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Investors consider tariff truce as shares rise and dollar falls
The dollar shook on Wednesday as the relatively benign U.S. data on inflation kept the prospect of Federal Reserve rate cuts later this year alive. Investors were still trying to gauge if the worst trade conflict was over. Financial markets were nervous as Donald Trump's trade war with China appeared to be on hold, following a truce between the two countries. Tony Sycamore, IG analyst, said: "I am a bit cautious about chasing this rally at this level." The worst-case scenario is already priced in. MSCI's broadest Asia-Pacific share index outside Japan rose 1.1% after U.S. shares climbed into positive territory for the entire year, wiping out losses caused by Trump's chaotic tariff rollout. Hong Kong's Hang Seng index rose 1.4% after JD.com, a Chinese ecommerce retailer, posted positive results. This week, investors will focus on the earnings of Tencent and Alibaba. Equity futures predicted a retreat in European markets, and a flat Wall Street day. Investors who were worried about inflationary impacts of U.S. Tariff Policies, which severely undermined expectations of Fed rate reductions in the near future, also found some relief from data overnight that showed softer than expected U.S. Consumer inflation. Although traders expect the inflation rate to rise as tariffs increase import costs, there is still uncertainty about the future as Washington continues to negotiate with its trading partners. The global mood improved after the U.S.-Britain trade agreement last week. It was further improved when U.S.-China announced on Monday that they would suspend their trade war, reduce reciprocal duties, and remove other measures, while they negotiate a permanent arrangement. In an interview with CNN on Tuesday, Trump said he would be willing to deal directly with Chinese President Xi Jinping over the details of a new trade agreement. The "potential" deals that Trump has been touting with India, Japan and South Korea have not yet materialized. "We still have a deadline of 90 days hanging over U.S. China trade relations," Frederic Neumann said, chief Asia economist for HSBC. He added that investors are not taking risks again due to the lingering uncertainty. The Fed warned of increasing economic uncertainty and indicated it was prepared to wait a while to evaluate the impact of U.S. Tariffs before cutting interest rates. The U.S. Dollar, which has been hammered recently due to economic and political uncertainty, fell 0.4% to 146.88 yen and was barely changed at $1.1189 against the Euro. The dollar index had little change after the previous session's 0.8% decline. Bank of America's Global Fund Manager Survey showed that in May, global asset managers had their largest underweight position on the dollar in over 19 years. The Nikkei 225 index of Japan fell 0.4% on Tuesday, reversing a 1.4% gain. Retail sales for April, due Thursday, will be the next big indicator of the health of the U.S. economy. On the same day, Russia and Ukraine will hold talks in Istanbul in hopes of reaching a ceasefire after three years in Europe's deadliest conflict since World War Two. Bank of America’s Global Fund Manager Survey (FMS) revealed on Tuesday that global asset managers had their largest underweight position against the dollar in nearly 19 years as Trump’s trade policy reduced investor appetite for U.S.-based assets. The yield on the benchmark 10-year Treasury note fell 2 basis points to 4.4768. U.S. crude oil fell 0.5% to $63.35 per barrel, remaining near its two-week high. Gold spot was down slightly at $3222.08 an ounce.
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RPT-Deutsche Boerse, Euronext step up battle against IPO flight to US
In the face of U.S. competitors, two of Europe's largest stock exchange operators have stepped up their efforts to keep local initial public offering companies. Marketing and research are challenging the perception that New York listed companies command higher valuations. The stock exchanges of Europe and the UK were hit by a lack of IPOs during the last two years. A number of local companies have chosen to float in the U.S. because of its larger pools of capital, and higher valuations. Deutsche Boerse (which operates the Frankfurt Stock Exchange) warns of sluggish post IPO performance, increased costs, and the threat litigation for firms listing in the U.S. The study found that two-thirds (including Germany) of the companies listed in Europe rose on their first trading day, while only half of European companies listed in America gained on their market debuts. Over time, the European IPOs also performed better than those in the United States. The data does not mention valuations at IPO. However, the exchange highlighted several examples in its report of European listed companies trading at a higher premium than their U.S. listed peers. Euronext operates seven markets, including Amsterdam and Paris. It plans to reissue the same paper, challenging the belief that U.S. listed firms are valued higher than their European counterparts, its spokesperson said. Stefan Maassen is the head of capital market and corporates for Deutsche Boerse. He said: "We see a more intense competition between Europe and America in terms of listing, than we do within Europe." Exchanges receive fees from companies listing on their platforms, as well as from brokers who trade securities. They are considered essential by policymakers in attracting investment. DEEP MARKETS The US capital markets' size and depth are attractive to those who want to list their companies. According to LSEG, based on the closing prices of Monday, the S&P500 index's market capitalisation is $49.5 trillion. This is almost four times greater than that of Europe’s Stoxx 600. European officials are considering new listing regulations to increase access to funding. Deutsche Boerse, Euronext and other European officials are also considering new listing rules to improve access to financing. In its document, Deutsche Boerse said that it had found the average share price of U.S.-listed German companies has fallen by 13% since 2004. It cited trivago.com and Mytheresa.com as two examples. Both have seen their prices fall since flotation. Frankfurt issuers saw a rise of 24%. New Financial, a capital markets think-tank, found that 130 European companies, worth $667 billion, chose to either list or relocate their primary listing in the United States during the last decade. According to the think-tank, 70% of these are trading at a discount from their original listing price, with a fall in average of 9%. In a speech on Tuesday, Christian Sewing, CEO of Deutsche Bank, commented on the move of European companies to the U.S. Deutsche Boerse warns that cross-border listed firms could face greater lawsuit risks. Some market participants do argue that the possibility of litigation provides shareholders with a path to redress. Exchange executives claim that the tariff-induced turmoil in U.S. markets may also increase the appeal of European exchange markets. Some market participants, such as Eva-Maria Wiecko of Rothschild & Co's Head of Equity Market Solutions for Germany and Austria, are more sceptical. In recent years, the U.S. stock market has experienced inflows. However, European markets have seen a large amount of outflows. Wiecko stated that "the recent rebalancing is just a fraction of this number, underscoring continued relative strength in the U.S. Market."
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Oil drops as traders keep an eye on the rise in U.S. crude stocks
The oil prices fell on Wednesday, as traders watched for a possible increase in U.S. crude stocks. Prices remained near their two-week highs though amid optimism following the United States' and China's agreement to temporarily lower reciprocal tariffs. Brent crude futures dropped 39 cents or 0.6% to $66.24 per barrel at 0400 GMT. U.S. West Texas Intermediate crude (WTI), which is a benchmark for the U.S., fell 36 cents or 0.6% to $63.31. Both benchmarks rose more than 2.5% the previous session. China and the United States agreed to suspend their trade war at least for 90 days. The United States reduced tariffs from 145% to 30%, while China reduced duties on U.S. imported goods to 10%. "The U.S./China economic pause may have crafted a narrative which could invigorate the demand amidst a background of cautious optimism," said Priyanka Sackdeva, Senior Market Analyst at Phillip Nova. Sachdeva said that for the moment, optimism was tempered by expectations of an enormous increase in U.S. crude oil inventories. She said: "This sharp contrast from last week's substantial drawing signals that the supply side is still struggling with significant challenges. Market watchers are on edge, wondering what the next twist and turn will be." Market sources cited American Petroleum Institute data on Tuesday to say that crude stocks had increased by 4.3 millions barrels during the week ending May 9. The U.S. Energy Information Administration will release its official weekly inventory data on Wednesday, 10:30 am EDT (1430 GMT). Investors continue to be attentive to demand signals. Rystad's energy analysts stated in a report that the agreement "eroded some pessimism on the demand side," but warned against any lasting impact of tariffs, despite the rollbacks. The market also watches U.S. president Donald Trump's Gulf tour, which began on Tuesday, with an appearance at a Riyadh investment forum, where he announced that the U.S. will lift longstanding Syrian sanctions and secured a pledge of $600-billion in Saudi investment. Mukesh SAHDEV, Rystad's global head for commodity markets, said that preventing oil prices spikes during the summer travel period will be an important part of the President's agenda. He added that the United States might be able to take advantage of lower oil prices in order to purchase more Middle East crudes for its Strategic Petroleum Reserve. Sahdev stated that the biggest unknown is whether U.S. action in relation to Iran, Russia or Venezuela will lead to supply disruptions or increases. The United States announced new sanctions against about 20 companies on Tuesday. They claimed that they were helping the Iranian Armed Forces General Staff, and its front company Sepehr Energy to send Iranian oil from Iran to China. The sanctions come after a fourth round in Oman of U.S. and Iran talks to resolve disputes about Iran's nuclear program. Reporting by Colleen Lerh and Jeslyn Howe, both in Beijing; editing by Sonali and Clarence Fernandez.
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London metals mixed amid lingering cautiousness over US-China trade truce
Investor caution continued despite a pause to the U.S. China trade war that has weighed heavily on the global economic and financial markets. As of 0334 GMT on Wednesday, the London Metal Exchange's (LME's) benchmark copper was $9,582 per metric ton, down 0.2% since Tuesday's closing and 0.3% below Tuesday's session high of $9,614, which was also the highest level since April 3. U.S. president Donald Trump said Tuesday that he would be willing to deal directly with Chinese President Xi Jinping in order to finalise details of a trading agreement. Both countries agreed to lower reciprocal tariffs, implement a 90 day suspension of action and Washington announced it would reduce the "de minimis tariff" for low-value shipments coming from China as low as 30 percent. A trader stated that "the uncertainty surrounding trade tariffs continues, and while we await further updates it is important to remember that the truce period is only a transitional one, leaving the future unclear in three months." Other London metals include aluminium, which rose by 0.8% to 2,509 dollars a ton. Zinc gained 0.4%, while lead fell 0.3%, to 1,983, and nickel, which climbed 0.1% to $15,755. Tin lost 0.2% to $32,645. The Shanghai Futures Exchange's (SHFE) most traded copper contract rose by 0.8%, to 78.510 yuan per ton ($10,898.08), due to falling inventories and strong domestic demand. Copper inventories The Shanghai Futures Exchange tracked 80,705 tonnes in its warehouses. A slower decline rate helped ease supply concerns. SHFE aluminium rose 1%, to 20,190 Chinese yuan per ton. Zinc gained 1.1%, to 22,585 Yuan. Lead fell 0.1%, to 16,930 Yuan. Nickel price increased 0.7%, to 125.060 Yuan. Tin advanced 0.6%, to 264.830 Yuan. $1 = 7.2132 Chinese Yuan (Reporting and editing by Sherry Jackson and Savio d'Souza).
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Seatools Gets Fengmiao 1 Offshore Wind Job from CDWE
Seatools, a subsea technology company, has secured a contract by CSBC-DEME Wind Engineering (CDWE) for the design, engineering, and delivery of the metrology and control system for the Pre-Piling Template (PPT) at the Fengmiao 1 Offshore Wind Farm in Taiwan.The Fengmiao 1 wind farm will feature jacket-type foundations installed using pre-installed pin piles.Seatools’ metrology and control system will be integrated into CDWE’s piling template to ensure accurate positioning of piles within tight tolerances -an essential element for successful jacket installation.While the system design leverages technologies from Seatools’ toolbox, the solution will also integrate new technologies to further boost operational efficiency during the piling campaign.Advanced simulation models will support first-time-right installation, reducing offshore commissioning time and risk.“We are proud that CDWE has once again entrusted Seatools with this critical scope, following our earlier collaborations on Hai Long and Zhong Neng. This repeat business reflects the trust we’ve built through consistent delivery, technical excellence, and our ability to adapt to each project’s unique challenges. With our proven technology and experience, we aim to deliver robust, high-performing equipment that enables CDWE to execute the piling campaign efficiently and without interruption,” said Jan Frumau, Managing Director of Seatools.Engineering activities for the system are already underway and will continue in close collaboration with CDWE.
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London metals are mixed amid investor caution over the US-China trade truce
Investor caution continued despite a temporary pause to the U.S. China trade dispute, which has weighed heavily on the global economic and financial markets. As of 0157 GMT, the benchmark copper price on London Metal Exchange (LME), was $9,598 per metric ton. U.S. president Donald Trump said Tuesday that he would be willing to deal directly with Chinese president Xi Jinping in order to finalize details of a U.S. China trade agreement. Washington announced that it would cut the "de minimis tariff" for low-value shipments coming from China down to 30%. This will further de-escalate a potential damaging trade war. The United States announced an agreement with China to reduce their reciprocal tariffs by a significant amount and suspend actions for 90 days. A trader stated that "the uncertainty surrounding trade tariffs continues, and while we await further updates it is important to remember that the truce period is only a transitional one, leaving the future unclear in three months." Other London metals include aluminium, which rose by 0.7% to 2,507 per ton. Zinc gained 0.5%, to $2719; lead fell 0.3%, to 1,983; and nickel, which climbed 0.1% to $15,755. Tin lost 0.2% to $32,660. The Shanghai Futures Exchange's (SHFE) most traded copper contract rose by nearly 1%, to 78.610 yuan per ton ($10,898.08), boosted by falling inventories and strong domestic demand. Copper inventories The Shanghai Futures Exchange tracked 80,705 tonnes in its warehouses. A slower decline rate helped ease supply concerns. SHFE aluminium rose 1.1%, to 20,215 Chinese yuan per ton. Zinc increased 1.3%, to 22,630 Chinese yuan. Lead fell 0.1%, to 16,935 Yuan. Nickel price rose 0.6%, to 124970 Yuan. Tin advanced 0.9%, to 265,650 Yuan. $1 = 7.2132 Chinese Yuan
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Iron ore reaches a new high of over 5 weeks on Sino-US trade optimism
The price of iron ore futures rose to its highest level in over five weeks on March 13, driven by the United States' and China's decision to reduce tariffs after a trade deal, which boosted hopes for a long-lasting resolution to the trade conflict. As of 0215 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was up 1.81% to 732.5 Yuan ($101.51) per metric tonne. Earlier in the session, the contract reached its highest level since 7 April at 736.5 Yuan per ton. As of 0205 GMT, the benchmark June iron ore price on Singapore Exchange was $1.6% higher at $100.1, compared to its previous level. The contract reached its highest level in over a month at $101.45. China announced on Tuesday it would lower its tariffs against U.S. products to 10% for the first 90 days. This will begin at 12:01 PM (0401 GMT) Wednesday. The U.S. is reducing the "de minimis tariff" for low-value Chinese shipments to as low 30%. In an interview broadcast Tuesday, U.S. president Donald Trump stated that he would be willing to deal directly with Chinese President Xi Jinping regarding the final details of a U.S. China trade agreement. Shougang Hierro Peru, a Chinese iron ore miner, has also suspended its operations following a collapse of part of the dispatch infrastructure at its shipping ports. Repairs are expected to take four to five months. Analysts and traders said that the Chinese steelmaker would have to purchase more iron ore cargoes on the spot market in order to maintain production. Coking coal and coke, which are both steelmaking ingredients, also saw gains, rising by 0.97% each. The benchmark steel prices on the Shanghai Futures Exchange have strengthened. Rebar gained 0.65%, while hot-rolled coil and wire rod both added 0.74%.
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Dollar struggles as investors consider tariff truce
The dollar wobbled on Wednesday as the relatively benign U.S. Inflation data fueled prospects for rate cuts from the Federal Reserve this year, even though investors were still trying to gauge if the worst trade conflict was over. Financial markets were nervous as Donald Trump's trade war with China appeared to be on hold, following a truce between the two countries. Tony Sycamore, IG analyst, said: "I am a bit cautious about chasing this rally at this point." We'll have to wait and see what happens in terms of headlines, the framework for further tariff negotiations with foreign countries, but at this stage the worst-case scenarios has already been priced out. MSCI's broadest Asia-Pacific index outside Japan rose 0.9% early in the day after U.S. shares climbed into positive territory for this year, wiping out losses caused by Trump's chaotic tariff rollout. Hong Kong's Hang Seng index climbed in early trading, lifted by tech shares after Chinese ecommerce retailer JD.com reported strong results. This week, investors will focus on the earnings of Tencent and Alibaba. Equity futures showed a retreat in the European and U.S. market. Investors who were worried about inflationary impacts of U.S. Tariff Policies, which severely undermined expectations of Fed rate reductions in the near future, also found some relief from data overnight that showed softer than expected U.S. Consumer inflation. Although traders expect the inflation rate to rise as tariffs increase import costs, there is still uncertainty about the future as Washington continues to negotiate with its trading partners. The global mood improved after the U.S.-Britain trade agreement last week. It was further boosted when U.S.-China announced on Monday that they would suspend their trade war and reduce reciprocal duties for 90 days while they negotiate an arrangement more permanent. Trump has also touted potential deals with India, Japan and South Korea. The Fed warned of increasing economic uncertainty and indicated it was prepared to wait a while to evaluate the impact of U.S. Tariffs before cutting interest rates. The U.S. Dollar, which has been hammered recently due to economic and political uncertainty, fell 0.2% against yen and remained unchanged at $1.1866 against the euro. The dollar index was barely changed following a 0.8% decline in the previous session. The Nikkei 225 index of Japan fell 0.7% on Wednesday, reversing a 1.4% gain. Retail sales for April, due Thursday, will be the next big indicator of the health of the U.S. economy. On the same day, Russia and Ukraine will hold talks in Istanbul in hopes of reaching a ceasefire after three years in Europe's deadliest conflict since World War Two. Bank of America’s Global Fund Manager Survey (FMS) revealed on Tuesday that global asset managers had their largest underweight position against the dollar in nearly 19 years as Trump’s trade policy reduced investor appetite for U.S. investments. The yield on the benchmark 10-year Treasury note fell 2 basis points to 4.4768. U.S. crude fell 0.3% to $63.48 per barrel while spot gold dropped slightly at $3244.79 an ounce.
Gold falls as demand for safe-havens weakens due to easing US-China trade tensions
The gold price fell on Wednesday, as the de-escalation of U.S. China trade tensions dampened safe-haven demand. Meanwhile, markets waited for another set inflation data in order to gauge the Federal Reserve’s policy direction.
As of 0231 GMT, spot gold was down 0.4% at $3,234.32. U.S. Gold Futures fell 0.3% to $3237.00.
Kyle Rodda, Capital.com financial analyst and expert on the gold market, said that positive developments in US trade policies are reducing the appeal of the metal in the short term.
"I believe that if there is continued progress made in the trade negotiations and agreements between the US, and its trading partners then gold could pull further back. "$3,200 is an important level of support."
According to a White House Executive Order and industry experts the U.S. is reducing the "de minimis tariff" for low-value shipments coming from China by 30%. This will further de-escalate a potentially damaging war of trade between the two world's largest economies.
Donald Trump, the U.S. president, said on Monday that he doesn't see tariffs for Chinese imports going back to 145% following the 90-day break. He also added that Washington and Beijing would reach a deal.
The United States Department of Labour reported that the consumer price index rose 0.2% in April. However, economists polled expected a 0.3% increase following a 0.1% drop in March.
The Fed's rate path will be revealed by the Producer Price Index, which is due to be released on Thursday. Market participants expect 53 basis points in rate reductions this year starting in September.
Gold is traditionally seen as a hedge to inflation. It also thrives in an environment of low interest rates.
Trump said that prices of gas, groceries, and "practically anything else" have been falling.
Silver spot fell 0.8%, to $32.63, platinum remained at $987.85 an ounce and palladium dropped 0.7% to $950.18. (Reporting and editing by Sumana Mukherjee and Janane Venkatraman in Bengaluru)
(source: Reuters)