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Coking coal withdraws from profit-taking activities
The prices of coking coal futures fell in China on Monday as investors liquidated their long positions in order to take advantage of the dramatic price rise. Dalian Exchange decided to limit its positions after a dramatic price increase. As of 0257 GMT, the most traded coking coal at China's Dalian Commodity Exchange dropped by 7%. It was now trading for 1,150 yuan (about $160.43) per metric ton. Coke fell by almost 6%. The Dalian Exchange's announcement comes after the price for coking coal rose by 33% over the last week. This was fueled by expectations that the supply would be reduced after the National Energy Administration had ordered mine inspections to check whether there were any excesses. After the Dalian Exchange imposed restrictions on holding positions, some investors liquidated their long positions in order to avoid risks, resulting in an abrupt price drop, said Zhou Tao. An analyst with broker Galaxy Futures. Iron ore, an important ingredient in steel production, also weakened, although at a slower pace, as investors waited for clear signals from the high-level Politburo meetings that will take place by the end of July, and the new trade talks between China and the United States. The September contract with the highest volume traded was down 0.56% at 795.5 Yuan per ton. Meanwhile, the benchmark September Iron Ore at the Singapore Exchange fell 0.47% to $102.8 per ton. The benchmarks for steel on the Shanghai Futures Exchange have stagnated. Rebar fell 1.27%, while hot-rolled coils dropped 1.41%. Wire rod dropped 2.9%, and stainless steel declined 0.62%.
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Beijing evacuates 4,400 people as rains increase
Authorities said that heavy rains intensified in Beijing and the surrounding provinces of northern China, increasing the risk of disasters such as landslides, flooding and mudslides. They relocated over 4,400 people. CCTV reported that flash floods, landslides and massive rains continued to hit the northwest suburb of Miyun, Beijing, causing flash flooding and other problems. Many villages were also affected. Images shared on China's Wechat application showed the flooding of roads in Miyun, where trucks and cars were floating. The water level had reached such a high level that it submerged a part of a residence. In recent years, the north of China has experienced record rainfall, which puts densely-populated cities like Beijing at risk of flooding. Scientists attribute the increase in rainfall in China's normally arid north region to global warming. These storms are a part of a larger pattern of extreme weather in China caused by the East Asian Monsoon. This has led to disruptions for the second largest economy of the world. CCTV reported on Monday that Xiwanzi Village, in Shicheng Town near Miyun Reservoir was severely affected. An additional 100 villagers were transferred to a school as shelter. Beijing authorities announced on Sunday that the peak flood flow in the Miyun Reservoir had reached a new record of 6550 cubic metres per second. Videos from the state media in Shanxi Province, a neighbouring province, showed roads submerged by strong currents. Authorities in Beijing's Pinggu District have sealed two sections of high-risk roads. The People's Daily reported that authorities are conducting search and rescue operations in cities across China, including Datong. A driver of a Ford vehicle lost contact with his car while driving through the floods. China's Water Resources Ministry issued flood warnings for 11 provinces, including Beijing and the neighbouring Hebei region, due to small and midsize river flooding and mountain torrents. CCTV reported on Sunday that two people were dead in Hebei Province and another two are missing. Fuping, a city in Baoding's industrial district, received a record-breaking 145 mm (5.8 inches) of rain per hour overnight. China's National Development and Reform Commission announced on Monday that they were urgently arranging for 50 million yuan (6.98 million dollars) to help Hebei. The money will be used to repair roads, bridges, embankments for water conservation, schools, and hospitals within the disaster zone. The NDRC stated that it "promotes the restoration of normal production and life as soon as possible." Chinese authorities closely watch extreme rainfall and severe floods as they threaten to displace thousands and wreck havoc on China’s $2.8 trillion agriculture sector. $1 = 7.1675 Chinese Yuan Renminbi (Reporting and editing by Farah master and the Beijing Newsroom)
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Euro firms and stocks rise after US-EU trade deal
The euro strengthened on Monday, after a US-EU trade agreement lifted the mood and provided some clarification in the week of important policy meetings between the Federal Reserve Bank of Japan and the Federal Reserve. A week after agreeing on a trade agreement with Japan, which lowered proposed auto import tariffs, the U.S. has struck a framework deal with the European Union. The U.S. will impose a 15% tariff on the majority of EU goods, half the rate that was threatened. The U.S. president Donald Trump has set a deadline of August 1, and countries are scrambling for trade deals to be finalised before that date. Talks between the U.S., China will take place in Stockholm on Monday amid hopes of extending the 90-day truce between two of the world's largest economies by another 90 days. Prashant N. Newnaha, senior Asia-Pacific rate strategist at TD Securities, said: "A 15% tariff against European goods, the forced purchase of U.S. military and energy equipment, and zero tariff retaliation from Europe is not negotiation. That's art of deal." "A huge win for the U.S." S&P 500 Futures rose by 0.4%, while Nasdaq Futures gained 0.5%. The euro strengthened against the dollar sterling and the yen. European futures soared by nearly 1%. MSCI's broadest Asia-Pacific share index outside Japan rose 0.27%. This was just a hair short of the nearly four-year-high it reached last week. Japan's Nikkei index fell 0.8%, after reaching a record high one year ago. The baseline tariff of 15% is still considered by many to be too high in Europe, but it's better than the 30% rate that was threatened. The U.S. and EU deal gives clarity to businesses, and averts a larger trade war between these two allies who account for almost a quarter of global trade. Marc Velan is the head of investments for Lucerne Asset Management, a Singapore-based asset management firm. He added that "markets interpret this as a return to predictability and stability in trade policy." "The China delaying fits the same pattern - the administration has chosen controlled diplomacy to avoid confrontation." Hong Kong's Hang Seng index rose 0.75%, while China's blue chip stocks gained 0.3%. The Australian dollar was trading at $0.657 and hovering near the peak reached last week, which is a close eight-month high. FED, BOJ AWAIT Investors will be watching closely for the Fed's and BOJ's monetary policy meetings, the U.S. monthly employment report, and the earnings of megacap companies Apple and Microsoft. Investors will need to pay attention to the comments of officials to determine the future interest rate path. The BOJ can now raise rates this year because of the trade agreement with Japan. The Fed will likely be cautious about any further rate cuts, as they are waiting for more data on the impact of tariffs on inflation to see if they can ease them. Trump has repeatedly criticized Fed Chairman Jerome Powell's refusal to cut rates. Two Trump-appointed members of the Fed Board have given reasons to support a rate reduction this month. The PCE index and the July jobs report are likely to shape expectations after this meeting. If inflation continues to decline, the next policy pivot will be pushed to September, said Kieran William, head of Asia FX for InTouch Capital Markets. Oil prices have risen in commodities after the U.S. EU trade agreement. Brent crude futures as well as U.S. West Texas Intermediate crude rose both by 0.5%. Gold prices dropped on Monday, reaching their lowest level in almost two weeks due to a reduced demand for safe-havens. (Reporting and editing by Sam Holmes, Kate Mayberry and Gregor Stuart Hunter from Singapore)
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Gold drops to a near 2-week low after US and EU agree on tariff deal
On Monday, gold prices dropped to their lowest levels in almost two weeks as the framework trade agreement reached between the United States of America and the European Union prior to the deadline for tariffs on August 1, boosted the appetite for risky assets. As of 0208 GMT spot gold was down by 0.1%, at $3,332.18 an ounce. It had reached its lowest level since 17 July. U.S. Gold Futures slipped 0.1% to $3,331.60. The U.S. and the European Union reached a framework agreement on trade on Sunday. It imposed a 15% tariff on the majority of EU goods, half the rate that was threatened. This prevented a larger trade war between these two allies who account for nearly a third the global trade. The agreement did not resolve key issues, such as tariffs on spirit. According to Jigar Trivedi of Reliance Securities' senior commodity analyst, the agreement also lowered the dollar index and provided some relief for gold. The U.S. Dollar Index eased by 0.1% making greenback bullion prices more affordable to overseas buyers. After the agreement, risk sentiment improved with European currencies and U.S. Stock index futures trading higher. Senior U.S.-Chinese negotiators will meet later today in Stockholm to discuss long-standing disputes in economics, hoping to extend the truce that prevented higher tariffs. "In the near term, we do not expect gold to undergo wild swings." Investors have their eyes on a crucial week in U.S. economic data and monetary policy," Trivedi stated. After its two-day meeting, the Federal Reserve is expected maintain its benchmark rate between 4.25% and 4.50%. U.S. president Donald Trump said he met with Powell on Friday and that the Fed chief may be inclined to reduce interest rates. Silver spot was up by 0.2% to $38.23 an ounce. Platinum gained 0.6%, to $1.409.50, and palladium increased 0.6%, to $1.227.76. (Reporting and editing by Subhranshu S. Sahu in Bengaluru.
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US and China to start new talks on tariff truce, easing the path for Trump-Xi Meeting
The top U.S. economic officials and Chinese economic officials are scheduled to resume their talks on Monday in Stockholm to address long-standing economic disputes that have been at the heart of the trade war between two of the world's largest economies. They hope to extend the truce for three months while preventing tariffs from rising sharply. China faces a deadline of August 12 to reach a lasting tariff agreement with the administration of President Donald Trump. Beijing and Washington had reached preliminary agreements in May and early June to put an end to weeks of escalating tariffs, including a ban on rare earth minerals. If there is no agreement, the global supply chain could be thrown into turmoil by U.S. tariffs returning to triple-digit rates that would amount a bilateral embargo. The Stockholm talks follow Trump's largest trade deal to date with the European Union, which was announced on Sunday. It included a 15% tariff for most EU exports into the U.S. including automobiles. The EU will also invest $600 billion in U.S. energy and buy $750 billion of American energy over the next few years. Trade analysts say that a similar breakthrough in the U.S. China talks is unlikely, but a 90-day extension to a tariff- and export-control truce reached in mid-May seems likely. A longer extension would help prevent further escalation, and allow for planning a possible meeting between Trump and Chinese president Xi Jinping at the end of October or beginning of November. A U.S. Treasury spokeswoman declined to comment on a South China Morning Post article citing unnamed sources who said that the two sides will refrain from introducing any new tariffs for 90 days or taking other actions which could escalate the trade conflict. Trump's administration will soon impose new tariffs on China, including those on semiconductors. Pharmacies, ship to shore cranes, and other products. "We are very close to making a deal with China." "We're very close to a deal with China," Trump said on Sunday, before European Commission President Ursula von der Leyen signed the tariff agreement. DEEPER ISSUES The previous U.S.-China talks held in Geneva and London between May and June were aimed at reducing the U.S. and Chinese tariffs from triple digit levels, and restoring flow of Nvidia H20 AI chips as well as other goods that had been halted in the United States. The talks so far have not covered broader economic topics. The U.S. has complained that China's export-driven, state-led model floods the world's markets with cheap products, while Beijing complains that U.S. export controls on technology goods are meant to stunt Chinese economic growth. "Geneva and London really were just trying to get their relationship back on track, so that at some point they could actually negotiate about the questions which are the source of the initial disagreement between the two countries," said Scott Kennedy. He is an expert in China economics at the Center for Strategic and International Studies, Washington. Kennedy stated that "I would be surprised if some of these things were harvested early, but an extension of 90 more days of the ceasefire seems the most likely result." U.S. Treasury secretary Scott Bessent already announced a deadline extension. He also said that he wanted China to rebalance their economy from exports towards more domestic consumption, a goal of U.S. policymakers for decades. Analysts believe that the U.S. and China negotiations will take more time than other Asian nations. China's hold on the world market for rare earth magnets and minerals, which are used in everything from car windshield wiper motors to military hardware, has proven to be a powerful leverage point against U.S. industry. TRUMP-XI MEETING? The background to the discussions is speculation regarding a possible Trump-Xi meeting in late October. Trump said that he would decide on his historic trip to China soon, but a new flare up of tariffs and export control measures could derail the planning. Sun Chenghao is a fellow with the Center for International Security and Strategy at Tsinghua's Center for International Security and Strategy, Beijing. He said the Trump-Xi Summit would give the U.S. an opportunity to lower its 20% tariffs against Chinese products related to fentanyl. He said that in exchange for the Chinese commitment to purchase more U.S. farm goods and other goods by 2020, they could fulfill their 2020 pledge. Sun stated that the future summit of heads of state is a very positive prospect for the negotiations, as everyone wants to achieve an agreement or pave a way ahead. Analysts said that China would likely ask for a further easing of U.S. export controls on high-tech products and a reduction in the multi-layered U.S. duties totaling 55 percent. Beijing argues that these purchases will help reduce the U.S.-China trade deficit, which is expected to reach $295.5 billion by 2024. (Reporting and editing by Diane Craft; David Lawder)
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Stocks celebrate Trump's trade deal after EU agreement
The euro strengthened on Monday, after a trade deal between the United States of America and the European Union lifted the mood and provided clarity during a crucial week that was highlighted by Federal Reserve policy meetings and Bank of Japan meetings. A week after signing a deal with Japan to lower tariffs on automobile imports, the U.S. has struck a framework agreement with the European Union. The U.S. will impose a 15% tariff on the majority of EU goods. The deadline for finalising trade agreements is August 1. Talks between the U.S., China and Sweden are scheduled to take place on Monday amid expectations of a 90-day extension of the truce between these two top economies. Prashant N. Newnaha, senior Asia-Pacific rate strategist at TD Securities, said: "A 15% tariff against European goods, the forced purchase of U.S. military and energy equipment, and zero tariff retaliation from Europe is not negotiation. That's art of deal." "A huge win for the U.S." S&P 500 Futures increased by 0.4%, while Nasdaq Futures gained by 0.5%. The euro strengthened across the board against the dollar sterling and the yen. European futures soared by nearly 1%. In Asia, Japan’s Nikkei fell after reaching a high of one year last week, while MSCI’s broadest Asia-Pacific share index outside Japan rose 0.27%. This was just a fraction shy of its almost four-year-high it reached last week. The baseline tariff of 15% is still considered by many to be too high in Europe, but it's better than the 30% rate that was threatened. The agreement with the EU gives clarity to businesses and prevents a larger trade war between two allies who account for almost one-third of global trade. "Put together, the evidence we have seen with Japan, the EU and the talks that will be held between the U.S.A. and China in Stockholm, this negates the risk of a long-term trade war," said Tony Sycamore. The importance of the August tariff deadline is now significantly diminished. Early trading saw the Australian dollar rise 0.12% to $0.65725, hovering near last week's peak of nearly eight months. FED, BOJ AWAIT Investors will be watching closely for the Fed's and BOJ's monetary policy meetings, as well as the U.S. monthly employment report, and the earnings reports of megacap companies Apple and Microsoft. Investors will need to pay attention to the comments of the officials to determine the future interest rate path. The BOJ can now raise rates this year because of the trade agreement with Japan. The Fed will likely be cautious about any further rate cuts, as officials are awaiting more data before lowering rates. They want to know if tariffs worsen inflation. The tensions between Trump and Jerome Powell, the Fed chair, have increased as a result of Trump's repeated criticisms. Two Trump-appointed Fed Board members have given reasons to support a rate reduction this month. ING economists predict that December will be a likely starting point for rates cuts. However, it could be a cut of 50 basis points if evidence about weaker GDP growth and jobs becomes more evident than we expect. In a note, they stated that "this would be similar to the Federal Reserve’s actions in 2024 where it waited to commit to a low interest rate environment until it felt completely comfortable." (Reporting and editing by Sam Holmes; Ankur Banerjee in Singapore, Gregor Stuart Hunter)
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Oil prices rise as US-EU trade deal boosts optimism
The oil prices increased on Monday, after the U.S. concluded a trade agreement with the European Union. It is also possible that the tariff pause will be extended with China. This reduces concerns about higher tariffs affecting economic activity and fuel demand. Brent crude futures rose 22 cents or 0.32% to $68.66 a bar by 0035 GMT, while U.S. West Texas Intermediate Crude was at $65.38 a bar, up 22cents or 0.34%. Tony Sycamore, IG's markets analyst, said that the U.S. - European Union trade agreement and a potential extension of U.S. - China tariff pause support global financial markets. On Sunday, the United States and European Union reached a framework agreement that will impose an import tariff of 15% on most EU products. This is half the rate threatened. The agreement avoided a larger trade war between the two allies, who account for nearly one-third of world trade and could reduce fuel demand. Senior U.S.-Chinese negotiators are also meeting in Stockholm, Sweden on Monday to try and extend the truce that has kept tariffs from rising sharply before the deadline of August 12. The oil price fell to its lowest level in three weeks on Friday, as concerns about global trade and the prospect of increased Venezuelan oil supplies weighed. Sources at the company said that Venezuela's PDVSA, the state-owned oil company, is preparing to resume its work in its joint ventures with terms similar to those of Biden's licenses once U.S. president Donald Trump reinstates authorizations for its partners, allowing them to export and operate oil through swaps. Although prices rose slightly on Monday, the prospects of OPEC+ easing further supply restrictions limited the gains. The Organization of the Petroleum Exporting Countries (OPEC) and its allies will meet on Monday at 1200 GMT. Four OPEC+ delegates stated last week that it is unlikely the panel will recommend a change to existing plans for eight members to increase oil production by 548,000 barrels a day in August. A second source also said that it is too early to tell. Summer demand helps absorb the extra barrels. JP Morgan analysts reported that global oil demand increased by 600,000 barrels per day (bpd) in July compared to the previous year. Global oil stocks also rose 1.6 millions bpd. As part of the fourth phase of the military operation against Israel in response to the Gaza conflict, the Houthis of Yemen said that they would attack any ships owned by companies doing business with Israeli ports regardless of the nationality of the owners. (Reporting and editing by Christian Schmollinger; Florence Tan is the reporter)
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Beijing evacuates 4,000 people as rains increase
Authorities said that heavy rains intensified in Beijing and other provinces of northern China, increasing the risk of disasters such as landslides, flooding and mudslides. They also relocated over 4,000 people. CCTV reported that flash floods, landslides and massive rains continued to hit the northwest suburb of Miyun, Beijing, causing flash flooding and other problems. Many villages were also affected. In recent years, the north of China has experienced record rainfall, which puts densely-populated cities like Beijing at risk of flooding. Scientists attribute the increase in rainfall in China's normally arid north region to global warming. These storms are part a larger pattern of extreme weather in China caused by the East Asian Monsoon. This has led to disruptions for the second largest economy of the world. CCTV reported on Monday that Xiwanzi Village, in Shicheng Town near Miyun Reservoir was severely affected. An additional 100 villagers were transferred to a school as shelter. Beijing authorities announced on Sunday that the peak flood flow in the Miyun Reservoir had reached a new record of 6550 cubic metres per second. Videos from the state media in Shanxi Province, a neighbouring province, showed roads submerged by strong currents. The People's Daily reported that authorities are conducting search and rescue operations in cities across China, including Datong. A driver of a Ford vehicle lost contact with his car while driving through the floods. China's Water Resources Ministry issued flood warnings for 11 provinces, including Beijing and the neighbouring Hebei region, due to small and midsize river flooding and mountain torrents. CCTV reported on Sunday that two people were missing and two others had died in Hebei Province. Fuping, a city in Baoding's industrial area, received 145 mm (5.8 inches) of rain per hour overnight. Chinese authorities closely watch extreme rainfall and severe floods as they threaten to displacing millions of people and wreck havoc on China’s $2.8 trillion agriculture sector. (Reporting and editing by Michael Perry, Farah master, and the Beijing Newsroom)
Outgunned Europe accepts the least-worst US Trade Deal
The European Union found that it did not have the leverage it needed to force Donald Trump's America to agree to a trade agreement on their terms. So, it signed a deal which it could just about stomach.
The agreement reached on Sunday on a 15% tariff blanket after months of standoff is a reality-check on the aspirations for the European Union, a 27-country bloc of countries, to become a power economic able to compete with the United States and China.
The cold shower feels all the more refreshing, given that for years the EU has portrayed itself to be a superpower in exports and a champion of rules-based trade. This is both for its own soft power as well as the global economy.
The new tariffs that are now being applied will be much more digestible than Trump's threat to impose a 30% "reciprocal tariff" in the next few days.
It will keep the economy in a rut, even though it is preventing a recession. The European Central Bank forecasted last month that the two scenarios would result in 0.5-0.9% growth in this year's GDP compared to just 1% if there were no trade tensions.
This is a point of landing that was unimaginable just months ago, in the pre Trump 2.0 era. The EU and much of the rest world were accustomed to U.S. Tariffs averaging around 1.5%.
Even though Britain and the United States agreed to a 10% baseline tariff in May, EU officials believed they could do more. They were convinced that the EU had the economic weight to stand up to Trump. So, they pushed for a “zero-for zero” tariff pact.
After a few fruitless weeks of talks with their U.S. colleagues, the Europeans finally accepted that 10% was all they could hope for and it took them a couple more weeks to agree to the same baseline of 15% as the United States did with Japan last Thursday.
One senior official who was briefed in a European city on the negotiations last week as they were closing in at around 15% said: "The EU doesn't have more leverage than America, and the Trump Administration isn't rushing things."
This official, along with others, pointed out the pressure coming from Europe's export oriented businesses to clinch a contract and ease the level of uncertainty that is starting to affect businesses like Nokia in Finland and SSAB in Sweden.
"We got a bad deal." One EU diplomat said that this deal was the best play possible under the circumstances. Recent months have shown clearly how damaging uncertainty on global trade can be for European businesses.
What now?
The final agreement reflects this imbalance, or "asymmetry", as the trade negotiators call it.
The EU has not only promised to invest $600 billion in the United States, but also renounce any retaliation. As yet, the timeframe and other details of this agreement are not defined.
The EU concluded that a full-scale confrontation would be more damaging than a series of talks.
The total amount of retaliatory actions that were threatened was 93 billion Euros - less than half the U.S. goods surplus of 200 billion euro.
It is true that a growing number EU capitals are also prepared to imagine wide-ranging anticoercion measures which would have enabled the bloc to target services trade where the United States enjoyed a surplus in the amount of $75 billion last year.
Even then, however, there was not a clear majority in favor of targeting U.S. digital service providers that Europeans enjoy and there are few homegrown alternatives to - such as Netflix, Uber or Microsoft cloud services.
The question remains whether the European leaders will be encouraged to speed up their economic reforms and diversifications of trading partners, to which they have long sworn allegiance but have been hindered by national divisions.
BGA, the German wholesale and export association, described the deal as an uncomfortable compromise that posed an "existential risk" to many of its members. It was time for Europe's reliance on their biggest trading partner to be reduced.
BGA President Dirk Jandura said, "Let's use the last few months as a warning." "Europe needs to prepare for the future strategically - new trade agreements with the largest industrial powers in the world are needed." Mark John, Nick Zieminski and Jan Strupczewski contributed to the reportage in Brussels. Christian Kraemer in Berlin and Maria Martinez were in Berlin.
(source: Reuters)