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TSX gains as investors evaluate tariff concerns
Investors are waiting for updates on trade and tariffs. The main Canadian stock index rose on Wednesday. After two consecutive days of decline, the S&P/TSX Index in Toronto rose 0.1% to 26,938.86 after a fall. The U.S. president Donald Trump announced on Tuesday steep tariffs on copper and threatened to impose levies against semiconductors and pharmaceuticals. This is a further extension of the trade war which has affected markets around the world. Trump has also extended the deadline for tariff agreements to August 1. Canadian government data revealed that Canadian firms have increased trade with allies including smaller markets in an effort to minimize the economic damage caused by U.S. Tariffs. Colin White, CEO of Verecan Capital Management and Portfolio Manager, said that the announcements about trade negotiations would continue to "cause movement in the market on a short-term basis." The information we'll receive this month about jobs will give us a good idea of what to expect in the coming months. Investors will be closely examining key Canadian job data due Friday to see how the economy is faring under tariff pressures. Healthcare shares gained 0.7%, while technology shares rose by 0.4%. H&R rose 4.7%, while real estate stocks gained 0.5%. The Globe and Mail reported asset manager Blackstone and U.S. Equity funds were in discussions to buy H&R's assets. Energy shares dropped 0.4% while mining shares remained flat. Copper prices dipped. Copper prices fell. EQB rose by 1.6% following the announcement that former finance director Chadwick W. Westlake would return as CEO. He had left the company just months earlier to become chief financial officer of software company OpenText. OpenText shares fell by 4.8%. Reporting by Twesha dikshit in Bengaluru and Sukriti gupta; editing by Shreya biswas
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Bank watchdogs say extreme weather conditions could lead to a 5% decline in the euro zone's GDP.
Heatwaves, wildfires and flooding could have the same impact on the euro zone's GDP as the global financial crises or COVID-19, according to a senior official at the European Central Bank. According to Livio Stracca, deputy director at the ECB, a series of severe weather events could lead to a near-term decline in the euro zone's growth of almost 5%. This is based on ECB's most extreme climate scenario, which was developed by ECB and 145 bank supervisors this year. The peak negative impact on the euro area's GDP is about 5%. This is the same magnitude as the global financial crises and just a bit less than COVID-19, said Stracca. He also chairs the Network for Greening the Financial System workstream on scenario analysis and design. The findings are based upon a set of new tools developed by the NGFS. This group of central banks and supervisors is working to address climate risk in the financial and economic sectors. These tools are designed to help companies and banks understand the impact of climate change on their business in the short-term by testing a number of climate-related scenarios. The group concluded that the euro zone's growth would be most adversely affected by "Disasters and Policy Stagnation", whereby heatwaves and droughts in 2026 are followed by a combination or floods and storms a year later in 2027. Another scenario suggests that if the euro zone follows through on its net-zero policies, which include its plan to reduce greenhouse gas emissions by 55% by 2030, this could help mitigate losses. In a blog posted by the ECB, Stracca and Bundesbank member Sabine Mauderer stated that climate-related risks were an immediate concern to financial stability and economic development. The NGFS scenarios... show that a global coordinated net-zero initiative would safeguard the economic interests of the euro zone over the next five year." The NGFS already has a set of widely-used climate scenarios. But this is the very first time that they offer tools to assess short-term impacts and physical effects. Reporting by Virginia Furness Editing Mark Potter
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Gold falls to a one-week low, as the dollar increases; trade talks are in focus
The dollar gained strength on Wednesday, and investors watched developments in the trade negotiations between the United States with its trading partners. As of 9:23 AM ET (1323 GMT), spot gold was down by 0.1%, at $3,297.19 an ounce. It had earlier hit its lowest level since the 30th June. U.S. Gold Futures dropped 0.3% to $3.306,10. The U.S. Dollar Index hovered around a two week high, which made bullion less appealing for overseas buyers. The yield on the benchmark 10-year U.S. Treasury note remained near a three week high. David Meger is the director of metals at High Ridge Futures. He said: "In the short-term, I notice that the dollar has bounced off its recent lows, which has taken some wind out of gold's sails. From a long-term perspective, gold prices remain well supported." Trump has promised to deliver more tariff notices against unnamed nations. On the front of trade, the European Union announced that it is working towards a deal between the United States and the European Union by the end the month. Investors will also be watching the minutes from the Federal Reserve's most recent policy meeting at 2:00 PM ET (1800 GMT), for any clues on the central bank's rate trajectory. The minutes of the Fed's meeting on June 17-18 are expected to reveal a central bank divided and hesitant to cut rates amid uncertainty about the inflation impact Trump's tariff increases will have. Meger said: "We expect that those minutes will confirm the likelihood of the Fed not lowering interest rates at their July meeting, and at the earliest at their September meeting." Gold tends to do well when times are uncertain, but struggles when interest rates rise because it does not earn interest. Silver fell by 1% per ounce to $36.40, while platinum dropped 0.3% to 1,355.69, and palladium fell 1.5% to $1,000.44. (Reporting and editing by Louise Heavens in Bengaluru. Anushree mukherjee, Bengaluru)
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South Africa's currency and stock prices fall as lower commodity costs weigh
Investors focused on precious metals prices, which have fallen after U.S. president Trump's latest threats. Trump announced on Tuesday that he would impose 50% tariffs on imports of copper, in an effort to increase U.S. production. Copper is a critical metal for electric vehicles, military equipment, power grids, and many consumer products. At 1218 GMT the rand was trading at 17.8250 per dollar, down 0.2% from Tuesday's closing price. South Africa, a major producer and exporter of precious metals, and minerals, is closely watching developments in Washington, as will investors in other currencies linked to commodities. The prices of gold, platinum and palladium outside the U.S. dropped sharply on Wednesday. Roy Topol is the portfolio manager of Cratos Asset Management. He said that although South Africa produces relatively less copper, it has a minimal direct exposure. A potential U.S. tariff on copper would have a greater impact on emerging economies exporting commodities. Last week, the Johannesburg Stock Exchange Top-40 Index fell by 0.2% due in part to a fall in mining shares. Topol attributes the decline in shares of Anglo American and Glencore to their exposure to copper. Shares in gold mining companies Harmony Gold and Gold Fields fell 1%. The rand's already high risk profile is further exacerbated by the country's efforts to reach a deal with the United States in time for the extended deadline of 1 August, after which the country will face a 30% tariff on exports to the United States. Trump reiterated his threat on Tuesday to impose 10% tariffs on South Africa and the BRICS bloc. The yield on the benchmark government bond for 2035 in South Africa was unchanged at 9.9%, although it had increased by half a basis-point. (Reporting and editing by Tomasz Janovski and Alex Richardson; Sfundo parakozov)
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Emirates Global Aluminium claims Guinea terminated the deal in error
Emirates Global Aluminium announced on Wednesday that Guinean authorities had terminated a contract with its subsidiary Guinea Alumina Corporation after a dispute lasting a year over the construction of alumina refinery. Guinea's military regime GAC has suspended its bauxite West Africa's militarized states are increasingly focusing on exports and mining as part of their increasing aggressive They are also pushing to get more out of their natural resources. The junta that took power in 2021 is the second largest producer of bauxite ore, which is used to make aluminum. The miners demanded to be paid Present plans to build refineries to generate capital for country. EGA, which is owned equally by Abu Dhabi sovereign fund Mubadala, and Dubai sovereign fund Investment Corporation of Dubai said that they plan to seek remedies through international courts. In a statement, Abdulnasser Bin Kalban said that "these actions have made it impossible to continue GAC's operation and develop an alumina refining facility." GAC said it will proceed with the necessary redundancy process, which initially will affect more than 2,00 employees and contractors. Kalban said, "We've maintained GAC employees in difficult circumstances as long as we could." The government of Guinea did not respond immediately to a comment request. Despite Guinea's regulations, bauxite exports jumped The robust Chinese demand will drive a 36% increase to 99,8 million metric tonnes in the first half 2025. (Reporting and writing by Hadeel al Sayegh, Maxwell Akalaare Adombila, Editing by Bate Felis and Mark Porter).
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UK signs $10 billion clean energy investment agreement with Japan's Sumitomo Corp
The British government announced on Wednesday that it had reached an agreement with Japan's Sumitomo Corp to fund clean energy infrastructure, such as offshore wind projects and hydrogen, over the next ten years. Poppy Gustafsson, the Investment Minister announced the deal on a visit to Japan. She described Japan as a major trading partner. Gustafsson stated that Sumitomo had historically been a major investor in UK energy project and the new deal would "really increase the bar of ambition" for areas such as power grids or investments in wind farms. In an interview conducted before the trip, she said: "Everything we're doing... You quickly run into supply chain constraints. And they've been great partners in helping to unlock those constraints." There are real examples of how this capital is being used to support and build real projects. The Labour government is prioritising private sector support to help fund planned energy investments. Prime Minister Keir starmer wants to achieve net zero and boost Britain's anaemic economic growth. The announcement by Donald Trump of tariffs has complicated the situation. Britain has reached a deal with the United States to eliminate certain tariffs. Japan to face new tariffs Gustafsson stated that the international trading environment is now "front-of-mind" when making investment decisions. She said that Britain should be a "central hub for discussions" in an environment that is fragmented.
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EU lawmakers reject attempts to limit the influence of far-right politicians in climate talks
The European Parliament rejected on Wednesday a proposal for fast-tracking talks on the EU’s new climate goal, undermining a bid by liberals, socialists and greens to limit the influence climate sceptic legislators have on this goal. The far-right Patriots of Europe, which rejects EU policy to curb climate changes, took over the role of leading negotiators on Tuesday for the 2040 target. They were seeking to steer discussions on this goal, to which they said they strongly opposed. On Wednesday, lawmakers rejected a proposal to speed up the negotiation process. This would have bypassed the stages in which the Patriots had the most influence and restricted their ability to determine the timing of negotiations. Total 379 legislators rejected the plan for accelerating the talks. 300 lawmakers voted in favor and eight abstained. With this vote, the Patriots are now in the driving seat for the Parliament as it negotiates with EU members the final climate target 2040. Patriots will draft an initial negotiation proposal for the Parliament. Patriots spokesperson stated that the group will not prioritize meeting the September deadline by which countries must submit their new climate targets at the United Nations. "What is important is to reach a deal which delivers real benefits to our citizens." The spokesperson stated that Patriots had never negotiated like traders on a market. The Patriots is the third largest group of legislators in the EU Parliament. It includes the far-right parties of France’s Marine Le Pen, and Hungary’s Prime Minister Viktor Orban. EU officials said that the Patriots won the top negotiating position in a meeting held behind closed doors on Tuesday, by outbidding parliament's largest group, the centre right European People's Party. Green legislators expressed concern that the goal would be diluted or delayed. Michael Bloss, a German EU legislator, said that there is a danger the EU's climate goal will be forgotten. The EPP, the party of European Commission president Ursula von der Leyen, did not support the attempt to speed up the talks. Jeroen Lénaers, a Dutch EPP EU legislator, said that the group didn't deem the fast track procedure necessary and that it wanted to "improve", without providing any further details, the target set by the Commission to reduce emissions 90% by 2040. Some EPP legislators have stated that a target of 90% is too ambitious. This year, governments from Italy to Poland have been reluctant to adopt ambitious goals for reducing emissions. They cited concerns about the costs of industries.
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China is hit by extreme weather conditions including heat, landslides, and floods
On Wednesday, torrential rains were sweeping across large areas of China as Tropical Storm Danas dunked coastal tech hubs. Monsoonal rains in the interior unleashed flash floods and deadly landslides over an 1,400 km (870 mile) arc. A subtropical system of high pressure has been saturating the north-east coast and the central provinces in the $19 trillion US economy since last week. This is straining power grids, and parching crops. Extreme weather is a growing threat to the world's second largest economy, and meteorologists attribute it to climate change. The impact of extreme weather threatens to wipe out billions in commercial activity and deaths each year as old flood defences are overwhelmed. Infrastructure gaps, such as the lack of air conditioning, are also exposed. Chinese weather authorities warned residents to stay inside as Storm Danas, which had been downgraded from a Typhoon following the death of two people in Taiwan, began dumping water that it had collected over the South China Sea (or Taiwan Strait) on the coast provinces Zhejiang or Fujian. China's State Broadcasting said that Danas could bring up to 300 millimetres of rain (30 centimetres in some areas), closing schools and putting officials on high alert along the rivers feeding important ports in Fuzhou and Xiamen. On Flood Alert The Danas residual vortex, and the large amount of water that it carries, could still cause havoc in south China, where rapid urbanisation sealed vast tracts of land under impermeable cement. This risk was realized 1,500 km away, in Yibin in the southwest Sichuan Province, where more than 6,000 people had to be evacuated after 14 hours rain. CCTV, the state broadcaster, showed firefighters rescuing residents from rising water in lower floors of apartment blocks. CCTV reported that heavy rains in Zhaotong (about a 3-hour drive away from Yibin) forced the evacuation of more than 7,000 residents. Five people went missing. In one county, 227.8mm of rain fell in 24 hours. This is the highest amount recorded since 1958. Over 300 people were forced to relocate after a flash flooding near the foothills the Himalayas, in China's Tibet. The flood was caused by the Gyirong river bursting its bank. Authorities in Shijiazhuang, in Hebei Province, activated emergency flood protocol after districts in the city received more than 100 mm of rain overnight. HEATWAVES On Wednesday, the subtropical system, which straddles the monsoonal cloud bands in China's interior with the Danas rain bands, continued to hover over central China, the eastern seaboard from Shanghai to Beijing, and brought near-record temperatures to the megacities of Shanghai Wuhan and Changsha. After reports of heatstroke deaths in the last week, people were advised to stay hydrated and avoid going out during the hottest part of the day. China does not keep an official record of deaths due to heat, but domestic media sometimes report on fatalities by citing local authorities. The country experienced a 79 day heatwave in 2022 from mid-June until late August - the worst since 1961. In 2023, a study published in The Lancet reported that over 50,000 deaths were caused by heat that year. (Reporting and editing by Saad sayeed and Bernadettebaum; Reporting and Editing by Joe Cash & Ethan Wang)
Q&A: Is Venezuela on the verge of losing its prized foreign asset, Citgo?
The final stages of a U.S.-court-organized auction for shares in Citgo Petroleum, the Venezuelan-owned parent company, have been reached. Bidders are submitting better offers and creditors hope to recover some of the proceeds.
The auction is a result of a case Crystallex, a Canadian miner, filed in Delaware eight years ago against Venezuela. Citgo Holding's parent company, PDV Holding was found liable by the court for Venezuela's expropriations and debts. This allowed over a dozen creditors to seek compensation for nearly $19 billion.
The auction, despite delays, has moved forward, particularly since last year. This is because there have been two rounds of bidding. In March, Red Tree Investment's $3.7 billion bid was chosen as the starting bid. Rivals are now challenging this offer.
Red Tree is not the only company competing for better bids. A consortium that includes Gold Reserve, Rusoro Mining and Koch, as well as a trading house, Vitol are also in competition.
According to a source with knowledge of the matter, Elliott Investment Management affiliate Amber Energy also considers whether or not to make a bid following a court ruling that favored a potential offer.
The court officer who oversees the auction and said last month that new bidders might emerge just before the June 18 deadline for submitting offers must recommend the winner of the auction by July 2. A final hearing is expected on August 18 with the judge and all parties involved.
What could be the possible loss for Venezuela?
Venezuela would lose its largest overseas asset if it fails to retain equity in the refinery and its U.S. parent companies. With a foreign debt of $150 billion, the country has already lost assets in Europe, Asia and elsewhere to creditors.
Leonard Stark, a Delaware judge, has allowed parties representing Venezuela the opportunity to make an offer. The boards that supervise the seventh largest U.S. refinery would have to get the backing of politicians from both Washington and Caracas, a difficult task given the U.S. sanctions against the OPEC nation.
Prior to the sanctions, Citgo's 807,000-barrel-per-day refining network was a primary processor of Venezuela's heavy sour crudes. Citgo's 2019 break with its ultimate parent company, Caracas based PDVSA has left Venezuela struggling to find new markets. The Houston-based refiner, on the other hand, has been sourcing crude from different suppliers.
Venezuela's opposition worked tirelessly for years to keep Citgo, funding legal defenses as well as lobbying Washington. Treasury Department must approve the winner of the auction. Treasury Department has protected Citgo in recent years from creditors.
Citgo, according to opponents of Venezuelan president Nicolas Maduro, could help the nation's economy recover if democracy was restored. Maduro officials rejected U.S. sanction and called the auction "robbery".
Can creditors claim post-auction compensation?
Yes. Yes.
If they are not satisfied with the results, creditors who rejected the result of the bidding round in the past due to the conditions set by the winner can file objections. They can also pursue parallel cases in U.S. court.
Three of the original 18 creditors cleared by the court have withdrawn due to mounting legal fees and uncertain prospects for recovery. Other participants, such as the owner of artifacts belonging to Venezuelan independence hero Simon Bolivar and a collector of Bolivar-related items, failed to meet all requirements set by the court.
All creditors will be compensated
Unlikely. Citgo's value was between $11 billion to $13 billion in the Delaware case. However, the auction is expected to yield less than $8 billion when you factor in possible side agreements with important creditors like bondholders.
Citgo's recent poor performance, which includes a profit that dropped to $305 millions last year, from $2 billion by 2023, will also affect its valuation.
This suggests that over half of the registered creditors who collectively claim $18,9 billion may not receive any distributions.
(source: Reuters)