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After Fed's much-anticipated rate cut, US yields drop and stocks edge lower
The world stock market edged down in choppy trades on Wednesday, while U.S. Treasury yields dropped across the board after the Federal Reserve announced a much anticipated interest rate cut. It also signaled the beginning of a new easing policy cycle. The Fed has cut interest rates by a quarter percentage point, and it indicated that borrowing costs will continue to be reduced for the remainder of this year. Only new Governor Stephen Miran, who joined the Fed on Tuesday and is on leave as head of the White House's Council of Economic Advisers, dissented in favor of a half-percentage-point cut. The Dow Jones Industrial Average rose 0.56%, while the S&P 500 fell 0.31% to 6,585.98. The Dow Jones Industrial Average increased 0.56% to 46 014.88, while the S&P 500 dropped 0.31% at 6,585.98, and the Nasdaq Composite fell 0.70% to 22,162.03. MSCI's global stock index fell 0.14%, to 975.41. It is now a fraction of its previous record high. The yield on the benchmark 10-year U.S. note fell by 1.5 basis points, to 4.009%. The yield on the 2-year note, which is usually in line with Fed interest rate expectations, fell by 1.5 basis points to 3,495%.
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UN increases financial support for poorer countries at COP30 amid hotel crisis
In light of the rising costs of accommodation in Belem, an Amazonian city, the U.N. is giving low-income countries additional money to attend COP30. This global climate summit will take place in Brazil in November. Brazil has resisted the calls for the conference to be moved from Belem. President Luiz inacio Lula da So did not want to renege on his promise to show the Amazon rainforest at COP30. A spokesperson for the U.N. Climate Secretariat informed that the International Civil Service Commission of the U.N., which makes decisions on the "daily allowance", has agreed to increase it for Belem. According to a press release from the Brazilian COP30 Presidency, the allowance for 144 developing nations has increased to $197. It was previously $144. The allowance is for two or three delegate per country and 374 total delegates. The UNFCCC and Brazilian representatives met on Wednesday to discuss the acute accommodation crisis that has arisen as hotels charge 10 to 15 percent more than their normal rates during conference periods. The annual U.N. Summit will bring together nearly every government to discuss how to combat climate change. Pre-summit discussions have been dominated by concerns over logistics rather than global climate policies. The Developing Countries have said that they can't afford the high accommodation rates in Belem, due to a shortage of rooms. Brazil is rushing to increase the number of hotel beds to accommodate the approximately 45,000 attendees expected at COP30. The company says that developing countries can get more affordable accommodations at a daily rate of up to $200. According to the Brazilian government, less than two months prior to the conference, only 79 nations have made reservations via the official COP30 Platform or other means. 70 countries are still in negotiation. Usually, the annual COP talks involve around 200 countries. (Reporting from Brasilia by Lisandra paraguassu; additional reporting in Brussels by Kate Abnett. Editing by PhilippaFletcher.
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Africa's climate funds are sucked dry by military spending
Climate change is a cost of military spending African leaders prefer grants to loans The private sector is called upon to step up Kim Harrisberg and Joanna Gill African leaders, researchers, and activists made a call to international donors at the second African Climate Summit in Ethiopia, last week. They asked them to help the continent withstand flooding, droughts, and heatwaves. "We are now living in a world where security measures have become prevalent in finance," said Patrick Verkooijen. He is the president of the Global Center on Adaptation, which has offices in Kenya and the Netherlands, and also leads the Africa Adaptation and Acceleration Programme (AAAP). Since 2021, the AAAP has invested billions of dollars in adaptation projects, from mangrove restoration along West Africa’s coastline to organic material recycling in Nairobi. According to the World Meteorological Organization, Africa is the continent that has been most affected by climate change despite its contribution of less than 10% in global carbon emissions. The summit announced the second phase of their adaptation programme, and invited international partners to assist in reaching the goal of $50 billion to expand efforts against climate change. The funding competition has risen due to a reduction in global humanitarian aid, and an increase in defense spending by the United States in Europe. Macky Sall is the chairperson of the Global Center on Adaptation and was the president of Senegal between 2012-2024. According to the research organization Climate Policy Initiative (CPI), Africa needs about $70 billion annually to meet adaptation targets. CPI estimates that this figure will drop to $14.8 billion in 2023 as aid is cut by donors. According to the Stockholm International Peace Research Institute, global military spending has increased across all regions, reaching $2.7 trillion by 2024, up 9.4% on 2023. This is the highest growth rate since the Cold War, and the 10th consecutive annual increase. Florian Krampe is the acting director of SIPRI's Climate Change and Risk Program. He also added that recent violations of Polish and Romanian Airspace during Russian attacks against Ukraine have highlighted the importance. Climate change could intensify the competition for resources, and increase conflict risk in fragile areas. Defence spending should therefore take this into consideration. Krampe suggested that defence departments budget for innovative environmental technologies to ensure long-term resilience of both militaries as well as civilians. Water harvesting is one example. In arid areas, water vapour can be extracted from the atmosphere to provide drinking-water for troops. This innovation could also benefit civilians. ADAPTATION AS AN INVESTMENT The GCA called upon the private sector in order to fill the funding gap for climate adaptation. GCA cites as examples of adaption methods the planting of trees, construction of flood barriers, or desalination plant investments that create jobs and invest in development. The World Resources Institute (a non-profit research organization) found that, for every dollar invested in adaptation over ten years, more than $10 in benefits can be generated. Verkooijen cited a report from Singapore's sovereign fund, which said that investment in adaptation initiatives was a $4 trillion opportunity worldwide. He said African countries should take advantage of this. In Asia, private sector adaptation financing is about 35%. In Africa, it is 6%," Verkooijen said. Attendees of the summit also placed a high priority on the type of investments that would support Africa in its readiness to deal with climate shocks. United Nations data shows that the combined debt load of African countries is more than $1.8 trillion. According to the Institute for Economic Justice, this means that they spend three times as much on servicing their external debt as they do on climate finance. In a press release, Nafi Qarshie, Africa Director of the Natural Resource Governance Institute, said that African states should push for more equitable (financing) models at the COP30.
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Tinubu, the Nigerian president, lifts the emergency rule in oil rich Rivers State
Bola Tinubu, the Nigerian president, lifted an emergency rule of six months in Rivers State on Wednesday, reinstating Governor Siminalayi Fubara, and other officials. He had said that a crisis constitutional that had paralysed government had been resolved. The emergency rule was imposed on 18 March following a standoff that occurred between Fubara, the governor of the state and the legislature. This conflict disrupted the budget approvals leaving the government in limbo. Tinubu claimed that the emergency rule was necessary to avoid anarchy. Rivers State is located in Nigeria's oil-producing Niger Delta and is a major hub for crude exports. The militants have targeted pipelines before, which has affected output and revenue. Tinubu stated that intelligence reports indicated a "groundswell" of a new understanding among political stakeholders. This would pave the way for democratic governance to return. The governor, his assistant, and the House of Assembly, which consists of 31 members, are expected to return to work on September 18. The declaration of emergency triggered over 40 legal challenges across Abuja Port Harcourt, and Yenagoa. Tinubu justified the emergency declaration as a constitutional instrument to restore order and said dissent is part of democratic practice. (Reporting and editing by Chijioke Ahuocha.)
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Copper falls to a one-week low before US Fed rate decision
The price of copper fell to a new low on Wednesday, as traders reduced their positions in anticipation of the Federal Reserve's decision on U.S. rates. Meanwhile, the demand for metals from China - the world's largest consumer - was muted due to the recent rally. The benchmark three-month copper price on the London Metal Exchange dropped 1.3% by 1600 GMT to $9,999 per metric ton, but remained above the 21-day moving median, which keeps it at $9.912. Metal, which is used for power and construction, reached its highest level in 15 months on Monday, at $10,192.50. Alastair Mudro, Marex's senior base metals analyst, said that China has been offering copper this week. It was the absence of a systematic bid, and even bearish mean-reversion sell signals that triggered weakness in the complex. State data released on Wednesday showed that China's copper output rose 15% in August compared to the previous year. Neil Welsh, Britannia Global Markets' head of metals, said that traders are waiting for clarity from the Fed, not only on the rate reduction expected, but also the direction of the future policy. The dollar is down about 10% for the year to date and the labour data has softened. Traders are looking for signs that this could be the start of a series. Aluminium, among other LME metals fell 1.1%, to $2,686 per ton. The price of aluminium reached a new six-month record of $2,720, on Tuesday. This was when the spread between the cash contract and the three-month contract increased to $16 per ton. It was the highest level since March. This was a sign of tightness within the LME during the current settlement period, as short positions holders were forced to reduce or rollover their contracts. The premium for buying aluminum tomorrow and selling it a day later - also known as tom next - fell to $2 per ton on Tuesday. From Tuesday's $13 per ton, the price has dropped to zero. According to LME data, there was a long position holder who held more than 40% open interest in LME September Futures. There were also several short positions. LME zinc fell 1.7% to 2,941, while lead climbed 0.2% to $2,000, tin dropped 1.4% to $34,380 and nickel declined 0.1% to $15,405. (Reporting and editing by Ed Osmond, Vijay Kishore and Amy Lv. Additional reporting by Amy Lv.
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Gold prices ease after reaching record highs, Fed rate decision looms
Investors locked in profits on Wednesday after gold prices had risen to $3,700 in the previous session. The Federal Reserve policy decision is now in focus. As of 10:49 AM EDT (1449 GMT), spot gold was down by 0.1%, at $3,685.39 an ounce. It had hit a record-high of $3,702.95 per ounce on Tuesday. U.S. Gold Futures for December Delivery dropped by 0.1% to $3720.70. After retreating the previous session, the U.S. Dollar grew a little. Gold priced in greenbacks is less attractive to other currency holders due to a stronger dollar. The recent gains in gold are putting "some pressure on the price of gold" ahead of FOMC. Jim Wyckoff is a senior analyst with Kitco Metals. He said that fundamentals and technicals are still bullish on gold. The next price target is $3,800. A major price target would be $4,000 in the future. At 2 p.m., EDT, the most political Fed meeting in recent years will conclude. The speech of Chair Jerome Powell will follow. The markets are pricing in a rate cut of a quarter point. The focus will be on whether officials discussed a 50-bps reduction, given that President Donald Trump’s economic overhaul initiative raises new questions about the independence of the central bank. When interest rates drop, gold is often more attractive as the lower yields reduce the cost of holding this non-yielding investment. While raising its gold forecast, Deutsche Bank said that even though the bullion had screened as richer than fair value, it was largely due to strong official demand which is expected continue. In India, a key hub, the supply of used gold coins and jewellery, which is usually released when investors make profits, has been limited as many people expect prices to rise. Silver spot fell by 1.3%, to $42, platinum dropped 1.3%, to $1372.26; and palladium slid 1.5%, to $1158.88. (Reporting and editing by Shreya biswas in Bengaluru, Ashitha Shivaprasad in Bengaluru)
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Democratic lawmakers call on Trump to abandon plan to eliminate vehicle emission standards
In a letter seen by, 102 Democratic members of the U.S. House of Representatives urged the Trump Administration to drop plans to repeal vehicle emissions rules. In a letter, led by Representative Doris Matsui, 102 members of Congress called on the Environmental Protection Agency (EPA) to abandon its plan to repeal all greenhouse-gas emission standards for heavy-duty, light-duty and medium-duty engines and vehicles. In a letter to the editor, the lawmakers stated that repealing vehicle pollution standards could hamstring the growing automotive industry by killing thousands of well-paying American. The EPA didn't immediately comment. If we turn away from clean vehicles "The next generation of American cars will be more expensive to maintain and repair, due to the new technologies," said the letter, which was also signed by Representatives Rick Larsen and Alexandria Ocasio Cortez. According to the letter, EPA's analyses "suggest that the proposal to remove vehicle pollution standards could result in $1.3 trillion of lost fuel and maintenance savings." Trump's administration has attacked vehicle environmental regulations on several fronts. Trump signed the Environmental Protection Act in June. A resolution of disapproval is a Congressional Resolution. Review Act to prohibit California's landmark Plan to end the sales of gasoline-only cars by 2035, and two other vehicle regulations. NHTSA has released its June 2016 NHTSA Report. Fuel economy in the U.S. is now more flexible By declaring that the former president Joe Biden’s administration exceeded their authority, by assuming a high uptake in electric vehicles when calculating rules. Trump has also signed legislation eliminating penalties Automakers who fail to meet U.S. Fuel Economy Standards as far back as 2022. The EPA announced in July that it would be implementing a new program to help reduce the number of EPA-related deaths. The long-standing Finding that greenhouse gas emission endanger the health of humans, removing all legal foundations for U.S. regulations on greenhouse gases, which would mean a complete end to current limits in greenhouse gas pollution coming from vehicle exhaust pipes, power plants and smokestacks. (Reporting and editing by Lisa Shumaker, Franklin Paul, and David Shepardson)
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Ukraine and US Launch Fund for Critical Mineral Projects with $150 Million Investment
Officials said that Ukraine and U.S. International Development Finance Corporation each will commit $75 million towards a joint fund as part of Kyiv’s mineral deal with Washington, first signed in April. In a press release, Prime Minister Yulia Shvyrydenko stated that the U.S. Development Finance Corporation has committed $75 million as a pilot project. Ukraine will match this amount. DFC stated that the investment will support Ukraine's economic recovery, and also strengthen U.S. supply chains for natural resources. Svyrydenko stated that the initial focus will be on energy, infrastructure and critical minerals. In April, Ukraine and the U.S., who had been promoted to do so by President Donald Trump signed a deal that gave the United States access to new Ukrainian mineral projects in exchange of investment. Since the Russian invasion of February 2022, the U.S. is Ukraine's largest military donor. Trump has said that after his return to the White House in this year, the U.S. must get something back from its aid to Kyiv. The fund would receive half of the revenues Ukraine earned from the new mining extractions under the agreement, with profits being split between Kyiv & Washington. Three large-scale government projects are planned to be implemented by the end of 2026. "American partners pay particular attention to gas project," Economy Minister Oleksiy Solobolev said, adding that these projects could be implemented faster than minerals exploration. This month, DFC's team visited Ukraine to scout for potential projects. Sobolev stated that the delegation visited sites in central Kirovohrad, which had deposits of zirconium and titanium ore. The EU considers 22 minerals in the Ukraine to be critical for industries like defence, high-tech devices and green energy. The country also has ferro alloys, which are needed in the steel industry and non-ferrous materials used in construction. It also contains some rare earths. (Reporting and writing by Yuliia Dyesa; Editing by Bernadette B. Baum)
The global trade situation is further complicated by the contradictory statements of US and China.
In an interview published Friday, U.S. president Donald Trump claimed that tariff negotiations with China were in progress, but Beijing denied there were any talks taking place. This is the latest in a string of contradictory signals about what progress has been made in de-escalating a trade conflict that threatens to sap global economic growth. Trump told TIME that talks were underway and that Chinese President Xi Jinping called him. He repeated this claim to reporters on his way out of the White House to Rome for the funeral service of Pope Francis.
China responded in a statement from its foreign ministry posted by the Chinese embassy in the U.S., "China and the U.S. have NOT been in consultation or negotiations on #tariffs." "The U.S. shouldn't be creating confusion."
Speaking to reporters on Air Force One, Trump said that it would be a great win for the United States if China opened its markets to U.S. goods and that tariffs might help make this happen.
"Free China. "Let's go into China and work it," he said. "That would be fantastic. It would be great, but I am not sure I will ask for it. They don't want the door open.
The back and forth added to the uncertainty over the current state of play regarding Trump's erratic policy. Not only in regards to China, but as it pertains the dozens countries scrambling for their own deals to relieve the burden of hefty import tax he unleashed after returning to the White House.
His team of negotiators conducted what was a lightning round trade talks with the foreign officials that had flooded Washington this week to attend the spring meetings for the International Monetary Fund (IMF) and World Bank Group.
While Trump officials, including Treasury Secretary Scott Bessent, touted signs of rapid progress, their counterparts, such as the finance chiefs from the IMF, were more circumspect. They were also urged to return home urgently in order to reduce the risk posed by the tariffs.
Paschal Donohoe, Irish Finance Minister, said: "I am walking away from these meeting with a clear understanding of what is at stake, and the risks there are for jobs, growth, and living standards around the world." The meetings here reminded me why we must leave no stone unturned over the next few months and weeks to find ways to reduce uncertainty.
DE-ESCALATION
There were some signs of de-escalation, even though it was unclear whether or not deals would be struck to prevent the imposition of higher tariffs in early July. China has exempted certain U.S. products from its high tariffs. Business groups claim that Beijing allowed U.S. pharmaceuticals to enter China without paying the 125% duty it imposed in response to Trump’s 145% tariffs.
A list of 131 categories of products that are allegedly being considered for exemptions is also circulating in some business and trade groups. The list includes chemicals, vaccines and jet engines. China has yet to make a public statement on the matter. Trump's administration also signaled in recent days that it was looking to defuse tensions with China. Bessent said both sides view the current situation as untenable. Trump also told reporters in the White House that an agreement with Japan was close. Analysts see this as a test case for other bilateral agreements, even though the talks may be difficult. Many expect Shigeru Shiba, the Prime Minister of Japan, and Donald Trump to announce an agreement when they meet in Canada at the G7 Summit in June.
Trump told TIME he made "200 deals", which he said would be finished in three to four weeks. He declined to give specifics. He said that if tariffs remained between 20% and 50% in a year, he would call it a victory.
Trump has claimed that his thickets of trade barriers would revive U.S. Manufacturing Industries that have been hollowed by global competition.
However, economists warn that this would increase prices for U.S. customers and the risk of recession. U.S. stock indexes are on track to gain a week, even though they have fallen by about 10% since Trump took office in January. They lag other countries' indexes, and the dollar is falling at an unprecedented pace. The dollar rose for the first time in over a month on Friday, while European and Asian shares were headed to a second consecutive week of gains. Investors took comfort from signs that the U.S. was willing to end its trade war with China. Wall Street's major indexes grew slightly as investors sought clarity on the U.S./China trade front.
Trump has imposed additional tariffs on autos, steel and aluminum in addition to country-specific duties. Trump has also proposed additional levies for the pharmaceutical and semiconductor industries. According to industry estimates, this could lead to a 12.9% increase in drug prices across the U.S.
The tariffs of Donald Trump dominated the IMF meetings in this week. Finance ministers vied for one-on-1 meetings with the U.S. Treasury secretary. Bessent described the initial talks with South Korea on Thursday as "very succesful." Seoul referred to it as a "good beginning." Next week, further discussions will take place. Switzerland said that it was also satisfied with the initial meeting between Bessent and Switzerland. The U.S. Trade Office said that it was "constantly engaging" with Japan and others, but Trump would decide whether or not they proceed. The IMF's Kristalina Gheorgieva warned that the lack of progress in other countries could lead to a serious slowdown of global growth. Reporting by Bureaus Worldwide; Writing by Andy Sullivan, Dan Burns and Editing by Chizu Nomiyama, Marguerita Choy
(source: Reuters)