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As focus shifts to Asian currencies, stocks drift and the dollar stabilizes
The dollar recovered some of its recent losses versus Asian counterparts on Tuesday as investor concerns about U.S. Tariffs and their impact upon economic growth returned. These fears, combined with the pledges of key oil producers to increase supply, kept crude prices near their four-year lows. Since April, the erratic policies of U.S. president Donald Trump has fueled significant waves of dollar sales as investors have shifted away from U.S.-based assets, driving up the euro, yen, and Swiss franc. The record rise of the Taiwan dollar in recent sessions has confirmed that dollar selling is now spreading to Asia. This has led to speculations about a possible revaluation to gain U.S. concessions on trade. The rally was a sign that a major unwinding is underway. It also shed light on a single economy amongst many where large dollar long positions have been built up by exporters and insurance companies over the years due to big trade surpluses. These positions are now being questioned and put on edge. On Tuesday, the focus shifted to Hong Kong where the de-facto central bank purchased $7.8 billion in order to prevent the local currency strengthening and breaking the peg with the greenback. Charu Chanana is the chief investment strategist of Saxo Singapore. She said that Asian FX was where it's at today. If these currencies continue to strengthen sharply, this could cause fears of a "reverse Asian currency crises", with possible ripple effects on the bond market, amid fears that Asian Institutions reassess unhedged Treasury holdings. China's Yuan has strengthened on the mainland to its highest rate since March 20, at 7.23 dollars. On Tuesday, the Taiwan dollar traded at 30.185 dollars for every dollar in the U.S., not far off from its near three-year peak of 29.59 dollars on Monday. The broadest MSCI index of Asia-Pacific stocks outside Japan rose 0.2% despite Japan being closed for the holiday. Taiwan stocks were not much changed. The blue-chip index in China returned to the market after a long holiday. It was up by nearly 1%. Hong Kong's Hang Seng index rose by 0.69%. The European stock futures point to a calm opening in the region, ahead of a scattering of manufacturing data which will likely provide an indication as to the impact of tariffs. U.S. futures also fell. Investors have been focused on the possibility that trade tensions could be eased between the U.S. Investors are left to try and make sense of headlines from the White House, but with little information. Donald Trump, the U.S. president, said on Sunday Washington was meeting with many nations, including China. His main priority in dealing with China is to get a fair deal. Trump imposed a 100% tax on movies made outside of the United States on Monday, but provided little information on the implementation. Saxo's Chanana stated that tariff headlines are driving the market more than anything else. The tactical risk-reward ratio could still tilt to the upside if hard data continues to hold up and sentiment is buoyed by trade deal hopes. Data released on Monday revealed that the U.S. service sector grew in April. Meanwhile, a measure of materials and services paid for by businesses soared to its highest level in over two years. This indicates an increase in inflation pressures caused by tariffs. The Federal Reserve will announce its policy on Wednesday. It is expected that the central bank will keep interest rates unchanged, but the focus of attention will be how policymakers navigate a path characterized by tariffs. Christian Scherrmann is the chief U.S. economics at DWS. "We believe they will adopt a slightly hawkish tone but in a direction more towards an extended pause rather than a possible hike." LSEG data revealed that traders are pricing 75 basis points in easing for this year, with the first possible move in July. Oil prices, which had hit four-year lows the previous session due to OPEC+'s decision to increase output, were stable on Tuesday. The gold price reached a new high of one week on the back of safe-haven demand. (Editing by Sam Holmes & Kate Mayberry).
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Ukraine strikes power station amid reports that Kyiv is attacking Kursk in Russia
The regional governor of Kursk said that Kyiv forces had attacked a substation in the western region of Russia, Kursk, on Tuesday. This came after Russian war bloggers claimed that a new Ukrainian invasion into the area was backed up by armoured vehicles, drones, and other land-based weapons. Alexander Khinshtein, the governor of Kursk, said that power had not yet been restored to Rylsk. The town has a population of 15,000 and is located about 50 kilometers (30 miles) away from the Ukrainian border. Ukrainian forces damaged two transformers at the substation late Monday night, injuring two teens. Khinshtein, on Telegram, said: "Dear Residents, the enemy continues to strike our territory in its pain." The administration of the Kursk Region said early Tuesday that authorities were evacuating local residents as drone attacks from Ukraine became "more common" in the last day. Russian war bloggers claimed that Ukrainian forces had attacked the Kursk area on Monday. They fired missiles and used special vehicles to cross minefields and smash through the border. On Monday, Russian war blogger RVvoenkor said that the enemy had blown up bridges using rockets in the night and then launched an assault with armoured units in morning. "The mine clearing vehicles started to make their way through the minefields. They were followed by armored vehicles and troops. "There is a heavy fight going on at border." The popular Russian military blog Rybar reported on Tuesday that the Ukrainian advance near the settlement of Tyotkino, in the Kursk region across the border failed. In August 2024, Ukraine launched a surprise attack on Kursk to change the momentum after the Kremlin gained control of the situation following the full-scale Russian invasion in 2022. Kyiv hoped that its position in Kursk could draw Russian troops from other parts Ukraine, giving it a bargaining tool with Moscow. Last month, Russia's top military official said that Ukrainian troops were ejected out of Kursk. This marked the end of the largest incursion on Russian territory since World War Two. Russia also announced that it was creating a buffer zone around the Ukrainian region Sumy. Kyiv denies that its troops have been forced to leave. Volodymyr Zelenskiy, the President of Ukraine, said that Kyiv continues to maintain forces in Kursk as well as in the nearby Russian region Belgorod. Pavel Zolotaryov wrote on Telegram, the head of Glushkovo District in Kursk, near the border of Ukraine, that residents were being evacuated from several localities to safer areas. Zolotaryov wrote: "Over the last 24 hours there has been a rise in drone attacks from enemy forces." There have been cases of people being injured or killed, and of homes and civil infrastructure sites being destroyed. Zolotaryov failed to provide any evidence or additional details about the casualties. Could not independently verify report. Ukrainian officials did comment on any progress made on Monday, but prosecutors reported that Russian shelling and guided-bomb attacks on border villages in Sumy Region killed and injured at least three people during the day. In its daily update, the General Staff of Ukraine’s Armed Forces only said that on Tuesday, fighting continued along the Kursk segment of the frontline with Kyiv troops repelling 18 enemy assaults there. Last week, Russian President Vladimir Putin declared a ceasefire lasting three days between May 8-10 in honor of the 80th anniversary since the Soviet Union's victory over Nazi Germany during World War II. Zelenskiy has said that such a move is ineffective and instead called for a ceasefire unconditionally lasting at least 30 consecutive days, in line with the U.S. proposal made in March. Reporting by Guy Faulconbridge; editing by William Maclean. Toby Chopra. Cynthia Osterman. Lincoln Feast.
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Copper rises on US-China dialogue hopes
Prices of copper edged up on Tuesday, as positive signs about U.S. China trade talks boosted the mood. However, lingering worries about the broader impact of trade conflicts limited gains. As of 0332 GMT, the benchmark copper price on London Metal Exchange (LME), was up by 1.2% at $9,479 per metric ton. U.S. Treasury secretary Scott Bessent defended President Donald Trump’s tariffs on Monday, highlighting that his larger agenda, which included tax cuts, will eventually lead to economic growth over the long term. China's Commerce Ministry announced on Friday that Beijing was "evaluating" Washington’s offer to have talks about Trump’s 145% tariffs. The U.S. approached China for talks, and Beijing was ready to hold discussions. This could signal a possible de-escalation of the trade war. A trader stated that "it doesn't appear to be a smooth road for trade talks, and investors are becoming increasingly concerned about the potential negative effects of trade on global economic expansion and metal demand." The U.S. Economy shrank in the first quarter for the first three years amid a flood in imports to avoid Trump's tariffs. And the International Monetary Fund forecasts that the U.S. Gross Domestic Product will only grow by 1.8% in 2025. Other London metals saw aluminium rise 0.8% to $2450 per ton, while zinc rose 1.8% to 2,654, lead increased by 0.5% to 1,943, and tin rose 3.8% to 31,850. Nickel gained 1.4% to 15,700 per ton. The Shanghai Futures Exchange's (SHFE) most traded copper contract rose by 0.4%, to 77 870 yuan per ton ($10 776.36). SHFE aluminium fell by 0.6%, to 19,875 Chinese yuan per ton. Zinc dropped 0.2%, to 22,465 Yuan. Lead declined by 0.9%, to 16,705 Yuan. Nickel rose 0.7%, to 124900 Yuan. Tin was up 0.1%, to 261,960 Yuan. $1 = 7.2260 Chinese Yuan Renminbi (Reporting and editing by Mrigank Dahniwala and Savio d'Souza).
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Dong Fang Offshore Orders Another CSOV from Vard
Vard has secured a new contract with Taiwanese-based Dong Fang Offshore (DFO) for the design and construction of one Commissioning Service Operation Vessel (CSOV), a sister vessel to the two CSOVs ordered in May 2024.After sealing the contract for two CSOVs in May 2024, Taiwanese DFO is adding a third vessel of the same design, the VARD 4 39.The design is the result of collaboration between DFO and Vard.The design gives a highly versatile all-round platform for sustainable wind farm support operations both as a service vessel for the wind farms and for the building and installation phase.Upon delivery, the CSOV will start a minimum 15-year service contract for an undisclosed wind farm customer in Taiwan.The CSOV has been developed with large design flexibility to accommodate future operational demands.The design has focus on low environmental footprint with efficient machinery and propulsion set-up for high station keeping capabilities, improved workability, and operational reliability, and a hull shape that supports the fuel efficient CSOV operation.The 102.7-meter-long vessel, with a beam of 19.5 meters, is further prepared with a large external deck for future integration of a modular power and fiber optic cable lay and repair spread.The design includes a full electrical equipment package as part of a forward-leaning strategy in environmentally friendly design, allowing for the delivery of enhanced reliable operations onboard the ship.This includes a battery package, crane and W2W gangway system. The CSOV is also prepared for future fuels. The vessel has an aggregated hotel capacity of 120 people, whereof 90 is allocated in large single cabins. Operational centers such as offices, briefing rooms, conference room and dayrooms have been designed to meet a high standard in the market.“We are delighted to return to Vard for the construction of the third CSOV is in our series of high performing CSOVs for the Taiwanese market, continuing the strong teamwork and momentum together with the team in Vard Vung Tau.“The vessel design has been developed to specifically address the many unique challenges operating offshore Taiwan, and it is humbling to see another customer place their trust in DFO to deliver long term O&M services, on a solution that we have developed together with Vard.“This order marks the third O&M service contract for an CSOV that DFO has been awarded in Taiwan, continuing the DFO strategy of building ships against high quality contracts with long-term, forward-thinking customers, and cementing DFO’s place as the O&M service provider of choice within Taiwan”, said Polin Chen, CEO of DFO.
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US Gulf Oil Output Could Reach 2.4 million Bpd Despite Geopolitical Instability
The U.S. Gulf of Mexico can continue growing oil output even amid geopolitical volatility not seen in decades, oil and gas industry leaders said on Monday.U.S. President Donald Trump's global tariff announcements have since last month contributed to a decline in oil prices and fears of an economic downturn, making it more difficult for oil producers to follow his call of "drill, baby, drill.""We've never been in a situation where we have so much geopolitical volatility," said Occidental Petroleum CEO Vicki Hollub, during a panel discussion at the Offshore Technology Conference in Houston on Monday.Despite the oil price oscillations, which according to experts come mainly from the shale industry and not from offshore, oil leaders expressed confidence the Trump administration would remove obstacles to help grow production.Oil output from the U.S. Gulf could reach up to 2.4 million barrels per day (bpd), up from the current level of roughly 1.8 million bpd, said Erik Milito, head of the U.S. National Ocean Industries Association.Advancements in technology, including artificial intelligence, are also helping production, executives said."We're seeing that today with the projects that are coming online, highly sophisticated projects that are overcoming a lot of the challenges that we saw 20 years ago," Milito said.The Trump administration plans to hold a lease sale for the U.S. Gulf in June as planned by the former administration of President Joe Biden.That will be critical because shale oil production will eventually plateau and begin to decline, making it important to grow offshore exploration, Hollub said."We have to find a way to get more out of the Gulf of Mexico, and that's got to happen in a big way," she said.Offshore production from the U.S. Gulf accounts for about 15% of total U.S. crude output.In addition to geopolitical uncertainty, industry leaders pointed to inflation as another challenge facing the sector."We are challenging our local suppliers and challenging our international suppliers... on cost," said Magda Chambriard, CEO of Brazil's state-owned oil company Petrobras.(Reuters)
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Oil prices drop, causing buyers to buy more; concerns about oversupply weigh
The oil price rebounded by over 1% Tuesday, with technical rebounding and dip-buying after a previous session's drop due to OPEC+'s decision to increase output. However, concerns about the outlook for a market surplus persisted. Brent crude futures rose by 92 cents a barrel to $61.15 at 0309 GMT. U.S. West Texas intermediate crude gained 89 cents a barrel to $58.02 The OPEC+ decision to increase oil production for a second month in a row, made over the weekend, pushed both benchmarks down to their lowest levels since February 2021. Yeap Jun Rong is a market analyst at IG. He said that the slight rise in oil prices today appears to be more technical than fundamental. "The broader price movement is being impacted by persistent headwinds, including a pivotal change in OPEC+'s production strategy, uncertainty over demand due to U.S. Tariff risks and downgraded price forecasts." Oil has dropped over 20% in the last six sessions, mainly due to expectations that production would exceed consumption. This is a result of increased bets placed on a global economic slowdown following U.S. president Donald Trump's shock tariffs in April. On Tuesday, the return of Chinese participants to the market after a 5-day holiday that began on May 1 helped support prices. "China reopened its doors today and as the world's largest oil importer, it is likely that buyers would have rushed to secure oil prices at their current low levels," said Priyanka Sackdeva, Senior Market Analyst at Phillip Nova. Data showing an increase in orders in the U.S. - the world's largest oil consumer - also provided some support. ISM (Institute for Supply Management) reported on Monday that its nonmanufacturing PMI (Purchasing Managers Index) rose to 51.6 from 50.8 last month. The economists polled had predicted that the services PMI would drop to 50.2. As tariffs threaten the economy, it is likely that on Wednesday, the U.S. Federal Reserve won't change interest rates. Barclays lowered their Brent crude forecast by $4 a barrel to $70 a barge for 2025, and set the estimate for 2026 at $62 a barge. They cited "a rocky path ahead for fundamentals", amid escalating tensions in trade and OPEC+’s shift in production strategy. Reporting by Siyi Liu and Arathy Sommesekhar, both in Houston. Editing by Muralikumar Anantharaman & Lincoln Feast.
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Financial Times - May 6
These are the most popular stories from the Financial Times. These stories have not been verified and we cannot vouch for the accuracy of these reports. Headlines US coal producer Peadbody has threatened to end deal with Anglo American Eutelsat names a new CEO as Starlink's rival in Europe seeks funding Credit Suisse will pay $511 Million for helping wealthy Americans to hide over $4 Billion Santander earns 7 billion Euros from Poland sales View the full article Peabody Energy has said that if it is not satisfied with the resolution of issues surrounding Anglo American's Moranbah North Mine, then they may terminate their pending agreement to purchase some of Anglo American's Australian steelmaking assets. The franco-british satellite operator Eutelsat has announced that Orange executive Jean Francois Fallacher will be replacing its CEO. This is a surprising move from a company known for its leading role in European defense communications. The U.S. Department of Justice announced that a Credit Suisse unit has pleaded guilty in the United States to charges of helping ultra wealthy Americans evade tax and will pay an amount of $510 million. Santander is selling stakes in its Polish retail banking business for 7 billion euros ($7.91billion) as part of a plan to reduce its exposure in the country. The proceeds will be used to buy back shares. ($1 = 0.8845 euro) (Compiled from Bengaluru Newsroom)
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Gold reaches two-week high due to demand for safe-haven assets; Fed decision looms
On Tuesday, gold prices reached a two week high as investors remained focused on the Federal Reserve's upcoming policy meeting. They were also concerned about President Donald Trump’s tariff plans. As of 0224 GMT the spot gold price was up 1.4% to $3,380.92 per ounce after reaching its highest level since earlier in session. U.S. Gold Futures rose 2% to $3389.90. "Gold prices are on a strong rise this week as investors return to the safe haven asset in order to hedge portfolio volatility due to renewed tariff worries from U.S. president Donald Trump," said IG's market strategist Yeap Jun-Rong. Trump announced a 100% tax on films produced abroad on Sunday, but provided few details about how the levy will work. He said on Monday that he plans to announce the pharmaceutical tariffs in two weeks. The Fed's rate decision this week and Fed Chairman Jerome Powell's remarks due on Wednesday will provide clues about the rate trajectory of the U.S. Central bank. Since last December, the Fed has maintained its policy rate between 4.25% and 4.50%. Rong stated that "dovish signals can provide additional support for gold and reinforce its overall upward momentum." According to a report the Fed will probably leave interest rates the same. It also said that this meeting could be the last one where the outcome was so clear-cut, with Trump's tariffs casting an uncertain shadow over the economy outlook. Before cutting, Fed officials will look for hard data on the labor market. Goldman Sachs wrote in a note that they expect this to take several months. They therefore anticipate three 25bp rate cuts in September, July and October. Low-interest rates are also conducive to the growth of non-yielding gold bullion as a hedge against financial and political turmoil. Silver spot rose by 1.5%, to $32.99 per ounce. Platinum rose by 1.3%, to $971.24, and palladium gained 0.5%, to $945.75.
China's demand for iron ore is resilient and boosted by Sino-US trade talks.
Prices of iron ore futures rose on Tuesday. This was due to the hopes that a trade agreement would be reached between the U.S.A. and China, the top steel-making consumer.
As of 0243 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.57% higher. It was 708.5 yuan (US$97.98) per metric ton.
The benchmark June Iron Ore at the Singapore Exchange rose 1.03% to $97.55 per ton.
U.S. president Donald Trump said on Sunday that the U.S. met with many countries including China on trade deals and that his priority with China was securing a fair deal.
China's Commerce Ministry announced on Friday that Beijing was "evaluating" Washington's offer to hold discussions over President Donald Trump's tariffs of 145%.
A private sector survey revealed on Tuesday that the uncertainty created by U.S. trade tariffs weighed down China's service activity in April.
Hexun Futures, a broker, stated that the steel market is worried about overseas recession risk sparked off by tariffs. Anti-dumping measures will negatively impact future steel demand.
Galaxy Futures said that domestic hot metal production is still high and the demand for it from end users continues to be strong.
Mysteel, a consultancy, reported that production among Chinese blast-furnace steel producers increased during the period April 25-30. However mills' margins shrank.
Steelhome data revealed that the total stockpiles of iron ore across Chinese ports increased by 2.24% in a week to 136.8 millions tons on April 30.
Coking coal and coke, which are both steelmaking ingredients, were down by 1.78% and 2.17 percent, respectively.
The benchmark steel prices on the Shanghai Futures Exchange were flat. The price of rebar fell by 0.26%. Hot-rolled coil rose by 0.06%. Stainless steel increased nearly 0.2%. Wire rod was flat. ($1 = 7.2312 Chinese Yuan) (Reporting and editing by Rashmi aich; Michele Pek)
(source: Reuters)