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No relief for US-China Trade Trance
Johann M. Cherian gives us a look at what the future holds for European and global markets. The mood of European investors is set to change as a result of the rapidly increasing tensions in Middle East, and another tariff salvo by U.S. president Donald Trump. This has triggered a wave dollar selling and risk off moves. The U.S. and China talks, which were much hyped up, ended in a fragile truce. This may have temporarily quelled the simmering tensions on trade between the two largest economies of the world. However the investors are still uneasy due to the lack details. China's President Xi Jinping has not yet approved the 'deal.' Details on the new tariffs and how they will be implemented have yet to be worked out. Also, U.S. restrictions on exporting high-end artificial Intelligence chips remain in place. Trump has returned to his unilateral policymaking style as the deadline for worldwide tariffs on July 8 is fast approaching. He said that he will send letters to dozens of countries in one to two week outlining trade terms, which they can accept or reject. The markets will be looking for another TACO Moment. Companies are beginning to raise the alarm, even though inflation reports from the past do not reflect current price pressures. Inditex, Zara's owner, was the latest company to release a disappointing quarter report and warn of trade uncertainty. As if investors didn't have enough to deal with, geopolitical tensions are escalating in the Middle East, increasing the risk of inflation as crude prices rise. Brent and West Texas Intermediate futures reached two-month highs, each at nearly $70 per barrel. As my colleague Jamie McGeever has pointed out, the valuations of stocks and equities are starting to look stretched. This increases the risk to investors in case of a selloff. Futures in Europe were down by 0.7% while those in the U.S. point to a lower opening on Thursday. However, the benchmark indexes of the two regions are only 2% apart from their respective records highs. Investors continue to doubt the dollar's status as a safe-haven currency. The euro reached a seven-week peak on Thursday and has gained 11% in 2018. It is poised to make its largest annual gain since 2017. Next week's central bank bonanza could shed more light on global economic outlook. Next week, the U.S. Federal Reserve, the Bank of Japan, and the Bank of England will announce their policy decisions. Investors will also be watching for UK economic data, including the gross domestic product (GDP) and manufacturing output reports later that day. Both reports are expected to show a decrease in activity on an annual basis. This is due to the BoE’s cautious approach towards monetary policy ease. Thursday's key developments could give investors more guidance on the markets. - In UK: data on GDP, industrial production, manufacturing output, and trade In the U.S., data on producer inflation, initial weekly claims for unemployment and an auction of bonds for 30 years worth $22 billion - Policymakers including David Jacobs, Reserve Bank of Australia and Jose Luis Escriva of the ECB are expected to speak. - UniCredit CEO says Commerzbank is too expensive, and that there are few chances of a BPM deal. - Oracle raises annual forecast on robust cloud services demand Fitch downgrades Warner Bros credit rating to junk on the split-up
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Market awaits clarity about Sino-US trade talks progress
Iron ore futures were in a range on Thursday as investors awaited further details about the trade talks between China and the U.S., even though U.S. president Donald Trump made a positive statement. The September contract for iron ore on China's Dalian Commodity Exchange closed the morning trading 0.07% lower, at 705 Yuan ($98.16). As of 0400 GMT, the benchmark July iron ore traded on Singapore Exchange fell 0.53% to $84.6 per ton. Trump said on Wednesday that he was extremely happy with the trade deal which restored a fragile truce to the U.S. - China trade war. Beijing hasn't confirmed any progress in the trade negotiations. It would be a good thing if both countries were able to reach an agreement, as this would remove some uncertainty in the export industry, but it could also reduce the likelihood of Beijing introducing more stimuli. Ge Xin said that the focus has temporarily shifted from the deteriorating fundamentals to the Sino-US trade talks until there is greater clarity. Ge stated that "Steel production has declined for the past two weeks. This indicates a lower consumption of raw material, including iron ore." Coking coal and coke, which are both steelmaking ingredients, have also lost ground. They fell by 1.9% and 1.33% respectively. The Shanghai Futures Exchange saw a decline in most steel benchmarks. Rebar fell 0.8%, while hot-rolled coil, wire rod, and stainless steel all gained 0.76%. ($1 = 7.1818 Chinese Yuan Renminbi)
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Chartwell Marine to Design CTV for NR Marine Services
NR Marine Services has commissioned Chartwell Marine to design a new crew transfer vessel (CTV) in response to client requests for a new class of vessel capable of supporting older generation assets, now referred to as legacy turbines.Chartwell Marine has developed the Defiant Class vessel, a 20-meter CTV designed to Workboat Code Edition 3 with IMO Tier 3 compliance featuring a step free flush forward deck, superstructure and modern furnishings and materials used in larger CTVs.The Defiant Class comes in response to the need for a new class of smaller CTV required for legacy turbines.The vessel will retain flexibility to be tailored to different projects from a water jet propulsion system for shallow water sites and hybrid options where budgets allow to internal modularity to suit different racking and seating solutions. “It is always enjoyable bringing a new class of vessel to the market. What’s interesting in this case, is the vessel is based-on ‘legacy vessel’ parameters but with modern up-to-date experienced thinking.“With the Defiant Class, we are able to utilize our proven high efficiency, high seakeeping performance hull form, in a smaller, more dynamic cost-effective platform, appropriate for the legacy turbine projects the vessels are intended to support,” said Andy Page of Chartwell Marine.“NR Marine Services is excited to be the first to bring the brand-new Chartwell DEFIANT Class CTV to the market. With strong industry focus being on the HSOSC market space, the CTV development has been taken away from the smaller vessel market. “Working closely with Chartwell Marine and Diverse Marine we have looked at incorporating as many of the recent CTV developments a possible into a smaller package.“Following an internal fleet review long with external market research, the data shows that there is a potential to replace older tonnage which is between 10-15 years old for near shore projects which have a lifespan that warrants investment in new CTV’s,” added Richard Thurlow of NR Marine Services.
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London Copper rises, but volatility concerns linger
London copper prices rose a little on Thursday. Analysts expect continued volatility due to the uncertainty surrounding trade tariffs, as well as fundamentals of the market. The London Metal Exchange's three-month contract for copper gained 0.2%, reaching $9,663.5 a metric ton at 0100 GMT. Meanwhile, the Shanghai Futures Exchange's most traded copper contract fell 0.7%, to 78660 yuan (10,935.94). The U.S. Dollar fell after data showed that inflation in the largest economy in the world rose less than anticipated in May. This suggests that the Federal Reserve may resume cutting rates sooner than later. The metal price is usually supported by a weaker dollar, which makes it more attractive for buyers who use other currencies. "The U.S. China trade agreement induced a muted reaction from the metal markets," ANZ stated. On Wednesday, U.S. president Donald Trump declared that he was "very pleased" with the trade agreement which restored a fragile truce in trade with China. The deal also removed Beijing's export restrictions on rare earths, and allowed Chinese students to attend U.S. Universities. Although the trade agreement eased concerns about copper prices, uncertainty continues to linger. SHMET, an Shanghai-based commodity analysis house, stated that while inventories at LME warehouses have decreased, China's copper stocks have increased. Inventory increases can indicate a softening of demand. Other LME metals include zinc, which rose by 0.1% per ton to $2,656.5, nickel, up 0.1% at $15,190; tin, down 0.3% at $32,555, and lead, down 0.1% at $1,986. Other SHFE metals include aluminium, which gained 0.6%, to 20,285 Yuan per ton. Zinc rose by 0.1%, to 22,035 Yuan. Nickel fell by 0.8%, to 120,520 Yuan. Tin lost 0.3%, to 264330 Yuan. Click or to see the latest news in metals, and other related stories. DATA/EVENTS (GMT) UK GDP Estimate 3M/3M, April 0600 UK Gross Domestic Product MM,YY, April 0600 UK Manufacturing Output, April 0600 UK Initial Jobless Clm Weekly, 1230 US Machine Mfg PPI, May 1600 US Federal Reserve releases Quarterly Financial Accounts for the United States
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Gold prices rise on weaker dollar and rising Middle East tensions
Gold prices rose Thursday on the back of rising tensions in Middle East, a weaker Dollar, and better-than-expected U.S. Inflation data. As of 0202 GMT, spot gold was up 0.6% to $3,372.46 per ounce. U.S. Gold Futures rose 1.5% to $3393. The U.S. Dollar Index fell to near a two-month low making greenback priced bullion more appealing to overseas buyers. Kelvin Wong is a senior analyst at OANDA. He said that the weakness of the dollar index was a powerful catalyst. Gold faced resistance at $3.346, but the breakout bullish triggered technical selling. The rising geopolitical risk aided the safe-haven assets. President Donald Trump announced on Wednesday that U.S. military personnel would be moved out of Middle East because of increased security risks due to increasing tensions with Iran. In the meantime, U.S. consumer price data revealed that gasoline prices were lower than expected, but inflation could increase due to import tariffs. Trump has again called for the Fed to cut rates significantly. Wong stated that the CPI data is not alarming and could lead to the Fed acting more quickly than expected. The Fed will meet on June 17-18. Traders are now expecting a rate cut of 50 basis points by the end of the year. They await U.S. Producer Price Index data due at 1230 GMT for more clues. Trump also said that Washington and Beijing agreed on a framework for restoring a fragile truce to the U.S. China trade war. This could have avoided higher tariffs. Trump said he would be willing to extend the deadline of July 8 for trade negotiations with other countries before U.S. tariffs increase, but he did not anticipate such a requirement. (Reporting by Anmol Choubey in Bengaluru; Editing by Sherry Jacob-Phillips) (Reporting and editing by Sherry Jacobi-Phillips in Bengaluru)
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Australian shares fall as mining losses offset banks' energy gains
Australian shares were mostly unchanged on Thursday as strong performances by banks and energy stocks partially offset the positive performance of miners. Meanwhile, President Donald Trump’s hint to extend the deadline for trade negotiations eased fears over impending tariff increases. As of 0108 GMT, the S&P/ASX 200 index remained at 8,593 point. The benchmark closed Wednesday at a record high of 8,592.1. Overnight, Trump indicated that he was open to extending the deadline of July 8 for trade negotiations before U.S. higher tariffs go into effect. However, he doubted whether an extension would be needed. China and the United States - Australia's two top export partners - have reached a framework agreement, which has boosted investor confidence for a lasting solution between the superpowers, and eased fears of further disruptions to the market. The lack of specifics could lead to future disputes over tariffs. If the current momentum continues, Chinese export-dependent miners will have their worst session since June 2. BHP, Rio Tinto, and Fortescue all dropped between 0.9% to 2.4%. Energy firms have bucked the trend of gloomy news, rising 1.4% as oil prices reached a new high. The sub-index looks set to post its fourth straight session of gains. Woodside and Santos, major index companies, both gained 1.5% and 0.8% respectively. The "Big Four" banks grew between 0.1% to 0.4%. Gold stocks rose nearly 2% in tandem with bullion price increases. The shares of metals mining company Northern Star Resources rose by about 1%. Qantas, one of the leading performers on the benchmark index with a 4.3% gain, was the most notable corporate news. This came a day after Qantas announced that it would be closing its Singapore-based Jetstar Asia budget airline due to increased costs and competition. The Australian Defence Minister expressed his confidence in AUKUS, despite Trump's administration conducting a formal review. The benchmark S&P/NZX50 index for New Zealand fell 0.1% to 12,592.86.
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Worries about escalating tensions between the US and Iran cause oil prices to rise
The oil prices rose on Thursday, reaching their highest level in over two months after U.S. president Donald Trump announced that U.S. personnel would be moving out of the Middle East. This sparked fears about the potential disruption to supply if tensions escalated with Iran. Brent crude futures increased 15 cents (0.2%), to $69.92 a bar at 1230 GMT. U.S. West Texas intermediate crude rose 22 cents (0.3%), to $68.37. Brent and WTI both surged over 4% on Wednesday, reaching their highest levels since early April. Trump said on Wednesday that U.S. personnel was being relocated out of the Middle East, because "it could potentially be a dangerous area." He added that the United States wouldn't allow Iran to possess a nuclear bomb. According to U.S. sources and Iraqi ones, it was reported on Wednesday morning that the U.S. will be preparing to evacuate its Iraqi Embassy and allow dependents of military personnel to leave Middle East locations due to increased security risks. Iraq is OPEC’s second largest crude producer after Saudi Arabia. Saudi Arabia is the No. Officials from the United States have said that military dependents can also leave Bahrain. Aziz Nasirzadeh, Iran's minister of defense, said Tehran would strike U.S. military bases in the area if nuclear negotiations fail and conflict with Washington arises. Trump has repeatedly warned Iran of bombings if it fails to reach a new deal on nuclear energy. Oil prices were also boosted by optimism about a possible trade agreement between the U.S.A. and China that could increase energy demand in two of the world's largest economies. The Energy Information Administration reported that crude oil inventories in the United States fell by 3.6 millions barrels, to 432.4 million last week. The analysts polled had predicted a draw of two million barrels. (Reporting and editing by SonaliPaul in Houston, ArathySomasekhar)
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The Information reports that OpenAI has discussed raising funds from Saudi Arabian and Indian investors.
The Information reported Wednesday that OpenAI, the maker of ChatGPT, has spoken to Saudi Arabia's PIF and India's Reliance industries, as well as existing shareholders United Arab Emirates' MGX, about its 40 billion financing. According to the report, people who are familiar with the fund-raising said that the investors could each invest at least hundreds millions of dollars. SoftBank, OpenAI's main financier, is seeking to raise additional funds for its ambitious Stargate infrastructure plan and model development. Two sources familiar with the matter said that OpenAI CEO Sam Altman had met earlier this year with India's Minister of IT and discussed India’s plan to create a low-cost AI eco system. Altman then planned to visit UAE in order to raise funds with Abu Dhabi Investment Group MGX. The Information reported that Microsoft-backed startup had also discussed raising $100 million each at Coatue and Founders Fund for the fundraise. The company also plans to raise $17 billion more in 2027. Could not confirm immediately the report. OpenAI, PIF Reliance Industries MGX SoftBank and SoftBank have not responded to our requests for comment.
Copper prices fall on the back of uncertainty about trade talks and demand
The copper price fell on Tuesday, as investors avoided the market because of uncertainty over the U.S.-China talks and the impact the trade war will have on economic growth and metals demands.
By 1000 GMT, the benchmark three-month copper price on London Metal Exchange had fallen 0.3% to $9,767 a metric ton, after having recovered 20% from its April lows, when it was at its lowest level since November 2023.
"There is a lot complacency in the market right now." The volatility of the markets seems to be decreasing, even though there has been no breakthrough in trade negotiations with China," Ole Hansen said. He is head of commodity strategy for Saxo Bank Copenhagen.
Tuesday in London, top U.S. officials and Chinese officials are expected to resume their trade negotiations for a second time. They hope to achieve a breakthrough on export controls of rare earths and related goods.
The LME registered warehouses saw more copper inventories leave as traders took advantage higher U.S. metal prices in anticipation that U.S. president Donald Trump would impose tariffs after duties were levied against aluminium and steel.
LME Copper Stocks
U.S. Comex Copper Futures fell 0.8% to $4.89 per lb. This brings the premium of Comex to the LME up to $1,000 per ton.
The appetite for the New York market is waning, as the tariff announcement would be a binary one. It's unlikely that you could avoid some fireworks once the news was out.
Traders await the results of an investigation Trump ordered on February regarding potential import tariffs for copper.
In China, zinc prices on the Shanghai Futures Exchange have weakened for the third trading day. They are now down 1.3% at 21,845 Yuan per ton. This is the lowest price since late April.
The Shanghai-based research firm SHMET reported that "China's demand for commodities has been weakening in recent months, and buyers are buying to meet their immediate requirements at lower prices."
Other LME metals saw a 0.1% decline in aluminium to $2477 per metric ton. Nickel fell 0.7% to $15310, Zinc dropped 0.1%, lead was down 0.4% at $1978.50 and tin rose 0.1%, to $32,750. Hongmei Li, Singapore Additional Reporting; Vijay Kishore Editing.
(source: Reuters)