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Stocks rise ahead of important US earnings and data as trade talks loom
On Tuesday, shares rose worldwide and the dollar retained most of its gains from July as investors entered a crucial week that will include U.S. earnings data, inflation figures and trade negotiations in a fairly optimistic mood. Donald Trump, the U.S. president, threatened to impose 30 percent tariffs on Europe and Mexico starting August 1, which is higher than the 20 percent he originally proposed for the EU in April. Trump, however, said that he would be open to more negotiations, despite investor predictions of lower final tariff levels. Japan is also trying to schedule high level talks with the U.S. on Friday. Andrzej szczepaniak is a senior Europe economist with Nomura. "However, it is likely that this will be seen as a tool for bargaining ahead of the 1 August. This is in line with what investors thought about most of Trump's letters to trading partners from last week." This view will only be challenged in a material way as we approach 1 August. The MSCI world share index rose by 0.16% Tuesday, just a hair away from the all-time highs set last week. The STOXX 600 index in Europe rose by 0.2%, lagging behind the broad APAC ex Japan benchmark of 1%. Nasdaq Futures gained 0.6% after Nvidia announced it would resume its sales of H20 chips into China. Earnings and Inflation Now, the focus shifts to the U.S. earning season that begins on Tuesday with major bank reports of their second-quarter results. According to LSEG, S&P profits are expected rise 5.8% over the past year. The forecast has deteriorated sharply from the early April prediction of 10.2% growth before Trump's trade war. Investors are also looking at the U.S. Inflation data due Tuesday to see if there is any impact from tariffs. Recent data has shown that tariffs have had little effect on the broader price pressures. However, this week's data will show an increase in gasoline costs and higher prices for certain tariff-sensitive products. The stock market also saw a boost on Tuesday, as oil prices fell after Trump gave Russia a deadline of 50 days to end its war in Ukraine or face energy sanctions. This eased immediate supply concerns. Brent futures fell last by 0.2%. JAPANESE ELSTION Investors are not only focused on U.S. politics. The upcoming Japanese election for the upper house of parliament is causing a stir in the Japanese government bonds market, which is spreading to other markets. According to polls, the ruling coalition could lose its majority of the upper chamber to opponents who support more spending. The 10-year benchmark yield rose to 1,595%, its highest level since October 2008, as a result of concerns about the impact of the crisis on Japan's finances. In recent days, higher Japanese yields also pushed long-dated European yields and even U.S. rates higher. However, Germany's 30-year rate, which had hit a two-year-high on Monday, fell 5 basis points to 3.20% on Tuesday. The benchmark 10-year Treasury yield in the U.S. fell by 1 basis point to 4.42%. In Asia, the data also showed that China's economy slowed down less than expected during the second quarter as a result of its resilience to U.S. Tariffs. On the currency markets, there was a slight weakening of the dollar against European currencies. The euro and the pound were both up by around 0.2%, at $1.1684 each, and $1.13449, respectively. The euro and pound both rose around 0.2% from their previous lows of over two weeks. Spot silver rose 0.3% to 38.25 dollars per ounce. Gold gained 0.5% to $3361 an ounce.
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Trump meets with tech, energy and government executives to push AI
The President Donald Trump, along with executives of some of the biggest U.S. energy and tech companies will be attending a summit on Tuesday in Pittsburgh as the Administration prepares new measures to drive the U.S. growth of artificial intelligence. The top economic rivals U.S.A. and China have entered a technological arms-race to see who can dominate AI, as this technology becomes more important in every area of life from the boardroom to the battlefield. The Energy and Innovation Summit, to be held at Carnegie Mellon University, is expected to attract tech executives and representatives from leading energy and technology firms, including Meta, Microsoft and Alphabet, to discuss ways to position the U.S. to become a leader in AI. The summit, organized by U.S. Senator Dave McCormick from Pennsylvania, a Republican allie, will announce $70 billion worth of artificial intelligence and energy investment in the state. Big Tech is scrambling for vast quantities of electricity to power its energy-guzzling, artificial intelligence-driven data centers. Khaldoon al-Mubarak, of Mubadala; Rene Hass, of SoftBank; Larry Fink, of BlackRock; Darren Woods, of ExxonMobil; Brendan Bechtel, of Bechtel, and Dario Amedei, of Anthropic, are among the CEOs who will be attending. Earlier, it was reported that the White House will consider executive actions to ease the connection of power-generating projects with the grid. It may also offer federal land to build data centers to advance AI technology. The administration is also considering streamlining the permitting process for data centers. This would involve creating a national Clean Water Act permit rather than forcing companies to apply state-by-state. Mike Sommers, the head of the influential American Petroleum Institute said that executive action was welcomed in order to unlock energy for powering the data centers. However, a more durable and long-lasting solution is required. Sommers told. Trump had ordered in January that his administration produce an AI Action Plan to make America the "world capital of artificial intelligence" by reducing regulatory barriers and promoting its rapid growth. The National Security Council will also be contributing to the report. It is due on July 23. Reports indicate that the White House may declare July 23 as "AI Action Day", to bring attention to the report, and to demonstrate its commitment towards expanding the industry. The U.S. is experiencing record-breaking power demand this year, after almost two decades of stagnation. This is due to the growth in AI and cloud computing data centres across the nation. Demand is leading to new deals between technology companies and the power industry, such as the attempt by Constellation Energy to restart the Three Mile Island nuclear plant in Pennsylvania. This surge in demand has caused concern about electricity shortages and the potential for blackouts. It also slows down Big Tech's global race to dominate artificial intelligent against countries such as China.
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Ministry says that a drone attack has stopped the production of Sarsang oil in Iraqi Kurdistan.
Two drones that caused damage to another oilfield near Erbil overnight were the cause of a drone attack on Sarsang, an Iraqi Kurdistan oilfield. Two engineers said that production was stopped as a precautionary step after an explosion occurred at the Sarsang oil field. The Iraqi Kurdistan Ministry of Natural Resources claimed the blast was caused by a drone. The attack has not been claimed by any group, but Iraqi Kurdistan's security sources have said that preliminary investigations suggest that the drone originated from areas controlled by Iran-backed militias. The Ministry did not provide any further details on what it called "a terrorist act". One oil engineer said that heavy plumes of smoke rose from the Sarsang Field in northern Iraq's Dohuk region. HKN Energy, the field operator, said the production halt was due to firefighters trying to put out the fire. They later added that emergency response teams had contained the damage. The ministry and HKN Energy confirmed that there were no injuries. The company stated that the incident was under investigation, and a full damage assessment had been undertaken. It did not provide any further details on the cause of explosion. Two drones damaged the water pipes in the Khurmala Oilfield, near Erbil, Iraqi Kurdistan on Monday. Reporting by Ahmed Rasheed, Writing by Tala RAMADAN and Nayera ABDALLAH Editing by Louise Heavens & David Goodwin
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Wildfires are fuelled by climate change in Europe
In the past month, wildfires have ravaged hotspots across several Mediterranean countries. The blazes forced thousands to lockdown in Catalonia, Spain and even encroached on Marseille, France's second largest city. What is driving wildfires in Europe and what has happened so far this season? How bad is it this year? According to the European Forest Fire Information System, wildfires have burned 227,000 hectares since the start of the year. This is more than twice the average over the last two decades. Although it is above average, the EFFIS records go back to 2002. Europe experienced particularly bad fire seasons between 2003 and 2017 when more than 110,000 hectares of land was burned in each year. This is equivalent to the size of Jamaica. The fire season will determine if 2025 is a record-breaking year. EFFIS reported that the number of fires has also increased in Europe this year. As of July 8, there were 1,118 fires, compared to 716 during the same period in last year. The heatwaves that swept Europe this month ignited fires all around the Mediterranean. This includes in Syria where, according to U.N., more than 3% the forest cover of the country has been destroyed by fire. Wildfires in Greece's Evia and Crete forced thousands to flee their homes this month. While Europe has seen an increase in fires this year, the scientists who have been observing them say that, while they are destructive, the fires in the Mediterranean area have so far remained relatively isolated. WHAT IS DRIVING THEM? Scientists claim that the Mediterranean region is at a high risk for wildfires because of its hotter and drier summers. Fires can spread quickly and out of control in the Mediterranean region due to its dry vegetation. Climate change increases this risk by creating hotter, drier conditions. This has led to fire seasons starting earlier, causing more land to be burned, and breaking records in terms of intensity. Since pre-industrial times, greenhouse gas emissions, mostly from the burning of coal, oil, and gas, has heated up the earth by about 1.3°C. According to the World Meteorological Organization, Europe has warmed twice as much as the global average in the last 30 years. Heatwaves are also more common due to climate change. The Intergovernmental Panel on Climate Change, the United Nations panel of climate scientists worldwide, has confirmed this. Rest of Summer The countries are preparing themselves for more intense fires. EFFIS forecasts warmer-than-average temperatures across Europe in August. This means that fire danger will continue to be high throughout much of Southern and Eastern Europe. EFFIS stated that while Southern Europe will likely see normal rain patterns in August, the rest of Europe could be dryer than usual. This could increase the risk of fires in other areas. The governments are trying to adapt. Greece has gathered a record number of 18,000 firefighters in anticipation for severe fires. The government said that they have adapted their firefighting techniques and patrols to try to detect fires sooner and limit damage. Forest management is another factor that increases fire risk. As people migrate to the cities, rural populations are shrinking in countries like Spain. This has left fewer workers to clear vegetation to prevent forest fires from accumulating fuel. The U.N. has called on governments to focus more on prevention than just responding to fires that have already broken out. It has also warned that climate changes are expected to increase global extreme fires by as much as 14% by the year 2020. The U.N. stated that fire prevention includes setting controlled flames before the summer season to remove fuels on which blazes feed, as well as restoring peatland and wetlands ecosystems.
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Gold prices rise as tensions in the trade wars boost demand for safe-haven assets; US CPI data is in focus
Tuesday, gold prices rose as investors looked forward to a key U.S. Inflation reading. Investors were also concerned about the global trade conflict. By 0816 GMT, spot gold was up 0.5% to $3,361.39 an ounce. U.S. Gold Futures rose 0.3% to $3370.40. The U.S. Dollar was down by 0.1%, which made gold more affordable for buyers of other currencies. Han Tan, the chief market analyst of Nemo.Money, said: "Gold is moving higher as bulls take advantage today's dollar which is slightly lighter." Gold is supported by many factors including the expectation of Fed rate cuts and U.S. president Donald Trump's threats to impose tariffs, as well persistent geopolitical, economic, and political risks. The European Union accused the U.S. on Monday of resisting attempts to strike a deal on trade and warned that countermeasures would be taken if an agreement was not reached in order to avoid the punishing duties Trump had threatened to impose beginning August 1. Trump escalated his war of trade on Saturday by announcing that he would impose a 30% tax on the majority of EU and Mexican imports. He had previously issued similar warnings to trading partners. The U.S. Consumer Price Index (CPI) Report, which is due at 1230 GMT today, may give investors additional guidance about the Federal Reserve's future policy. The Fed is hesitant to resume rate cuts because the U.S. consumer price index likely increased in June. This could be the beginning of the long-anticipated increase in inflation caused by tariffs. The markets currently expect 48 basis point rate cuts to be implemented by the end this year. This will begin in October. Silver spot gained 0.5%, to $38.31 an ounce. It had reached its highest level since Sept. 2011 on Monday. Nitesh Sha, a commodities strategist at WisdomTree, said that if the current ratio of gold to silver prices is maintained and gold prices are above $3,440/oz we will see silver over $40/oz. Palladium dropped 0.3% to 1,189.69, and platinum rose 0.2%. (Reporting by Anushree Mukherjee in Bengaluru; Editing by Harikrishnan Nair)
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Trade talks and US data have helped most Gulf markets to gain an advantage over the US.
The major Gulf stock markets rose early on Tuesday, ahead of U.S. data on inflation due later that day. This indicates investors' positive outlook for talks between Washington and major trading partner countries. After threatening to impose 30% tariffs on imports from Mexico and the European Union from August 1, U.S. president Donald Trump indicated he would be open to discussion on tariffs. The Yomiuri reported that the Japanese Prime Minister Shigeru Shiba is planning to meet with U.S. Treasury Sec. Scott Bessent this Friday. Investors will also be watching for U.S. consumer prices for June due Tuesday. They are looking for any upward pressure in the price of goods from tariffs, which could influence U.S. Federal Reserve rate decisions. As most regional currencies are pegged with the U.S. Dollar, the Fed's actions will have an impact on the monetary policy of the Gulf region. Dubai's main stock index rose 0.7%. This was led by the 2.7% increase of top lender Emirates NBD, and a 1.4% rise in blue-chip developer Emaar Properties. Abu Dhabi Commercial Bank jumped 6%, a 0.7% increase, while the Abu Dhabi index rose by 0.7%. According to LSEG, the lender, which is third largest in terms of asset volume within the Gulf, reported a net profit for the second quarter of 2,32 billion dirhams ($631.65 millions), exceeding both analysts' expectations and their consensus estimates. The Qatari index rose 0.1% thanks to a 0.4% increase in the petrochemical manufacturer Industries Qatar. Doha Bank, however, fell by 0.7% despite reporting a rise in its first-half profits. Saudi Arabia's benchmark stock index fell 0.3% due to a drop of 0.6% in the oil giant Saudi Aramco. Oil prices, a major factor in the Gulf's financial market, fell after Trump set a 50-day deadline to Russia for it to end its war with Ukraine and avoid sanctions. This eased supply concerns. ($1 = 3.6729 UAE Dirham) (Reporting and editing by Joe Bavier in Bengaluru)
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US planes and cars, as well as drinks, are on the EU's list of potential tariffs
The European Commission is proposing to impose tariffs if trade talks with Washington fail to produce an agreement. This is the second package put forward by European Commission which oversees the trade policy of the 27 nation European Union. The package is intended to counter U.S. car and auto parts tariffs and a 10% baseline tariff. The U.S. president Donald Trump is now threatening to impose a 30% baseline tariff on EU imports starting August 1. European officials claim that this level is unacceptable, and it would stop normal trade between the two largest markets in the world. The list was sent to EU members and seen on Tuesday. It covers U.S. imports of goods worth $84.1 billion. The list also includes agricultural and food products, including a variety of fruits and vegetables as well as wine, beer, and spirits, worth a combined total of 6.35bn euros. The first package of 21 billion Euros worth of U.S. goods approved in April was immediately suspended for the purpose to negotiate. This suspension has now been extended until August 6. EU officials stated on Monday they are still trying to reach a deal in order to avoid Trump’s tariffs. However, EU Trade Chief Maros SEFCIOC said that member states have agreed to countermeasures should talks with the U.S. fall through. In May, the Commission first presented the second package for public consultation. The proposal at the time concerned 95 billion euros worth of goods from the United States. The proposal has been reduced, but the majority of its main elements have not changed. The EU has not set a date to approve this package. Reporting by Philip Blenkinsop, Editing by Joe Bavier.
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Positive economic data and improved Australia-Ties help Iron Ore recover from its early losses
The price of iron ore futures rebounded Tuesday after a series of positive economic reports and the strengthening of ties between Australia, the world's largest producer and China, its top consumer, outweighed the persistent weakness in China’s property market. The September contract for iron ore on China's Dalian Commodity Exchange traded 0.13% higher, at 767 Yuan ($106.91). As of 0726 GMT, the benchmark August iron ore traded on Singapore Exchange was down by 0.84% to $98.75 per ton. China's Q2 Gross Domestic Product (GDP) grew by 5.2% compared with the same period last year. Meanwhile, June industrial production grew 6.8%, exceeding analyst expectations despite U.S. Tariffs. In a Tuesday meeting, Chinese President Xi Jinping vowed to expand the free trade and deepen cooperation between his country and Australia's Prime Minister Anthony Albanese. Albanese travelled to China with executives of mining giants Rio Tinto BHP, and Fortescue who met Chinese officials in the steel industry on Monday. In a recent note, analysts at ANZ stated that "strong steel production, healthy margins and low inventories of steel appear to have encouraged mills to restock their raw materials." ANZ said that the gains are limited, however, by the concern that authorities will continue reducing steel capacity. Market sentiment remained tempered despite the positive data on growth. In June, China's new-home prices experienced their biggest monthly drop in eight months. This reflects the continued weakness in the real estate sector. China's crude output of steel in June was down 3.9% on the previous month and 9.2% on an annual basis as steelmakers maintained equipment. In addition to the high temperatures in northern Europe and the heavy rains in eastern and southern Europe, outdoor construction was limited, which reduced the demand for steel. Coking coal and coke, which are used to make steel, also fell on the DCE. They were down by 0.38% and 0.85%, respectively. The Shanghai Futures Exchange saw a general decline in steel benchmarks. The rebar fell by 0.54%. Hot-rolled coils dropped 0.31%. Wire rods declined 2.13%. Stainless steels gained 0.08%. ($1 = 7.1745 Chinese yuan). (Reporting and editing by Rashmi Liew)
Iron ore prices fall as China's property data is sluggish
The price of iron ore futures fell on Tuesday, as the persistent weakness of China's real estate sector dampened investor confidence. Meanwhile, a decline in crude steel production and weather-related disruptions further affected steel consumption.
As of 0250 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.07% lower. It was 765.5 Yuan ($106.75).
The benchmark iron ore for August on the Singapore Exchange fell 0.59% to $99 per ton.
China's new-home prices fell the most in June since eight months. This reflects a continued slowdown in the real estate sector.
China's crude output of steel in June was down 3.9% on the previous month and 9.2% year-onyear, as steelmakers performed more equipment maintenance.
As a result of the high temperatures in northern Canada and the heavy rains in eastern and southern United States, outdoor construction was limited, which in turn reduced the demand for steel.
In a recent note, analysts at ANZ stated that "strong steel production, healthy margins and low inventories of steel appear to have encouraged mills to restock their raw materials."
ANZ said that the gains are limited, however, by the concern that authorities will continue reducing steel capacity.
China's Q2 Gross Domestic Product (GDP) grew by 5.2% from the previous year. Meanwhile, June industrial production grew 6.8%, exceeding analyst expectations despite the U.S. Tariffs.
Hexun Futures, a broker, reported that iron ore shipments from Australia and Brazil, two of the world's top producers, were mixed. Australia's shipments declined due to maintenance in some ports while Brazil's shipments recovered significantly.
Coking coal and coke, which are used to make steel, also fell on the DCE. They were down by 0.16% each and 0.59 % respectively.
All steel benchmarks at the Shanghai Futures Exchange fell. The price of rebar fell by 0.35%. Hot-rolled coil dropped by 0.21%. Wire rod was down 1.37%. Stainless steel dropped 0.04%. ($1 = 7.1712 Chinese yuan). (Reporting and editing by Rashmi Liew)
(source: Reuters)