ishiba is facing increasing opposition within his own party over his pledge to remain in power, despite Sunday's loss of the ruling coalition in upper house elections. Chanana, from Saxo, said Ishiba’s departure removed a source for political fragility. It also sets the stage to a leadership that is more aligned towards pro-market policies as well as closer U.S. relations. His exit also clears the way for Japan to continue its accommodative monetary and fiscal stance." Treasury Secretary Scott Bessent announced that in another positive development U.S. officials and Chinese officials would meet next week in Stockholm to discuss an extension of the August 12 deadline to negotiate a trade agreement. Hong Kong's Hang Seng index rose 0.7%. MSCI's broadest Asia-Pacific share index outside Japan rose 0.8%. Wall Street ended the night mixed after investors analyzed a series of earnings reports that showed signs that Trump's Trade War is affecting corporate profit margins. General Motors fell 8.1% after it reported that tariffs had taken a $1 billion toll on its quarterly results. Investors now await the results of Tesla and Google parent Alphabet, the Magnificent Seven stocks that drove much of the recent market rally fuelled with AI optimism. The foreign exchange market was relatively quiet, with dollar yields and overnight dollar losses holding steady. The dollar index remained flat at 97.45 after slipping 0.4% overnight, its third consecutive day of declines. The euro dropped 0.1% to $1.1739, after rising 0.5% overnight. The benchmark 10-year U.S. Treasury Yields increased by 2 basis points, to 4.3559% after falling 3 bps overnight. Trump continued to criticize Federal Reserve Chair Jerome Powell, for not reducing interest rates. Bessent, however, said that Powell did not need to resign immediately. Bessent said that the Fed's independence in monetary policy was threatened by the "mandate creep" it has taken into other areas. He called on the U.S. Central Bank to review these operations. The price of oil rose a bit. U.S. crude oil rose by 0.4%, to $65.60 a barrel. Brent, on the other hand, was up 0.4%, at $68.88 a barrel. The spot gold price remained at $3.429 per ounce.
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CEP Makes ‘Significant’ Oil Discovery Offshore Poland
Canadian exploration and production company Central European Petroleum (CEP) has made a significant oil discovery in its fully owned and operated Wolin East 1 (WE1) well, located in the Baltic Sea, offshore Poland.The WE1 well was drilled using Noble Corporation’s Noble Resolve jack-up rig in waters 9.5 meters deep and reached a vertical depth of 2715 meters.Tests confirmed a 62-meter hydrocarbon column and excellent reservoir properties for oil and gas production in the Main Dolomite geological formation, according to the company.Zenith Energy Wraps Up Well Ops at CEP’s Field off PolandThe Wolin East oil discovery is estimated to contain mean recoverable oil, sales gas and natural gas liquids totalling 200 million barrels of oil equivalent (mmboe).There is also significant further low-risk exploration, appraisal and secondary recovery potential within the license in the Main Dolomite as well as in the deeper Rotliegend formation.With these opportunities included, the Wolin license in total is estimated to contain more than 400 mmboe of recoverable hydrocarbon resources, which constitutes the largest conventional hydrocarbon field yet discovered in Poland, and one of the largest conventional oil discoveries in Europe in the past decade, CEP claims.“This is a historic moment for both Central European Petroleum and Poland’s energy sector. We view this discovery as a foundation for long-term, responsible development of Poland’s offshore resources. Wolin East is more than just a promising field – it represents a shared opportunity to unlock the full geological and energy potential of the Baltic Sea,” said Rolf G. Skaar, CEO of CEP.“The discovery of the Wolin East hydrocarbon deposit – although it still requires the preparation, submission, and approval of the deposit’s geological documentation – may prove to be one of the breakthrough moments in the history of hydrocarbon exploration in Poland, especially with regard to areas that have so far remained insufficiently explored, such as Poland’s Exclusive Economic Zone in the Baltic Sea.“If this discovery is ultimately confirmed, the Wolin East deposit could become the largest oil and associated natural gas field discovered in Poland to date. The future development of this site may significantly contribute to strengthening Poland’s energy security and reducing its dependence on external hydrocarbon suppliers, provided that all necessary formal requirements enabling its exploitation are met in advance,” added Krzysztof Galos, Undersecretary of State and Chief Geologist.
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National Australia Bank CEO: He just needs to endure media coverage about investor complaints
The chief executive of National Australia Bank said that on Wednesday he only had to "get past" the media coverage about investor complaints regarding his management style and drinking during customer events. The Australian Financial Review reported, on July 15, that during an investor lunch held last month, major investors in the Bank questioned whether Andrew Irvine (CEO since April 2024) should improve his leadership skills and reduce his drinking at events. AFR reported that the complaints led the board of Canada's largest business lender and third largest mortgage provider to provide more mentoring and leadership development. The board of NAB has stated that it supports Irvine. Irvine's first public comments since the report were a direct admission that the media coverage was personal and public. "It was difficult for me and my family," he said. Irvine, who chairs the Australian Banking Association (an industry group he chairs), said that public figures can expect to be scrutinized. He said that "a noble purpose" in his work, which is to help people manage their finances, energized him. Over the last year, Australia has scrutinized CEO behavior in great detail. Richard White, the CEO of Wisetech, a logistics software company, resigned after allegations regarding his personal life. He has since been promoted to executive chair of the company. Mineral Resources announced late last year that its billionaire founder Chris Ellison would be leaving the company within 18 months following an internal investigation which found he had used company resources to his personal advantage and evaded tax.
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Shanghai metals rise as traders weigh Beijing’s pledge of growth and Sino-US discussions
Market optimism following Beijing's recent pledge of stabilizing industrial growth and traders monitoring developments in China-U.S. Trade talks led to a rise in the most traded metals at the Shanghai Futures Exchange on Wednesday. SHFE aluminium rose 0.24% to 20,910 Yuan ($2,916.36) a ton at 0102 GMT. This is its highest level since November 12, 2024. SHFE zinc rose 0.37% to 22 945 yuan. This is its highest level since April 1. Tin was the biggest gainer among the SHFE metals. It rose 0.8% to 269,570 Yuan, the highest since July 4. Copper also climbed 0.53%, reaching 80,070 Yuan, the highest since July 9. Lead climbed by 0.18%, to 16,925 Yuan. Nickel rose 0.3% to 123 690 yuan. Many have interpreted Beijing's comments on stabilizing industrial growth made last Friday as supply-side Reform, which is good news for those who are overcapacity," said a Shanghai based metals analyst at a futures firm. The Chinese metals market closely followed the progress of U.S.-China Trade discussions. U.S. Treasury secretary Scott Bessent announced on Tuesday that U.S. officials and Chinese officials would meet in Stockholm to discuss extending deadlines for trade deals negotiations. The original deadline for trade deal negotiations was August 12. Trump's comments Tuesday lifted global mood. Washington and Japan have struck a deal which includes a 15% lower tariff on U.S. auto imports. "Japan’s 15% tariff was better than expected, and the best deal to date, which could shed some light on U.S. China talks, too, as we wonder what will be discussed during Trump’s visit to China," said a Beijing metals analyst of a futures firm. Trump said that he might visit China in the near future for a historic trip to address simmering tensions on trade and security between both superpower economies. LME copper was flat at $9.919.5 per ton. Lead remained unchanged at $2.010 while zinc dropped 0.26% at $2.852.5. Tin fell 0.26% at $33,820. Aluminium dipped 0.1% to $2.655.5 and nickel declined 0.05% to $15,520. Click or to see the latest news in metals, and other related stories. Flash July 1400 US Existing Home Sales June Flash July 1400 Existing Home Sales in the US June
Sources: France's EDF will cut jobs and withdraw from certain overseas projects
Two sources with knowledge of the matter said that France's EDF has cut its headcount abroad and canceled bids for some nuclear projects overseas in order to focus on a major building programme at home, under new CEO Bernard Fontana.
France, once the world's leading nuclear power producer and Europe's biggest nuclear energy provider, is now pulling back, at a moment when global nuclear expansion calls are being made. This opens up new opportunities for other players, as high costs and design problems hurt its ability compete internationally.
Fontana took over EDF in April after the government became frustrated by the slow progress of the French nuclear fleet.
The new CEO told a parliamentary committee hearing about his nomination that he will focus on the development of domestic nuclear projects, rather than on its international business. This company employs hundreds and has built reactors previously in China, Finland, and Britain.
Sources said that he has made changes in the past few weeks to his overseas business, including a pullback from certain bids for building reactors outside Europe.
A source familiar with plans said that the company would focus on nuclear tenders in the Netherlands and Sweden, where there is a greater chance of it winning.
The person who spoke to me said that it will also reduce the priority of projects in Poland and India as well as Canada and other countries outside Europe.
Another industry source with knowledge of the situation said that reducing its international footprint would allow it to reduce costs and redirect staff to more important projects.
Recent international projects by EDF have been plagued with long delays and cost increases. It lost out last year to South Korea's KHNP for the bid of two new reactors.
Fontana plans to reduce the number of employees on its international sales team. According to one source, there are plans for about 60 job cuts, including 10 managers.
EDF has said that no decision has been taken.
The company stated that the group will continue to pursue its international activities, while maintaining a focus on the profitability of their commitments.
A spokesperson for the company stated that Europe was always its top priority. It is now focusing on strengthening European supply chains.
An official from the office of Prime Minister Francoise Bayrou said that "the new French nuclear program is the group's top priority."
According to a report in the media last year, President Emmanuel Macron announced early 2022 plans for six new French nuclear reactors. The reactors would replace ageing plants to ensure future energy supplies.
However, the company is heavily indebted after costly repairs to its nuclear facility in recent years.
EDF also wants to sell off some of its renewable assets in North America, Brazil and South America.
One source said that the company's subsidiaries Framatome, Arabelle and AP 1000, which manufacture reactor parts, would continue to bid for international projects such as AP 1000, in Canada.
(source: Reuters)