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Base metals decline as dollar firms, US tariff optimism fades
The dollar strengthened on Friday, and the market's optimism faded after a court decision that reinstated some of the largest tariffs imposed in the United States by President Donald Trump. As of 0521 GMT, the London Metal Exchange reported that three-month copper was down by 0.1%, at $9,562.50 a metric ton. Red metal, which is used for power and construction, continues to gain 4.8% this month and looks set to have its best month since Sept. 2024. The Shanghai Futures Exchange's (SHFE) most-traded contract for copper fell 0.3%, to 77 740 yuan per ton ($10 813). LME aluminium dropped 0.2%, to $2.445 per ton. Zinc fell 0.7%, to $2.656.50. Lead fell 0.6%, to $1.952, and nickel fell by 0.2%, to $15.335. Tin fell 1.4% to $30.790. Metals traders in Singapore reported that "the market rose yesterday on the optimism that the appeals court would be able to block Trump's tariffs. However, the rally faded as the appeals courts suspended the verdict." On Thursday, an appeals court in the United States temporarily reinstated Trump's most comprehensive tariffs. A day earlier, the U.S. Trade Court had ruled that Trump exceeded his authority by imposing these duties and ordered a blockade. Investors digested court's decision to maintain Trump's tariffs. The dollar index increased by 0.2% against rival currencies, making assets denominated in dollars more expensive for holders of other currencies. Investors are waiting for the Federal Reserve's preferred inflation indicator, the Personal Consumption Expenditures (PCE) Price Index Report due later that day. This could give them more insight into their policy direction. SHFE aluminium fell 0.2% to 20110 yuan per ton. Lead dropped 0.8% at 16,630 yuan. Nickel rose 0.9% to 128,810 yuan. Zinc lost 0.5% to 22250 yuan. Tin fell 2.6% at 251,120.
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How Trump's Trade War is Upending the Global Economy
The tariffs imposed by Donald Trump since his inauguration on January 20, 2017 have sent shockwaves through financial markets, and uncertainty has spread throughout the global economy. This timeline shows the major events: Trump imposes tariffs of 25% on Mexican imports, 10% on Chinese goods and most Canadian imports from February 1. He demands that they reduce the flow of illegal immigrants and fentanyl into the United States. Trump agrees to a 30-day suspension of his tariff threat against Mexico and Canada in exchange for concessions made on border security and criminal enforcement. The U.S. doesn't reach a similar deal with China. Trump delays tariffs until the Commerce Department confirms that systems and procedures are in place for processing low-cost packages from China and collecting tariff revenue. Trump increases tariffs on aluminum and steel to 25%, "without any exceptions or exclusions". March 3 - Trump announces that 25% tariffs will be imposed on imports from Mexico and Canada from March 4, and that all Chinese imports will face a 20% tariff on fentanyl. After a phone call with General Motors, Ford and Stellantis' chairperson and CEOs, the president agreed to defer tariffs on certain vehicles manufactured in Canada and Mexico for a month. Trump exempts Canadian and Mexican goods under the North American Trade Pact from 25% tariffs for one month. Trump announces a 25% import tariff on cars and light trucks. Trump announces global duties with a base of 10% on all imports, and much higher duties for some of the U.S. biggest trading partners. Trump suspends most of the country-specific tariffs he had imposed less than 24 hours before, following a financial market upheaval that erased trillions from global bourses. The 10% blanket duty on nearly all U.S. imported goods remains in place. Trump has announced that he will increase the tariffs on Chinese imports from 104% to 125%, which was the level in effect the day before. The extra duties on Chinese products, including those related to fentanyl, will now be 145%. April 13: The U.S. government grants exemptions from steep tariffs for smartphones, computers, and other electronics imported from China. In an effort to impose tariffs in both sectors, the Trump administration launched national security investigations under Section 232 of Trade Act of 1962 on imports of pharmaceuticals and semiconductors. May 4, Trump imposes 100% tariffs on all films produced outside of the U.S. May 9 - Trump announces a limited bilateral agreement with British Prime Minister Keir starmer that keeps 10% tariffs in place on British exports and modestly increases agricultural access to both countries. It also lowers U.S. prohibitive duties on British auto exports. On May 12, the U.S. & China agreed to temporarily reduce reciprocal tariffs. The U.S. and China agree to temporarily reduce reciprocal tariffs. May 13: The U.S. reduces the "de minimis", or low-value tariff, on China shipments. Duties for items up to $800 are reduced to 54% instead of 120%. May 23 - Trump announces he will recommend a 50% tariff on all goods imported from the European Union, starting June 1. He warned Apple that it would be subject to a 25% tariff on phones sold in the U.S. if they were not manufactured within the U.S. Trump retracts his threat to impose 50% tariffs on EU imports, and agrees to extend the deadline of talks between the U.S. May 28 - The U.S. Trade Court blocked Trump's tariffs in an sweeping ruling, saying that the president had overstepped his powers by imposing duties across-the board on imports of U.S. trading partners. The Trump administration announced that it would appeal this ruling. May 29: A federal appeals Court temporarily reinstates Trump's most sweeping tariffs. It said it was pausing lower court's decision to consider the appeal of the government, and ordered plaintiffs to respond by the 5th June, and the administration to do so by the 9th June. (Compiled in Gdansk by Paolo Laudani, Mateusz Rabiega and Jamie Freed; edited by Milla Nissi Prussak and Lincoln Feast.
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The market is looking at another OPEC+ production hike as the oil price drops for a second consecutive week
The oil price was on course for a second weekly drop on Friday. This was due to expectations of a further OPEC+ production increase in July, and new uncertainty following the latest legal twist that kept President Donald Trump's Tariffs in place. Brent crude futures fell 31 cents or 0.48% to $63.84 per barrel at 0424 GMT. U.S. West Texas Intermediate Crude fell 31 cents or 0.51% to $60.63 per barrel. Brent's July futures contract expires on Friday. The two contracts have both fallen by 1.5% this week. Investors priced in a further increase by the Organization of the Petroleum Exporting Countries (OPEC+), a group of eight members, at their meeting on Saturday. Robert Rennie, Westpac's director of commodity and carbon analysis, said in a recent note that the stage was set for a bumper increase to production. This could be higher than the 411,000-barrels-per day decision made at the two previous meetings. JPMorgan analysts said in a report that the potential price hike is due to the fact that global surpluses have widened from 2.2 million barrels a day to 2.2 millions. This likely means a price increase to stimulate a supply response and restore equilibrium. Prices are expected to stay within the current ranges, before moving into the high 50s by year's end. The U.S. tariffs will remain in place after a federal appellate court temporarily reinstated the tariffs on Thursday. This reversed a Wednesday decision by a trade court to block the most comprehensive of the duties. As traders assessed its impact, the block sent oil prices down more than 1%. Analysts predicted that uncertainty would continue as tariff wars progressed. Since Trump's "Liberation Day", April 2, announcement of tariffs, oil prices have fallen by more than 10%. The tariff war has fueled recession fears, which have clouded demand. Washington has added to the U.S. China trade tensions by ordering a wide range of companies to cease shipping goods to China, including butane and ethane, without a licence and revoking licenses granted to certain suppliers. Analysts at JPMorgan noted that global oil demand increased from the previous weeks, mainly due to a rebound in U.S. consumption of oil, as a result of the long Memorial Day weekend and the influx of travelers. They said that the global oil demand growth is currently at a rate of approximately 400,000 barrels per day (bpd) as of May 28. This is 250,000 bpd less than expected. Colleen Liu and Siyi Howe reported from Beijing, while Sonali Paul edited the article.
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Iron ore to fall by a weekly loss due to softer China demand and trade uncertainty
The price of iron ore futures fell on Friday, and are set to lose money for the week due to a softer demand for this steelmaking ingredient. Traders brace themselves for more trade uncertainty. As of 0254 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.14% lower. It was 704 yuan (US$97.97) per metric ton. This week, the contract has fallen by 2.28%. The benchmark June ore price on the Singapore Exchange is 0.35% lower, at $96.55 per ton. This week it has lost 1.25%. The hot metal production, which is typically used as a gauge of iron ore demand to determine the market, has fallen for the third consecutive week. It was down by around 0.7% at 2.42 million tonnes on May 30, according to data from Mysteel. In a recent note, Galaxy Futures said that the seasonal demand for steel is at its peak and will continue to fall. Hexun Futures, a broker, says that iron ore prices remain somewhat stable as long as steel mills continue to make decent profits. The tariffs imposed by President Donald Trump in the U.S. will remain in place after a federal appellate court temporarily reinstated the tariffs on Thursday. This reverses a decision made on Wednesday by a trade court to block the most comprehensive of the duties. The weakening dollar was also a factor in the price rise, as it headed towards its fifth consecutive monthly drop on account of increased trade uncertainty. Dollar-denominated investments are more affordable for holders of currencies other than the U.S. Coking coal and coke, which are used to make steel, also fell, by 3.46% apiece. The benchmark steel prices on the Shanghai Futures Exchange were flat. Hot-rolled coil and rebar both lost 0.68% while stainless steel and wire rod gained 0.4%. The Chinese financial markets will close on Monday due to a holiday. Trading will resume Tuesday, June 3rd. The trading will resume on Tuesday, June 3.
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As the dollar strengthens, US tariff optimism wanes
The dollar strengthened on Friday, and the market's optimism waned after a court decision that reinstated some of the largest tariffs imposed in the United States by President Donald Trump. As of 0240 GMT, the London Metal Exchange reported that three-month copper was down by 0.2%, at $9,550 a metric ton. Red metal, which is used for power and construction, continues to gain 4.6% this month and looks set to have its best month since Sept. 2024. The Shanghai Futures Exchange's (SHFE) most traded copper contract fell 0.4%, to 77 680 yuan per ton ($10 807.50). LME aluminium dropped 0.4%, to $2.441 per ton. Zinc fell 0.7%, to $2.656, while lead fell by 0.4%, to $1.954, and nickel fell by 0.4%, to $15.310. Tin fell 1.1% to $30,00855. Metals traders in Singapore reported that "the market rose yesterday on the optimism that the court would be able to block Trump's tariffs. However, the rally faded as the appeals courts suspended this verdict." On Thursday, an appeals court in the United States temporarily reinstated Trump's most comprehensive tariffs. This came a day after the U.S. Trade Court ruled that Trump had overstepped his authority by imposing these duties and ordered a blockade. Investors digested court's decision to maintain Trump's tariffs. The dollar index increased by 0.2% in comparison to its rivals. This makes dollar-denominated investments more expensive for holders of other currencies. Investors are waiting for the Federal Reserve's preferred inflation indicator, the Personal Consumption Expenditures (PCE) Price Index Report due later that day. This could give them more insight into their policy direction. SHFE aluminium fell 0.4% to 20060 yuan per ton. Lead dropped 1% at 16,585 Yuan. Nickel rose 1% at 120,960 Yuan. Zinc lost 0.7% at 22,200 yuan. Tin fell 2.5% to 25,310 yuan.
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Valeura Concludes Eight-Well Drilling Campaign in Gulf of Thailand
Canada-based oil and gas company Valeura Energy has completed an eight-well drilling campaign in license B5/27 in Gulf of Thailand with Borr Drilling’s Mist jack-up drilling rig.At its 100%-operated B5/27 license, Valeura conducted drilling operations at Jasmine C, Ban Yen A, Jasmine D and Ratree developments.According to the company, the block B5/27 drilling programme was completed safely, on time, and under budget. As a result of the campaign, Valeura said it had maintained oil production rates approximately consistent with its first quarter performance, thereby offsetting the impact of natural declines.The company’s contracted drilling rig, Borr Drilling’s Mist-jack up, is now being mobilised to the Nong Yao field, where Valeura plans to drill a programme of approximately 10 development wells.“Block B5/27 is a prime example of how with ongoing drilling activity we can continue to commercialise new accumulations to maintain a stable and predictable stream of cash flow from each of our Gulf of Thailand assets.“At the same time, we have appraised several additional reservoir intervals which will form the basis of a future drilling campaign on the block. We expect to demonstrate further reserves adds at our next year-end reserves evaluation, giving rise to yet another extension in the economic life of the field,” said Sean Guest, President and CEO.Jasmine CValeura drilled two development wells from the Jasmine C platform. Both wells were successful and exceeded management’s expectation for total oil pay and are currently online as producers, the company informed.Well C-30ST1H was drilled as a horizontal lateral within the 400 sand reservoir and was completed as an oil producer. The well’s completion design includes an autonomous inflow control device, which has made it possible to complete the well as an oil producer despite being drilled into a mixed gas/oil transition zone.Well C-39 was directionally drilled to develop three separate reservoir intervals (the 330, 160, and 50 sands), and was successful with all targets. It was completed as a multi-zone producer, with the 330 interval now online.Ban Yen AThe company drilled three wells from the Ban Yen A platform. Two were primarily development wells with additional appraisal targets, and one was a dedicated appraisal well. The two development wells were successful, having exceeded expectations for total pay, and are online contributing to production.Jasmine DValeura drilled two deviated development wells from the Jasmine D platform. Both were successful and are now contributing to production.Well D-44 was drilled as a deviated development well with multiple targets. The well encountered its primary targets (the 500 and 600 series sands) as intended, successfully accessing remaining oil at the structure’s crest. In addition, the well verified upside in all of its secondary targets, covering five additional reservoir sands, which indicates the potential for further development of this fault block in the future.Well D-45 was also drilled as a deviated development well into the block’s main fault block. The well encountered oil in all three of its primary targets (the 250, 245, and 160 sands) and was completed as a multi-zone producer. In addition, the well encountered oil in its secondary 680 sand target, which will be developed by an additional well as part of a future development campaign.RatreeThe Ratree exploration well intersected its target sand reservoirs as prognosed but encountered only trace amounts of hydrocarbons. Results suggest that oil did not migrate to this particular reservoir trend, resulting in insufficient hydrocarbon charge. Further prospective trends within the B5/27 block are being evaluated for future exploration potential, Valeura noted.
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After the latest court ruling, Trump tariffs are still in place and stocks fall. The dollar also falls.
Investors digested the fact that an appeals court upheld President Donald Trump's tariffs, just a day after markets had rallied following a ruling that blocked most of them. The Nikkei index in Japan saw the biggest selling after the largest buying on Thursday. This was exacerbated by the fluctuation in demand for safe-haven currencies, such as the yen. The United States Court of Appeals for the Federal Circuit, Washington, temporarily reinstated Trump’s duties on Friday while it considered the government’s appeal. A little-known trade tribunal unanimously ruled on Wednesday that Trump had overstepped his authority and that tariffs are the responsibility of Congress, not the President. Senior Trump administration officials have said that they are undeterred by the situation and expect to either win on appeal or use other powers to keep tariffs in place. The Nikkei fell 1.7% during the morning Asian session, which brought it back to its closing level on Wednesday. The yen gained about 2% since its low of Thursday, and last changed hands at around 143.48 dollars. The value of overseas revenue is reduced by a stronger yen. Hong Kong's Hang Seng index fell 1.4%, while mainland China's blue-chip index slipped 0.3%. The KOSPI in South Korea fell by 0.5%. The broadest MSCI index of Asia-Pacific stocks outside Japan fell by 0.4%. Rodrigo Catril is a senior FX Strategist at National Australia Bank. He said that Trump's trade agenda was still alive and well, but the legal battle has added yet another layer to uncertainty. He said that the only thing more certain than uncertainty is further delays in hiring and investment decisions. Futures for the U.S. S&P500 fell by 0.2%. Cash index rose by 0.4% overnight. However, this was mostly due to the resilient Nvidia results that were released after the close of the market on Wednesday. Asian shares had already had time to react to these results. The price of the STOXX50 futures in Europe fell by 0.1%. The yield on the 10-year U.S. Treasury was unchanged at 4.42%, after a decline of 5.5 basis points on Thursday. Gold, the safe-haven, was unchanged at $3,311 an ounce after a 0.8% gain in the previous session. Bitcoin, a currency that is sensitive to risk, fell to a low of $104,714.35. Brent crude and U.S. West Texas Intermediate oil both fell 0.3% to $63.97 per barrel and $60.75, respectively, at the start of Friday. The Trump administration has said that despite the uncertainty created by the courtroom dramas, negotiations with the top trading partners are continuing unabated. Treasury Secretary Scott Bessent said in an interview with Fox News he was scheduled to meet with a Japanese delegation of high level later on Friday. Trump had already suspended his "Liberation Day' tariff rates for most trade partners until July 9, and in the interim set a 10% baseline rate to give some time to work out deals. Deals are still elusive, aside from the broad agreement reached with Britain. Bessent stated in an interview with Fox News, that the talks with China were "a little stalled" and could require the direct involvement of Trump or Chinese President Xi Jinping.
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Oil prices to drop by a weekly average with tariffs and legal battles in focus, OPEC+
The oil price is expected to drop more than 1% this Friday due to the U.S. tariff rulings and the potential OPEC+ production increase. Brent crude futures fell 26 cents or 0.41% to $63.89 per barrel at 0104 GMT. U.S. West Texas Intermediate Crude fell 27 cents or 0.44% to $60.67 per barrel. Brent's July futures contract expires on Friday. The tariffs imposed by President Donald Trump in the U.S. will remain in place after a federal court of appeals temporarily reinstated them Thursday. This reverses a decision made on Wednesday by a trade court to block the most comprehensive duties. As traders assessed its impact, the block sent oil prices down more than 1%. Analysts predicted that uncertainty would continue as tariff battles made their way through court systems. OPEC+ members, a group of oil exporting countries and their allies, will meet on Saturday to discuss a possible increase in July's oil production. OPEC is also trying to get some countries, like Kazakhstan, that are producing more than their agreed-upon levels, to reduce their output. Robert Rennie, Westpac's director of commodity and carbon analysis, said in a recent note that "the standoff between OPEC & Kazakhstan became more evident this week". According to a report published by Interfax on Thursday, citing Kazakhstan’s deputy energy minister, the country has told OPEC it doesn’t intend to cut its oil production. The Kazakhstani energy minister dismissed on Thursday the complaints of other countries about Kazakhstan's excessive production. He said that Kazakhstan's share in world oil production was less than 2%, and that a price for crude oil above $75 per barrel would be acceptable to all countries. Rennie stated that the stage was set for a bumper increase in production, possibly higher than the 411,000 barrels a day decision made at the two previous meetings. (Reporting and editing by Colleen Waye)
Japan's SMBC will take 20% of India's Yes Bank
SumitomoMitsui Banking Corp. (SMBC), a Japanese lender, has signed a definitive deal to acquire a 20% stake of Indian private lender Yes Bank. This is the largest cross border merger and acquisition in India's finance sector.
Sumitomo Mitsui Financial Group released a statement saying that the total value of this deal is 134.8 billion yen ($1.58 billion), which includes SMBC purchasing shares from eight current shareholders.
SMBC is a subsidiary of Sumitomo Mitsui Financial Group, and the second largest bank in Japan.
Cross-border banking deals are rare in Indian banks due to restrictions on ownership, capital requirements and the state's dominance of the sector. The last major deal was a takeover by Singapore's DBS Group of the troubled Lakshmi Vilas Bank in 2020.
SMBC’s purchase of a stake in Yes Bank will make the bank the largest shareholder. It is also the latest overseas acquisition of a Japanese financial organization as it looks to find new growth sources after years of low interest rates and a shrinking population at home.
Nomura, the investment bank, acquired Macquarie Group’s U.S. public asset management business and its European counterpart for $1.8 billion last month. In December of 2012 Nippon Life Insurance became a fully-owned subsidiary of Bermuda-based Resolution Life for approximately $8.2 billion.
Yes Bank announced in a filing to the stock exchange that SMBC would acquire a stake of 13.19% from State Bank of India (also its largest shareholder) and an aggregate of 6,81% from Axis Bank Bandhan Bank Federal Bank HDFC Bank ICICI Bank IDFC First Bank Limited Kotak Mahindra Bank.
SBI owns a 24 percent stake in Yes Bank as a result the restructuring led by the regulator in March 2020.
Together, ICICI Bank (ICICI Bank), HDFC Bank (HDFC Bank), Kotak Mahindra Bank (Kotak Mahindra Bank), Axis Bank, and Life Insurance Corporation of India hold 11.34% of Yes Bank.
Yes Bank stated that the transaction is subjected to approvals by the Reserve Bank of India (RBI), Competition Commission of India (CCI) and the shareholders of the Bank.
Prashant Kumar, CEO of SMBC, said that the investment was "a pivotal step for our next phase in growth".
Yes Bank reported that JPMorgan and Jefferies were the financial advisors for SMBC.
This week, it was reported that SMBC had reached an agreement with Yes Bank on the acquisition of a stake. The central bank had also verbally approved this deal.
The shares of Yes Bank have gained nearly 10% this year. $1 = 85.3990 Indian rupees (Reporting and editing by David Goodwin and David Evans in Tokyo and Siddhi Nyak in Mumbai)
(source: Reuters)