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Oil prices drop, causing buyers to buy more; concerns about oversupply weigh
The oil price rebounded by over 1% Tuesday, with technical rebounding and dip-buying after a previous session's drop due to OPEC+'s decision to increase output. However, concerns about the outlook for a market surplus persisted. Brent crude futures rose by 92 cents a barrel to $61.15 at 0309 GMT. U.S. West Texas intermediate crude gained 89 cents a barrel to $58.02 The OPEC+ decision to increase oil production for a second month in a row, made over the weekend, pushed both benchmarks down to their lowest levels since February 2021. Yeap Jun Rong is a market analyst at IG. He said that the slight rise in oil prices today appears to be more technical than fundamental. "The broader price movement is being impacted by persistent headwinds, including a pivotal change in OPEC+'s production strategy, uncertainty over demand due to U.S. Tariff risks and downgraded price forecasts." Oil has dropped over 20% in the last six sessions, mainly due to expectations that production would exceed consumption. This is a result of increased bets placed on a global economic slowdown following U.S. president Donald Trump's shock tariffs in April. On Tuesday, the return of Chinese participants to the market after a 5-day holiday that began on May 1 helped support prices. "China reopened its doors today and as the world's largest oil importer, it is likely that buyers would have rushed to secure oil prices at their current low levels," said Priyanka Sackdeva, Senior Market Analyst at Phillip Nova. Data showing an increase in orders in the U.S. - the world's largest oil consumer - also provided some support. ISM (Institute for Supply Management) reported on Monday that its nonmanufacturing PMI (Purchasing Managers Index) rose to 51.6 from 50.8 last month. The economists polled had predicted that the services PMI would drop to 50.2. As tariffs threaten the economy, it is likely that on Wednesday, the U.S. Federal Reserve won't change interest rates. Barclays lowered their Brent crude forecast by $4 a barrel to $70 a barge for 2025, and set the estimate for 2026 at $62 a barge. They cited "a rocky path ahead for fundamentals", amid escalating tensions in trade and OPEC+’s shift in production strategy. Reporting by Siyi Liu and Arathy Sommesekhar, both in Houston. Editing by Muralikumar Anantharaman & Lincoln Feast.
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China's demand for iron ore is resilient and boosted by Sino-US trade talks.
Prices of iron ore futures rose on Tuesday. This was due to the hopes that a trade agreement would be reached between the U.S.A. and China, the top steel-making consumer. As of 0243 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.57% higher. It was 708.5 yuan (US$97.98) per metric ton. The benchmark June Iron Ore at the Singapore Exchange rose 1.03% to $97.55 per ton. U.S. president Donald Trump said on Sunday that the U.S. met with many countries including China on trade deals and that his priority with China was securing a fair deal. China's Commerce Ministry announced on Friday that Beijing was "evaluating" Washington's offer to hold discussions over President Donald Trump's tariffs of 145%. A private sector survey revealed on Tuesday that the uncertainty created by U.S. trade tariffs weighed down China's service activity in April. Hexun Futures, a broker, stated that the steel market is worried about overseas recession risk sparked off by tariffs. Anti-dumping measures will negatively impact future steel demand. Galaxy Futures said that domestic hot metal production is still high and the demand for it from end users continues to be strong. Mysteel, a consultancy, reported that production among Chinese blast-furnace steel producers increased during the period April 25-30. However mills' margins shrank. Steelhome data revealed that the total stockpiles of iron ore across Chinese ports increased by 2.24% in a week to 136.8 millions tons on April 30. Coking coal and coke, which are both steelmaking ingredients, were down by 1.78% and 2.17 percent, respectively. The benchmark steel prices on the Shanghai Futures Exchange were flat. The price of rebar fell by 0.26%. Hot-rolled coil rose by 0.06%. Stainless steel increased nearly 0.2%. Wire rod was flat. ($1 = 7.2312 Chinese Yuan) (Reporting and editing by Rashmi aich; Michele Pek)
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Financial Times - May 6
These are the most popular stories from the Financial Times. These stories have not been verified and we cannot vouch for the accuracy of these reports. Headlines US coal producer Peadbody has threatened to end deal with Anglo American Eutelsat names a new CEO as Starlink's rival in Europe seeks funding Credit Suisse will pay $511 Million for helping wealthy Americans to hide over $4 Billion Santander earns 7 billion Euros from Poland sales View the full article Peabody Energy has said that if it is not satisfied with the resolution of issues surrounding Anglo American's Moranbah North Mine, then they may terminate their pending agreement to purchase some of Anglo American's Australian steelmaking assets. The franco-british satellite operator Eutelsat has announced that Orange executive Jean Francois Fallacher will be replacing its CEO. This is a surprising move from a company known for its leading role in European defense communications. The U.S. Department of Justice announced that a Credit Suisse unit has pleaded guilty in the United States to charges of helping ultra wealthy Americans evade tax and will pay an amount of $510 million. Santander is selling stakes in its Polish retail banking business for 7 billion euros ($7.91billion) as part of a plan to reduce its exposure in the country. The proceeds will be used to buy back shares. ($1 = 0.8845 euro) (Compiled from Bengaluru Newsroom)
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Gold reaches two-week high due to demand for safe-haven assets; Fed decision looms
On Tuesday, gold prices reached a two week high as investors remained focused on the Federal Reserve's upcoming policy meeting. They were also concerned about President Donald Trump’s tariff plans. As of 0224 GMT the spot gold price was up 1.4% to $3,380.92 per ounce after reaching its highest level since earlier in session. U.S. Gold Futures rose 2% to $3389.90. "Gold prices are on a strong rise this week as investors return to the safe haven asset in order to hedge portfolio volatility due to renewed tariff worries from U.S. president Donald Trump," said IG's market strategist Yeap Jun-Rong. Trump announced a 100% tax on films produced abroad on Sunday, but provided few details about how the levy will work. He said on Monday that he plans to announce the pharmaceutical tariffs in two weeks. The Fed's rate decision this week and Fed Chairman Jerome Powell's remarks due on Wednesday will provide clues about the rate trajectory of the U.S. Central bank. Since last December, the Fed has maintained its policy rate between 4.25% and 4.50%. Rong stated that "dovish signals can provide additional support for gold and reinforce its overall upward momentum." According to a report the Fed will probably leave interest rates the same. It also said that this meeting could be the last one where the outcome was so clear-cut, with Trump's tariffs casting an uncertain shadow over the economy outlook. Before cutting, Fed officials will look for hard data on the labor market. Goldman Sachs wrote in a note that they expect this to take several months. They therefore anticipate three 25bp rate cuts in September, July and October. Low-interest rates are also conducive to the growth of non-yielding gold bullion as a hedge against financial and political turmoil. Silver spot rose by 1.5%, to $32.99 per ounce. Platinum rose by 1.3%, to $971.24, and palladium gained 0.5%, to $945.75.
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As focus shifts from Asian currencies, stocks drift and the dollar stabilizes
Investors re-emphasised concerns over U.S. trade tariffs, and their impact on the economy. These fears, combined with the pledges of key oil producers to increase supply, kept crude prices near their four-year-lows. After the Taiwan dollar surged in recent sessions, the focus has shifted in Asia to currencies. This has stoked rumors that a regional revaluation was in the works to gain U.S. concessions on trade. The rally has suggested that a major unwinding of the economy is underway. It also sheds light on a single economy, where years with large trade surpluses built up large dollar long positions for exporters and insurance companies. These positions are now being questioned and put on edge. On Tuesday, the heat was turned up on Hong Kong. The de facto central banks bought $7.8 Billion to prevent the local currency strengthening and breaking the peg with the greenback. Charu Chanana is the chief investment strategist of Saxo Singapore. She said that Asian FX was where it's at today. If these currencies continue to strengthen sharply, this could cause fears of a "reverse Asian currency crises", with possible ripple effects on the bond market, amid fears that Asian Institutions reassess unhedged Treasury holdings. China's Yuan has strengthened on the mainland to its highest rate since March 20, at 7.23 dollars. In early trading on February 2, the Taiwan dollar reached 30 to the dollar, which was not far off from its near three-year peak of 29,59 that it had touched on Monday. It also grew by 8% in two days. The MSCI broadest Asia-Pacific share index outside Japan fell by 0.2% with Japan on holiday. Taiwan stocks slipped 0.3%. The blue-chip index opened slightly higher after the Chinese markets returned from their holiday. Hong Kong's Hang Seng fell 0.2%. Investors have been focused on the possibility that trade tensions could be eased between the U.S. Investors are left to try and make sense of headlines from the White House, but with little information. Donald Trump, the U.S. president, said on Sunday Washington was meeting with many nations, including China. His main priority in dealing with China is to get a fair deal. Trump also imposed a 100% tariff Monday on movies produced outside of the United States, but provided little clarity about how the levies will be implemented. Saxo's Chanana says tariff headlines drive the market more than anything else. The tactical risk-reward ratio could still tilt to the upside if hard data continues to hold up and sentiment is buoyed by trade deal hopes. Data released on Monday revealed that the U.S. service sector grew in April. Meanwhile, a measure of the prices businesses paid for goods and services soared to its highest level in over two years. This indicates a rise in inflation pressures caused by tariffs. The Federal Reserve will announce its policy on Wednesday. It is expected that the central bank will keep interest rates unchanged, but the focus of attention will be how policymakers navigate a path characterized by tariffs. The markets are looking for confirmation that the Fed will cut rates in response to any tariff-induced price shock, as it is already priced into the markets. This was stated by Kyle Rodda senior financial market analyst at Capital.com. LSEG data revealed that traders are pricing 75 basis points in easing for this year, with the first move possible in July. Oil prices, which had hit four-year lows the previous session due to OPEC+'s decision to increase output, were stable on Tuesday. The gold price reached a new high in a week due to the demand for safe havens.
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Copper rises on US-China dialogue hopes
Prices of copper edged up on Tuesday, as positive signs about U.S.-China talks boosted sentiment. However, lingering worries about the broader impact of trade disputes on the economy limited gains. As of 1300 GMT, the benchmark copper price on London Metal Exchange (LME), was up 0.7%, to $9,431 per metric ton. U.S. Treasury secretary Scott Bessent defended Trump's trade tariffs on Monday, pointing out that his larger agenda, including tax cuts, would lead to long-term growth. China's Commerce Ministry announced on Friday that Beijing was "evaluating" Washington's offer to hold discussions over President Donald Trump's tariffs of 145%. The Commerce Ministry stated that the United States had approached China for talks about Trump's tariffs, and Beijing was ready to talk. This could signal a possible de-escalation of the trade war. A trader stated that "it doesn't appear to be a smooth road for trade talks, and investors are becoming increasingly concerned about the potential negative effects of trade on global economic expansion and metal demand." The U.S. economy shrank for the first time since three years in the first quarter amid an import flood to avoid Trump's tariffs. And the International Monetary Fund forecasts that the U.S. Gross Domestic Product will only grow by 1.8% by 2025. Other London metals saw aluminium rise 0.6%, to $2.445 per ton. Zinc rose 1.4%, to $2.645, while lead rose 0.6%, to $1.948. Tin was up 3.6%, to $31,795; and nickel rose by 1.2%, to $15.665 per ton. The Shanghai Futures Exchange's (SHFE) most traded copper contract was unchanged at 77.570 yuan per ton. SHFE aluminium fell by 0.7%, to 19,850 Chinese yuan per ton. Zinc lost 0.5%, to 22,385 Yuan. Lead dropped 0.5%, to 16,765 Yuan. Nickel rose 0.4%, to 124 500 Yuan. Tin was up 0.7%, to 260,000 Yan. ($1 = 7.2706 Chinese Yuan) (Reporting and editing by Mrigank Dahniwala; Violet Li, Lewis Jackson)
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Oil prices stabilize after dropping to a four-year low in the previous session
The price of oil was stable on Tuesday, after it hit four-year lows the previous session. This was due to a decision by OPEC+ to increase output. This decision stoked fears of an oversupply during a period when U.S. Tariffs are causing concern about demand. Brent crude futures increased 10 cents, to $60.33 per barrel at 0050 GMT. U.S. West Texas intermediate crude also rose 10 cents, to $57.23 per barrel. On Monday, both benchmarks reached their lowest levels since February 2021. OPEC+ decided on Saturday to accelerate oil production increases for a second month in a row, increasing output by 411,000 barrels / day (bpd) in June. The increase in June by eight members of the OPEC+, which includes allies like Russia, will bring the combined increases for April, may and June to 960,000 bpd. Calculations show that this represents a 44% reduction of the 2.2m bpd in various cuts that have been agreed upon since 2022. OPEC+ said that the group may fully undo its voluntary reductions by the end October if member countries do not improve their compliance with production quotas. Diamondback Energy, a U.S. shale oil producer, lowered its production forecast for 2025 Monday. It said that a combination between global economic uncertainty and increasing OPEC+ supplies has brought U.S. crude production to a critical point. Scott Bessent, U.S. Treasury secretary, said that President Donald Trump’s agenda of tariffs, tax cuts and deregulation would all work together in order to drive long-term investments into the U.S. Economy. He added that U.S. Financial Markets were "antifragile" so they would weather any short term turbulence. As tariffs threaten the economy, it is likely that on Wednesday, the U.S. Federal Reserve won't change interest rates. Barclays lowered their Brent crude forecast by $4 to $72 a bar for 2025, and their 2026 estimate was set at $62 a bar. They cited "a rocky path ahead for fundamentals", amid escalating tensions in trade and OPEC+’s shift in production strategy. (Reporting and editing by Muralikumar Aantharaman in Houston)
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UN document reveals that the US is attempting to undermine global efforts for development finance
A document from the United Nations that was seen by revealed that the United States wants to weaken an international deal designed to help developing countries who are struggling with climate change, among other things. The Trump administration is against draft reforms to the global financial system that are intended to assist developing countries. This includes taxation, credit rating and fossil fuel subsidy. The administration wants to remove all mentions of "climate", "gender equality", and "sustainable development". The document, which was previously unknown, sheds light on the Trump administration's efforts to impose an "America First", including opposition to efforts that slow climate change and promote diversification, on institutions at the core of solving global systemic crises. The 4th International Conference on Financing for Development, which takes place every decade, will be held in Seville, Spain in June. Its aim is to influence the strategic direction taken by the development finance institutions around the world. At FFD3, countries agreed to expand tax cooperation so that developing nations could set the rules. As of May last year, more than 140 countries are involved. Tom Mitchell, Executive Director of the International Institute for Environment and Development said, "This conference aims to bring together world leaders and set the rules and priorities for funding development goals in the next decade." The U.N. Secretariat assisted the Mexico, Nepal and Zambia Permanent Representatives to compile the April 11 draft, which is annotated by the 193 countries involved in the discussion. The U.S. delegation said that the FFD4 draft was prescriptive, too long and had a lot of prescriptive language. They also denounced the "ever-widening definition" of sustainable development. Jonathan Shrier, acting U.N. Economic and Social Council Representative for the United States, said: "The international financial organizations have independent mandates and authority. We do not support any attempts to impose U.N.-style directives on their priorities or activities." The United Nations does not have direct control over multilateral development financing institutions. The document was a response to the U.S. Treasury secretary Scott Bessent's pushback against the ongoing changes at both the World Bank and International Monetary Fund for the fight against Climate Change. It also showed that the U.N. reform prescriptions were being watered down. The document reveals that the U.S. is looking to remove the reference to "a package of reforms" in relation to sustainable development. It wants to replace the line that promises to "commit reform to the international financial infrastructure" with the pledge to "recognize and enhance its resilience to current and future crises and challenges." These changes in language can be used to support future actions or inactions in discussions by indicating the level of commitment. In an email, Florencia Nino, spokesperson for the U.N. secretary-general Antonio Guterres said that the Secretary-General acknowledged the need to overcome many challenges before the conference. However, he urged all countries to "be at the table focused on solutions in Sevilla," she added. Both the Treasury Department and State Department declined to comment. The White House has not responded to a comment request. The U.S. position on development is tougher now under Trump. However, the document of negotiations shows that it still supports efforts such as developing countries working closer with the private sector and fostering financial literacy and innovation. CLIMATE CHANGE The global reforms aim to help the poorer nations better cope with climate change-related weather disasters and boost economic growth by using low carbon energy instead of traditional fossil fuels. Donald Trump, the president of the United States, has withdrawn from UN climate agreement in Paris. He also slashed U.S. Foreign Development Aid by more than 80%. This was part of an overhaul government led by Elon Musk. The U.S. has objected to several areas in the FFD4 document, including a call to countries to investigate "global solidarité levies", which could include taxes on high-polluting activities or super-rich people to finance sustainable development. The levies, if included, could be discussed in the U.N. tax negotiations this year. They would also support a taskforce led by France Kenya and Barbados, which aims to create such taxes for smaller groups of countries. Russia, Saudi Arabia, and China are also among the countries that object. The document also shows that the U.S. wants to remove a paragraph that calls for companies to pay taxes to countries where economic activities occur; a paragrah on helping developing nations improve tax transparency and another one on phase-out inefficient fossil fuel subsides. The FFD4 document indicates that the U.S. is looking to remove a paragraph about reforming the rating system. It showed that rating agencies should be more lenient with nations who voluntarily restructure debt in order to invest in environmentally friendly projects. Documents show that the U.S. is also against a commitment by countries to receive "adequate funding and uninterrupted at appropriate terms for social protection, and other essential social expenditures during shocks and crisis," according to the document. The draft agreement is likely to be revised as countries continue to negotiate in May before reaching consensus on the final document by mid-June. The U.S.'s position places pressure on other nations to accept a weaker agreement, as the talks are aimed at adopting a deal through consensus. (Reporting and editing by Dawn Kopecki and Rod Nickel in Washington Additional reporting and editing by David Lawder in London and Daphne Psaledakis and Kate Abnett in London)
Meloni will meet Trump for tariff talks on April 17, 2019.
Her office announced on Tuesday that Giorgia Mello will meet Donald Trump, the U.S. president in Washington, on April 17, to discuss tariffs imposed by Trump on imports from the European Union.
Trump has a policy of imposing tariffs that are 25% on imports of steel, aluminium and automobiles. The tariffs will be a broader 20% for all other goods starting Wednesday.
Meloni said she backed an offer by the European Commission for a "zero to zero" tariff agreement to avoid a trade conflict with the United States.
Meloni stated in a staff-released speech that "This is a negotiation which must see us at all levels committed, which sees and commits us. I am committed as I will be there in Washington on April 17, next year," Meloni.
Meloni, a nationalist who has a deep admiration for Trump is
Battle to reconcile
Analysts say that there is a growing gap between Washington's ideological instincts and Italy’s strategic ties with the European Union.
She is under pressure also to defend Italy's export-driven industry, which last year ran a 40-billion-euro ($43.75-billion)trade surplus with the United States -- the third-largest in the European Union after Germany and Ireland.
Italy's total exports are 10% of its total.
"I believe (tariffs are) an absolutely wrong decision by the Trump administration. Western economies are interconnected. Meloni stated that such protectionist policies would hurt Europe just as much as they would the U.S.
EU FUNDS
Meloni stated that her government will discuss alternative ways with the European Union to use funds already allocated to EU to offset the negative impact expected of the tariffs.
She said, "We are committed in using all resources available, beginning with those which do not impact public finances."
She said that although no additional borrowing is currently planned, 14 billion euro could be derived from a revamp of Italy's EU supported post-COVID Recovery Plan, and an additional 11 billion from EU Regional Development Funds.
Another 7 billion euro was expected to be spent using EU funds in order to combat climate change.
The government is
Prepare to cut
Two sources with knowledge of the situation said that the U.S. Tariffs have caused the uncertainty in the economic growth forecasts for this year and next.
Sources said that the multi-year budget plan for Italy, which is due to be released on Wednesday, predicts a 0.6% increase in gross domestic product this year. This is down from the 1.2% goal set last September. Next year's GDP is expected to be +0.8% down from the previous target of +1.1%. ($1 = 0.9414 euros) (Reporting and writing by Giuseppe Fonte, Editing and proofreading by Crispia Balmer)
(source: Reuters)