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MORNING BID EUROPE-Trump-Musk feud shakes markets pre-payrolls
Stella Qiu gives us a look at what the future holds for European and global markets. The most expensive divorce ever could cost you a lot of money. The bromance-turned-to-brawl between U.S. President Donald Trump and billionaire Elon Musk sparked a 14% drop in Tesla shares overnight, wiping out $150 billion in market value. Trump has also threatened to cancel government contracts worth tens and tens billions of dollars with SpaceX. Investors haven't lost sight of the U.S. Payrolls Report that will be released later today. After a week of weak economic data, markets are wary of any negative surprises. After assessing the inflationary impact from Trump's tariffs, the Federal Reserve has been hesitant to cut rates. But the Trump-Musk spat was not without wider implications for markets. Bitcoin prices fell 4% over night as investors realised that Trump's support may not last forever. Asian technology shares fell in line with Wall Street, pushing most stock markets of the region into negative territory. Japan's Nikkei, however, was the exception. It rose 0.3%. In the morning of Friday, there were some signs that tempers might be cooling. Trump told Politico "it's fine" when asked about the split and Tesla stock prices stabilized in after-hours trade. Investors found little to celebrate in the meantime about the telephone call between Trump and Chinese president Xi Jinping on trade, which resulted in little more than a promise to continue to speak. Forecasts for May's U.S. payrolls predict a gain of 130,000 new jobs, while the unemployment rate remains at 4.2%. Fed funds futures indicate that there is little chance for a rate reduction until September. However, a cut at this time has been priced in about 90% with a second expected in December. Markets were subdued by fears of a negative surprise in payrolls. Wall Street futures are mostly flat, and European markets will open lower with EUROSTOXX futures down by 0.2%. On the currency market, the euro hit a six-week peak of $1.1495 over night after the European Central Bank reduced rates. However, it signaled that the policy easing cycle was coming to an end. Investors have given in to the idea of a July cut, but the final decision is expected in December. The following are key developments that may influence the markets on Friday. German Industrial Output and Trade Data for April Retail sales in the Eurozone for April Payrolls of non-farm workers in the U.S. for May
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Wall Street Journal, June 06
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. Boston Consulting Group has fired two North American Partners involved in a joint Israeli-American effort for the distribution of humanitarian aid to Gaza. Senate Republicans in the United States are working on a proposal that would protect some NASA programs against large cuts proposed by White House. People familiar with the transaction have confirmed that Iran ordered thousands of tonnes of ballistic missile ingredients from China. The country is seeking to regain its military strength as it talks with the U.S. about the future of its nuke program. Humana, second-largest Medicare insurer, told congressional staffers it would support measures that would curb billing practices that result in billions of extra payments for the industry. Staffers and The Wall Street Journal viewed a document that was viewed by the staffers. U.S. president Donald Trump spoke with Chinese leader Xi Jinping on Thursday and suggested that after the call, one of the points leading to a break down in trade negotiations--the exportation of rare-earth mineral which is critical to the U.S. automotive industry--had already been addressed. Israel's military announced that it had targeted an underground drone facility located in southern Beirut, on Thursday. This was one of the largest strikes against Hezbollah assets in recent memory since a ceasefire agreement was reached in November.
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ASM Australia sees a surge in enquiries for rare earths amid supply shortage
Australian Strategic Materials reported on Friday that customers are increasingly interested in rare earth alloys and metals produced at its South Korean critical metals facility, as a result of China's restrictions on exports. The Korean Metals Plant of critical metals is one of only a few plants outside of China that can produce rare earth alloys and metals commercially. The shares of the company jumped up to 29.1%, to A$0.655. This was a new high for more than 3 weeks. However, they then pared some gains. The benchmark index for the broader market edged down by 0.1%. ASM said that it had received purchase orders for rare earth alloys from U.S. based Noveon Magnetics Inc. and Vacuumschmelze owned by the private equity firm ARA Partners. After providing USA Rare Earths with rare earth samples, the company has been in talks with other parties about future sales. It has also delivered 19 metric tons of rare earth metal to Magnequench - a division from Neo Performance Materials, located in Canada. In April, China, which produces 90% of the world's rare-earth minerals, implemented export restrictions on strategic minerals as a response to tariffs imposed by U.S. president Donald Trump. The company said that due to China's export bans, there are more disruptions in the supply of rare earths. It is therefore positioned to supply alternative supplies to the rest the world.
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GHD Tackles Offshore Wind Noise Impacts with New Modelling Kit
Engineering specialist GHD has unveiled a new subsea noise modelling program designed to mitigate the environmental impacts of offshore wind farms.GHD's solution, the RAT (R Acoustics Toolbox), has been developed to address challenges related to underwater noise by providing a bespoke, web-based interface that utilizes existing algorithms in a customizable manner.Developed using R programming language, the RAT is said to enhance efficiency and accuracy in underwater noise modelling. The program automates processes such as transect generation and data handling, which were previously done manually, and represents complex numerical data visually, making it easier to understand and analyses.The company is conducting impact assessments for Australia’s nascent offshore wind developments, with underwater noise becoming a crucial component of these studies.Underwater noise models are essential for predicting impacts on marine life, and the limited availability of commercial software solutions has historically inhibited the ability to conduct comprehensive assessments.The advanced underwater noise modelling program has already been successfully deployed on oil and gas projects in the Middle East, submarine cables, defense projects across Australia, and geophysical surveys in the U.K.Looking ahead, GHD plans to continue enhancing the RAT by adding features such as full movement models to simulate how species respond to noise over time"The algorithm spits out a huge amount of data - 10 kilometers long and 500 meters deep. We built a system to represent those numbers visually, making it easier to understand, even for experienced modelers,” said Marco Velasco, GHD's Senior Engineer in the Air & Noise Service Line."We will be using this program on upcoming wind farm projects in Australia. It will be a huge asset in terms of mitigating and managing noise impacts to marine fauna as a result of these offshore renewable projects,” added Pri Pandey, GHD Service Line Leader - Air & Noise.
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Iron ore gains for the week on China's resilient demand
The price of iron ore rose to a one-week-high on Friday, and was set for a weekly gain, thanks to progress in Sino-U.S. negotiations and the steady demand from China, its top consumer. However, seasonally low steel consumption limited gains. As of 0231 GMT the most traded September iron ore contract at China's Dalian Commodity Exchange was up 1.21% to 710 yuan (98.84 dollars) per metric ton. This is the highest price since May 29. This week, the contract has gained 0.9%. As of 0226 GMT on Friday, the benchmark July iron ore traded at the Singapore Exchange had risen 0.9% to $95.7 per ton. This is a 0.1% increase this week. The session began with the price at its highest level since May 29, $96.4. The market was optimistic after U.S. president Donald Trump and Chinese President Xi Jinping addressed weeks of brewing tensions over trade and a fight over vital minerals during a rare leader to leader call on Thursday. Analysts at Everbright Futures wrote in a report that the call between Sino-U.S. leader is a sign that trade tensions are easing between the two superpowers. This has sparked a risk-on mood. Analysts at Chaos Ternary Futures say that near-term ore consumption is expected to remain firm, as steelmakers will need to stockpile cargo in order to maintain production. Hot metal output has been relatively high, and the mills' inventory remains low. A survey by consultancy Mysteel revealed that the average daily hot metal production, which is a measure of iron ore consumption, was 2.42 million tonnes as of 5 June, up 2.6% compared to a year ago. Steel consumption has slowed down as the high temperatures of summer have hampered construction. Coking coal, coke, and other steelmaking ingredients were all up by 3.91% or 1.19% respectively. The majority of steel benchmarks at the Shanghai Futures Exchange rose. Rebar was 0.85% higher. Hot-rolled coils were up 0.81%. Wire rod was up 0.88%. Stainless steel was down 0.08%.
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The oil price is on track to make solid gains this week as China and the U.S. resume their trade talks
After the U.S. President Donald Trump resumed his trade talks with China's Xi Jinping, oil prices fell on Friday. However, they were still on track to gain their first weekly increase in three weeks. This was due to hopes of growth and higher demand in two of the world's largest economies. Brent crude futures dropped 12 cents or 0.2% to $65.22 per barrel at 0133 GMT. U.S. West Texas Intermediate Crude lost 15 cents (0.2%), to $63.22, following a gain of around 50 cents Thursday. Both benchmarks are on course to end the week higher, after two weeks of falling. Brent is up 2.1%, and WTI is 4% higher this week. Markets continued to move with the news of tariff negotiations, and data that showed how tariff impacts and trade war uncertainty are affecting global economies. China's official Xinhua News Agency said that trade talks between Xi Trump were held at Washington's request. Trump said that the conversation had ended in a "very good conclusion," and added that the U.S. is "in a very good position with China and the deal." According to Melanie Joly, the Minister of Industry, Canada, Mark Carney, was in direct contact with Donald Trump. Canada's ongoing wildfires have also contributed to the market. Saudi Arabia, the top exporter of crude oil to Asia, has cut its crude prices in July to levels that are near their two-month lows. This was a lower price drop than expected, after OPEC+ agreed in July to increase output by 411,000 barrels a day. The Kingdom had been pushing for a larger output increase, as part of a broader strategic plan to win back the market share and discipline the over-producers within OPEC+. This grouping includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia. Economic indicators show that the U.S. service sector contracted for the first time since nearly a full year in May, and the number of weekly claims for unemployment benefits rose, again pointing to the cooling of the labor market. Investors await Friday's nonfarm payrolls data in the United States for more information on Federal Reserve interest rate policy. (Reporting and editing by SonaliPaul; SudarshanVaradhan)
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Tesla falls as Trump-Musk's bromance soured. Stocks are on alert for payrolls
Asian shares were tepid on Friday, as investors prepared for the important payrolls report. Tesla also suffered massive losses due to the public feud between Elon Musk and President Donald Trump. The markets are wary after a string of weak economic data, and they're worried that a surprise downturn in the payrolls report due later today could add to fears of inflation while increasing pressure on the Federal Reserve. Tesla shares rose 0.8% after hours trading, after plummeting 14% overnight and wiping out $150 billion of market value. Trump had threatened to stop government contracts for Elon Musk's businesses after the relationship, which was once very close, turned into an angry public feud. Futures on the Nasdaq were unchanged, while those for S&P 500 rose by 0.1%. MSCI's broadest Asia-Pacific share index outside Japan fell 0.1% on Friday, but is still expected to rise 2.2% weekly and hover at just below its eight-month high. Japan's Nikkei gained 0.3%, but will drop by 0.7% on a weekly basis. The KOSPI, the South Korean stock index, is closed this week for a holiday. However, it was up 4,2% to a near 11-month high as newly-elected President Lee Jae Myung prepared an emergency package designed to revive the economy. The won also gained 2% to reach an eight-month high this week. The blue chips in China were flat, and Hong Kong's Hang Seng fell 0.3% after a phone call between Trump and Chinese president Xi Jinping failed to provide any clarity on how to ease the ongoing trade tensions. Luke Yeaman is the chief economist of the Commonwealth Bank of Australia. He said that the U.S. and China agreement to deescalate tensions and the recent telephone call between Trump, and Xi shows both countries are able to tolerate economic pain. This takes off some serious downside scenarios, but tensions are high and more bouts of escalation will likely occur...we see few prospects that a comprehensive US China trade agreement will be resolved by 14 August." WAIT FOR PAYROLLS Payrolls report expectations have been dampened by weaker-than-expected labour data. This includes a 47% jump in Challenger's layoffs year-on-year and a major surprise on the downside in ADP private payrolls. Forecasts predict a gain of 130,000 new jobs in May with the unemployment rate remaining at 4.2%. A sudden weakness in the U.S. economy could trigger a rate cut and cause a massive rally in Treasuries. The futures market indicates that there is little chance of a rate reduction until September. This is 93% priced-in, and another move will likely come in December. The yields on benchmark 10-year Treasuries remained flat at 4.3925 percent, after rising 3 basis points over night to recover from a 1-month low. In a client note, analysts at TD Securities said that they expect payrolls in May to print below consensus levels of 110,000. In recent weeks, the markets have been focusing solely on tariffs and debts. Macro has taken a backseat. We may not have enough information to help catalyze a renewed focus on macroeconomics, but we do expect that downside surprises will cause a greater market reaction. On Friday, the dollar's value against its major counterparts was unchanged. However, it was expected to drop by 0.7% in the coming week due to weak economic data. After the European Central Bank reduced rates, but also signaled the nearing end of the year-long policy-easing cycle, the euro gained some support overnight and reached a six-week high of $1.1495. Investors have given in to a move for July. The final move is expected in December. On the commodities market, oil prices are slightly lower than last week but they will likely rise by a large amount this week due to supply concerns. U.S. Crude Futures fell 0.1% to $65.29 per barrel, but were up 2.1% on the week. Gold prices rose 0.3%, to $3,362 per ounce. They are up 2.2% for the week.
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London copper to gain weekly on the back of easing trade tensions and supply concerns
London copper prices are on course to end the week on a high note on Friday. This is due to hopes that U.S. China trade tensions will ease and to concerns about supply disruptions caused by mining operations being suspended and decreasing inventories. As of 0111 GMT the three-month contract for copper on LME fell 0.1%, to $9,727 per ton, but it was up 2.4% over the past week. On Thursday, the market reached its highest level since March 31, at $9.809.50. The Shanghai Futures Exchange's most traded copper contract gained 0.6% this week to 78 560 yuan per ton, or about 1.1%. The U.S. president Donald Trump and Chinese President Xi Jinping had a rare call Thursday between leaders. They left the key issues for future talks and invited each other to their respective countries. "The market sentiment was boosted due to the easing of trade tensions. Trump and Xi have agreed to further trade talks after Trump claimed that they had resolved disputes over rare earth exports in a phone call," ANZ reported. LME copper inventories fell to 138,000 tonnes, the lowest in almost a year. They are down nearly half this year. . Teck Resources, a copper miner, reported this week production setbacks in two Chilean operations. The Kakula copper project in the Democratic Republic of Congo, ANZ stated, was also affected by seismic activity causing the underground part of the operation to flood. LME aluminium fell 0.1%, to $2,475 per ton, while lead rose 0.4%, to $1,986.5. SHFE tin was the best performer Friday, rising 1.5% to 262,880 Yuan. Aluminium fell 0.1% to 20,035 Yuan per ton. Lead dropped 0.3% at 16,665 Yuan. Nickel declined 0.3% at 122,210 Yuan. Click or to see the latest news in metals, and other related stories. Data/Events (GMT 0600 UK Halifax House Price MM, May 0645 France Reserve Assets May 0700 EU QQ GDP Revised, YY Q1 12:00 UJS Non Farm Payrolls Unemployment Rate Average Earnings May ($1 = 7,1808 Chinese Yuan) (Reporting and Editing by Janane Vekatraman; Reporting by Hongmei Li)
China's new tracking system increases scrutiny of rare earth magnets
Three sources confirmed that China has implemented a tracking system in its rare earth magnet industry, as export restrictions are beginning to isolate customers from around the globe.
Two sources briefed on the issue and two others familiar with it said that the national tracking system went into effect this week and requires producers to provide extra information online, including trading volume and client names.
China, the world's biggest rare earth magnet exporter and supplier, in April, placed export restrictions on several magnets and seven medium-to-heavy rare earth elements. Exporters were required to obtain licenses.
The delays in getting approvals has disrupted supply chains, affecting automakers, semiconductor firms and others. Global automakers have already begun to shut down some production lines, as they run out of reserves.
Beijing announced high-level plans in June to create an information tracking system for rare earths products. However, the subject was not mentioned again until this week, according to a source familiar with the issue.
China's export restrictions on rare earths, magnets, and other products - in which it has a near monopoly - may become permanent.
In the U.S., and elsewhere, there was hope that this would be eliminated as part of the trade truce reached in Geneva last week.
Exports tend to gradually rebound in cases where China has placed export restrictions on metals. This is because exporters have applied for and received licences.
Tim Zhang, the founder of Edge Research in Singapore, said: "Our current hypotheses is that China will continue to control its exports on rare earths as it's an ace card China can hold."
Beijing's goal is to strengthen its control of the sector and crackdown on illegal mining, smuggling and tax evasion. A fourth source, who was also briefed about the issue, said that Beijing has a long-term plan to track all rare earth production chains, not just magnets.
(source: Reuters)