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Asian stocks fall on weak China data and plunging copper price
Asian stocks fell on Thursday, after weaker than expected Chinese data and a drop in copper prices. Investors also weighed the impact of a new trade agreement between South Korea & the U.S. Investors weighed the Federal Reserve's decision to keep rates unchanged and megacap tech companies' strong earnings when determining whether or not to buy the dollar. Nasdaq Futures soared 1.2% after Microsoft and Meta Platforms reported earnings that were better than expected. S&P futures rose 0.8% while the U.S. Dollar held steady following a two-month peak. Tony Sycamore is a market analyst with IG Sydney. He said that both companies' earnings reports have "shot the lights out", reporting increased revenue from cloud computing, and AI-enabled ad targetting, respectively. The broadest MSCI index of Asia-Pacific stocks outside Japan fell 0.7% but is still on course for a fourth consecutive monthly increase in July. Hong Kong and China stocks led the declines following official PMI gauges showing weaker than expected economic activity in July. The markets are now waiting for the Bank of Japan to announce its monthly policy decision in the afternoon. Traders will be looking for any clues that Governor Kazuo ueda might give about the probability of another rate increase this year. The Federal Reserve’s rate-setting panel voted on Wednesday 9-2 to keep interest rates unchanged for the fifth meeting in a row. Two Fed governors dissented for the first time since more than 30 years. The comments made by Fed chair Jerome Powell after the decision undermined confidence that borrowing rates would start to drop in September. Citi analysts said that it would take two months for Fed officials to be convinced that tariff effects are only going to lead to modest one-time increases in prices and that the policy rate should move toward neutral. The dollar index stood at 98.812, just below the high of 99.987 that was reached on Wednesday. The index will clock its first gain in 2025, a 3.1% increase for the month. "Although Federal Reserve kept rates at their recent rate setting decision the possibility of rate reductions at upcoming meetings remains alive as they balance the softening economy data with the possible for persistent inflation," Manusha Samanthaweera, Fixed Income Investment Director at Capital Group. The U.S. Gross Domestic Product growth was higher than expected during the second quarter. However, the report's details painted a picture that showed an economy in decline due to the uncertainty caused by Trump's protectionist policy. The Korean won increased by 0.3% following Trump's announcement that the U.S. would charge a 15 percent tariff on South Korean imports in exchange for South Korea investing $350 billion into U.S. projects, and purchasing $100 billion of U.S. Energy Products. This announcement is just the latest in a long line of deals on trade policy that were rushed to be announced before the August 1 deadline, so as to avoid the impositions of "Liberation Day", April 2, tariffs. These deals continue cast a shadow over global markets. The price of copper futures fell 19.4% when Trump announced that the U.S. would impose a tariff of 50% on copper pipes, wiring and other copper products. However, the details of this levy were not as comprehensive as expected, and did not include copper input materials like ores, concentrates, and cathodes. Trump announced on Wednesday that trade negotiations with India were still in progress after previously announcing the U.S. would impose a 25 percent tariff on products imported from India. The U.S. is also going to suspend its "de minimis exemption" that allowed low value commercial shipments to ship to the United States with no tariffs. Tax breaks are a major part of China's low cost e-commerce platforms, such as Shein or PDD's Temu. Oil prices rose on Thursday for the fourth consecutive day, as investors were worried about supply shortages, amid Trump's call for a quick resolution of the Ukraine war and his threats to impose tariffs on countries that buy Russian oil. Brent crude futures, due to expire Thursday, climbed 0.33% to $73.48 a barrel, while U.S. West Texas Intermediate Crude for September rose 0.21% to $70.15 a barrel.
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The fourth day of gains in oil prices is due to supply concerns from Trump tariffs
The oil price rose for the fourth consecutive day on Thursday as investors were worried about supply shortages in light of President Donald Trump’s call for a quick resolution to the conflict in Ukraine, and his threats against countries that buy Russian oil. Brent crude futures expiring on Thursday rose 27 cents or 0.4% to $73.51 per barrel at 0028 GMT. U.S. West Texas intermediate crude for September rose 37 cents or 0.5% to $70.37 per barrel. Both benchmarks closed 1% higher Wednesday. Brent's October contract, which is the most active, was up 29 cents or 0.4% at $72.76. Toshitaka Takawa, an analyst with Fujitomi Securities, said that the concern about secondary tariffs on countries who import Russian crude oil will restrict supplies continues to drive interest in buying. Trump announced on Tuesday that he would begin imposing measures against Russia, including 100% secondary duties on its trading partners if the country did not end the war in 10-12 days. This was a move up from an earlier deadline of 50 days. Trump announced on Wednesday that the United States was still in negotiations with India over trade, after earlier announcing the U.S. would impose a 25 percent tariff on goods imported into the country beginning on Friday. The U.S. warned China, which is the biggest buyer of Russian crude oil, it would face high tariffs if they continued to buy. The U.S. Treasury Department issued new sanctions Wednesday against over 115 Iran linked individuals, entities, and vessels. This is an indication that the Trump Administration has intensified its "maximum-pressure" campaign following the June bombing of Tehran's nuclear sites. China is the largest buyer of Iranian oil. The Energy Information Administration reported on Wednesday that U.S. crude inventories increased by 7.7 millions barrels to 426.7million barrels during the week ended July 25, mainly due to lower exports. Analysts expected a draw of 1.3 million barrels. The gasoline stocks dropped by 2.7m barrels to 228,4m barrels. This was far more than expected, which predicted a 600k barrel draw. ? Tazawa, from Fujitomi Securities, said that "U.S. inventories showed a larger than expected build in crude stock, but an even bigger gasoline draw confirmed the strong driving season demand. This resulted in a neutral effect on the oil market." (Reporting and editing by Yuka Feast; reporting by Yuka Obayashi)
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AGL Energy, Australia's grid-scale batteries project is approved for $515 million
AGL Energy announced on Thursday that it had made a final decision to invest in a grid-scale project worth A$800,000,000 ($515,28,000,000) as part of its broader transition to cleaner energy. The Tomago Battery, which has a four-hour capacity and 500 megawatts of power, will be located in New South Wales' Hunter region. Construction is expected to start later this year and operations to begin by the end of 2027. AGL will fund the battery through its balance sheet, using a combination of operating cash flows and existing debt facilities including green capex loan. AGL has a growing portfolio of grid-scale batteries, including the operational batteries in Torrens Island, Broken Hill and the 500MW Liddell Battery, scheduled to be online early 2026. The company has announced that it has another 900 MW in its pipeline, which is nearing FID. AGL, Australia's largest power generator, has set its sights on a pivot towards flexible and renewable energy. The company's recent acquisition of South Australia’s Virtual Power Plant from Tesla shows its ambition to reach net-zero emission by 2035. In its half-yearly report, the company stated that it aimed to complete 1.4 gigawatts grid-scale storage projects in the next year.
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Bloomberg News: California Governor seeks an additional $18 billion to fund utilities' wildfire funds
Bloomberg News reported on Wednesday that California Governor Gavin Newsom has proposed legislation to boost the wildfire fund of the state with an extra $18 billion. The plan is well-known by sources. Could not verify immediately the report. California lawmakers created the California Wildfire Fund in 2019, which is managed by the California Earthquake Authority. This fund, which has a $21 billion budget, will provide more immediate and substantial compensation to victims of certain utility-caused fires, while protecting the power companies from large claims. The report stated that electricity ratepayers will contribute half of the money via a monthly charge, while the remaining half will be funded by the utility companies who benefit from the fund. These include Edison International, PG&E, and Sempra. According to the report, the proposal is still in draft form. It may be changed. Newsom's Office said that they continue to work on a policy to stabilize California's Wildfire Fund in order to help wildfire survivors recover and protect California utility customers. Newsom's Office, Edison, PG&E, and Sempra didn't immediately respond to a?request for comment. (Reporting by Anusha Shah in Bengaluru; Editing by Himani Sarkar)
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Trump imposes tariffs on Brazil of 50%, but excludes aircraft, OJ and energy
Donald Trump, the U.S. president, imposed a 50% tariff Wednesday on Brazilian goods in response to what he called a witch hunt against former President Jairbolsonaro. However, he softened his blow by exempting sectors like aircraft, energy, and orange juice from higher levies. This came as a welcome relief to many in Brasilia who, since Trump announced his tariff earlier in the month, had been calling for protections for major Brazilian exporters caught up in the crossfire. The shares of Embraer, a plane manufacturer, and Suzano, a pulp maker rose. The Brazilian Treasury Secretary Rogerio Ceron said to reporters that "we're not in the worst case scenario." It's a better outcome than could have been. The new tariffs are set to go into effect August 6, and not August 1, as Trump originally announced. The White House linked the tariffs in a Wednesday factsheet on Trump's executive orders to Brazil's prosecution against Trump ally Bolsonaro. Bolsonaro is currently on trial for allegedly plotting to overturn the 2022 election loss. The U.S. announced sanctions against a Brazilian Supreme Court judge overseeing Bolsonaro’s trial. They accused the judge of authorizing pre-trial detentions that were arbitrary and of suppressing freedoms of expression. Trump's executive orders formalizing a tariff of 50% excluded dozens key Brazilian exports into the United States. These included civil aircraft, pig-iron, precious metals and wood pulp as well as energy and fertilizers. Embraer stated that an initial review indicated a 10% tariff, imposed by Trump back in April, remains in effect. The exclusion applies to the additional 40 percent. Rafael Favetti is a partner in the political consultancy Fatto Inteligencia Politica, located in Brasilia. He believes that these exceptions may be a response to U.S. company concerns, and not a retreat from Trump's attempts to influence Brazilian politics. He said that "this also shows Brazilian diplomacy has done its job correctly in raising awareness among U.S. businesses." Mauro Vieira, Brazilian Minister of External Affairs, said he had met with U.S. Sec. of State Marco Rubio to reaffirm his country's willingness for negotiations on tariffs. This is a sign of a possible restart of the negotiations which stalled back in June. Vieira said that Bolsonaro’s legal problems cannot be considered in negotiations. The State Department didn't immediately respond to a comment request. A SMALLER EFFECT Welber Baral, former Brazilian Trade Secretary, estimated that Brazil exports around 3,000 different types of products to the United States. Barral stated that "there will be an effect." According to an analysis by the American Chamber of Commerce for Brazil, almost 700 products are exempt from the new tariffs. This represents 43.4% of Brazil’s total exports by value. Embraer, which exports 70% of its executive aircraft to the United States, and 45% of commercial aircraft, was a major concern for Bolsonaro’s leftist opponent, President Luiz inacio da Silva. Analysts also warned that Suzano could suffer a severe impact, as it is one of the largest wood pulp producers in the world. In Sao Paulo, Embraer's shares rose by 11% and Suzano's gained more than 1% during afternoon trading. IBP, a lobbying group for oil, said that after oil products are listed as exempted from the new tariffs, oil shipments will resume to the U.S. Ibram, the mining lobby, stated that exemptions covered 75% of all mining exports. The executive order of Wednesday did not include any exemptions for coffee or beef, two important exports to the United States. Roberto Perosa is the head of Brazilian meatpacking group Abiec. The group represents producers of beef, including JBS, Marfrig and Marfrig. Cecafe, a group of Brazilian coffee exporters, said in a press release that it would continue to work for coffee being included as an exemption. The battle over tariffs will continue as the political motivations behind them provide ammunition to the plaintiffs who have filed a lawsuit. Alex Jacquez who worked at the White House National Economic Council for former President Joe Biden said that the new tariffs are a violation of "both the law and Trump’s stated trade policy." He said that the tariffs would only increase coffee prices. "We have a large trade surplus with Brazil. These punitive duties will not rebalance unfair trade. Reporting by Luciana Magialhaes and Gabriel Araujo in Sao Paulo; Lisandra Paraguassu, Marcela Ayres and Ismail Shakil, in Brasilia; Kanishka Singh, in Washington; Manuela Andreoni, in Ottawa; Brad Haynes, Rosalba o'Brien, in Washington.
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FirstEnergy exceeds Q2 profit expectations on higher electricity prices
FirstEnergy, a utility that benefits from higher rates, beat Wall Street's expectations for the second quarter adjusted profit on Tuesday. U.S. utilities are trying to increase power bills in order to upgrade their infrastructure. This is because the electrical grids of the United States are under increasing pressure due to increased demand from industries and data centres. FirstEnergy, for example, uses rate cases to determine customer charges by comparing the investments they made in their transmission and electric systems. The company's quarterly performance was boosted as a result of the new Pennsylvania base rates, even though milder temperatures impacted demand for electricity. The company stated that milder temperatures reduced customer demand during the third quarter by almost 3% compared to a year ago. FirstEnergy provides electricity to about 6,000,000 customers in Ohio and Pennsylvania, New Jersey and West Virginia as well as Maryland and New York. It operates three segments: distribution, integrated transmission and stand-alone. According to data compiled and analyzed by LSEG, the Akron, Ohio, based company posted an adjusted profit per share of 52 cents in the second quarter. This was compared to analysts' estimates of 49 cents. Reporting by Khusbu Jennifer; Editing and proofreading by Anil D’Silva
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Ford shares fall 4% following the bell as it raises its projected tariff impact.
Ford Motors said that U.S. Tariffs on Imported Vehicles, as well As Materials Like Steel and Aluminum, Will Cost More Than Expected For The Year. Ford's Shares Slid About 4% In After-Market Trading. Ford said that its second-quarter earnings were hit by tariffs to the tune of $800 million. This was a smaller impact than other U.S. competitors due to Ford's strong manufacturing base in the United States. Ford increased the upper range of its projected impact on gross revenues due to tariffs for the entire year by $500 million to $3 billion. Sherry house, Ford's Chief Financial Officer, said that Ford increased the projection because tariffs on Mexico and Canada remained higher than expected for a longer period of time. She also cited increased levies on steel and aluminum. Dearborn, Michigan, automaker issued guidance on annual results Wednesday after suspending them in May for a month to assess the impact U.S. president Trump's tariffs. Ford has announced that it will now record full-year adjusted profits before interest and tax of $6.5 billion to $7 billion, down from the February 2025 projections of between $7.0 and $8.5 billion. The auto giant beat LSEG's expectation of 33 cents for the last quarter. Ford reported a $36 million net loss in the third quarter, primarily because of special charges related cancellation of a three row electric SUV and field service action from a $570,000,000 recall. Ford reported revenue of $50.2billion for the third quarter, an increase of 5% over the same period last year. Ford has gained market share by aggressively discounting its vehicles and offering a "zero zero zero" campaign that offers customers a $0 deposit, zero percent for 48 months and no payments for the initial 90 days. The CFRA Research analyst Garrett Nelson wrote in a report that "the substantial revenue outperformance shows Ford's pricing strength, but the margin compression indicates underlying cost pressures are still problematic." These deals led to a 15.5% rise in gasoline-powered cars during the quarter. In the third quarter, shoppers were also interested in hybrid offers. Ford reported that its results for the June quarter were $800m lower due to Washington's tariffs. General Motors' competitor reported a more severe tariff impact, with a $1.1billion hit to its quarter results, mostly from the imports of its entry-level Chevrolets and Buicks made in South Korea. GM estimates a tariff impact of $4 to $5 billion for the entire year. It plans to offset 30 percent of this expense. Ford said that it plans to offset $1 billion in gross tariff costs. Stellantis, a Jeep manufacturer, said that tariffs are expected to increase expenses by $1.7 billion for the entire year. The White House didn't respond to an email asking for comment on automakers' projected sales. Trump has in the past said that the levies would bring manufacturing and jobs to the U.S. Ford produces around 80% domestically of the cars it sells in America, which is about 25% more than the two Detroit rivals. This was revealed by a review of imports conducted by business analytics firm GlobalData. This foundation may have made the company more resistant to tariffs but it is still facing steep levies for aluminum, steel, and copper, which has rocked industry. Executives have also said that the shortage of rare earth magnets in China has caused production to be disrupted this quarter. Ford's EV investment and quality problems remained its biggest challenges. Ford had said earlier in the year that it anticipated a loss of up to $5.5billion on its EV business and software by 2025, before tariffs were imposed. The segment recorded an operating loss of $1.3 billion for the third quarter. The elimination of the $7,500 tax credit for consumers in September will likely further dampen sales growth. Automaker also faces costly quality problems and a record number of recalls. Jim Farley, Ford CEO since 2020, has made reducing these problems a top priority. (Reporting from Nora Eckert and Nathan Gomes in Bengaluru, Editing by David Gregorio.)
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Albemarle posts surprise second-quarter profit on lithium demand; shares surge
Albemarle is the largest lithium producer in the world. Its shares rose over 7% on Wednesday after the bell, thanks to the sustained demand for this metal. Fastmarkets, a consultancy, says that lithium's use for electric vehicles, large battery storage, and other electronic uses has increased rapidly. Demand was up by 24% in the past year, and is expected to increase by 12% per annum over the next decade. Albemarle reported that its April-June net sales were $1.33 billion. This is 7% less than the previous year, but still higher than analysts' expectations, which was $1.22 billion. Data compiled by LSEG. The company reported that its revenue decreased year-over-year due to lower prices, but was offset by growth in volume within its energy storage and specialty business segments. The price of lithium has fallen by more than 90 percent in the last two years, largely due to an oversupply from China. This is causing layoffs and corporate purchases, as well as project delays, around the world. Albemarle, to combat the price glut, has implemented measures like job cuts and cancellation of expansion projects. This includes a U.S. key lithium refinery. Albemarle began a "comprehensive" review of its costs and operating structure earlier this year. It is expected to complete the project by October. The lithium producer lowered Wednesday its capital expenditure plans for 2025 from $700 to $800 to $650 to $750. The company expects a positive cash flow for the entire year. The Charlotte-based company, which is headquartered in North Carolina, reported a quarterly adjusted profit per share of 11 cents, while analysts expected a loss per share of 82 cents. (Reporting from Vallari Srivastava, Bengaluru. Additional reporting by Ernest Scheyder, Houston. Editing by Alan Barona.)
The price of iron ore has risen for the past two months on hopes that China will stimulate steel production and reduce its supply.
Iron ore futures rose for the third consecutive session on Thursday. They reached multi-month highs as optimism grew over a new reform wave to curb steel production and additional stimulus measures by China, the world's largest consumer.
The daytime trading price of the most traded September iron ore contract at China's Dalian Commodity Exchange was 3.67% higher, closing at 763.5 Yuan ($106.39), a three-month record.
As of 0724 GMT, the benchmark August iron ore traded on the Singapore Exchange rose 3.41% to $99,35 per ton. This is the highest price since May 22.
The main reason for the rise in prices is the anticipation of a supply-side steel reform, according to a Shanghai analyst who spoke on condition of anonymity because he was not authorized to speak to media.
The head of China's state planner announced on Wednesday that China's GDP will surpass 140 trillion yuan in this year despite the ongoing trade war with the United States, and the persistent deflationary forces.
Analysts at Yongan Futures stated that this fueled some hopes about "whether there will be more stimulus at the high-level meetings later in the month."
Pei Hao is an analyst with international brokerage Freight Investor Services. She said that iron ore has benefited from the recent rally on the coal markets, which was driven by the expectation of supply-side changes.
The iron ore supply and demand did not change fundamentally. Although shipments fell, a decrease in arrivals is likely to be visible until late July.
Coking coal and coke, which are both steelmaking ingredients, also saw gains. They rose by 4.24% each and by 3.56% respectively.
The benchmarks for steel on the Shanghai Futures Exchange have strengthened. Rebar gained 1.89%; hot-rolled coil grew by 2.16%; wire rod climbed 1%, and stainless steel jumped 1.06%. ($1 = 7.1762 Chinese Yuan) (Reporting and editing by Amy Lv, Lewis Jackson and Mrigank Dahniwala).
(source: Reuters)