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IMF increases forecast for Saudi GDP to 3.5% by 2025
The International Monetary Fund raised its GDP growth forecast for Saudi Arabia for 2025 to 3.5%, from 3%. This was partly due to the demand for government-led project and the OPEC+ plan to gradually end oil production cuts. Saudi Arabia is expected to have a budget deficit of $27 billion in this year due to lower oil prices. The kingdom is still pushing ahead with a massive transformation program called Vision 2030, which aims to wean its economy off oil dependence. Saudi Arabia has made significant investments in sports, entertainment, and tourism in the last few years. Even though oil prices are lower, growth is expected to be fueled by government spending and domestic demand. The IMF reported that "robust domestic demand, including government-led initiatives, will continue to fuel growth despite increased global uncertainty and a weak commodity price outlook." The Financial Times reported that in May, Saudi Finance Minister Mohammed Al-Jadaan stated the kingdom would take stock of its priorities as a result of a decline in oil revenues. The kingdom has committed to host several major international events. Each event will require significant construction and development costs. The 2029 Asian Winter Games will feature artificial snow, a freshwater lake created by man, and the World Cup in 2034, where 11 new stadiums and some renovated ones will be constructed. IMF report said that the kingdom's deficit fiscal will be funded largely by borrowing. Saudi Arabia, the world's largest emerging market dollar issuer, issued the most debt last year. But the IMF says that the country has plenty of room to borrow, as its net debt is only 17% of GDP. This makes it one of the lowest-indebted countries in the world. IMF reduced the Kingdom's GDP Growth Forecast to 3% from an initial estimate of 3.3% in January. The fund added on Thursday that the non-oil GDP growth in 2025 is projected to be 3.4%, which is about 0.8% less than last year. Pesha Magd is reporting; Jan Harvey is editing.
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Officials backed by Russia claim that Russia has captured a village in eastern Ukraine near a lithium deposit
A Russian-backed official announced on Thursday that Russian troops had taken control of an eastern Ukrainian village near a lithium deposit, after fierce resistance by Ukrainian forces. Shevchenko, a village in Donetsk in Ukraine, is one of four regions that Moscow claims as its own territory. Kyiv and the Western powers have rejected this as illegal. On Thursday, the Russian Defence Ministry said that Shevchenko and another settlement named Novoserhiivka had been taken. Ukraine has not yet commented on the report. Deep State, a Ukrainian military blog resource that uses open source mapping, shows Shevchenko as being under Russian control. Soviet geologists discovered the deposit in 1982 and said it was significant. The deposit is at a depth which would allow for commercial mining. Russian-backed officials say that it will be developed as soon as the conditions permit. The village of Shevchenko is also a settlement with a lithium deposit. It is located near the Dnipropetrovsk Region. The Ukrainian armed forces were one of those who sent a large number of soldiers to defend it, according to the TASS state news agency. According to the Ukrainian Geological Survey, the deposit is situated on Shevchenko’s eastern outskirts. It covers an area of almost 40 hectares. In January, some Russian media incorrectly reported that the Shevchenko Deposit had been captured. They confused it with another settlement by the same name in another country. Lithium has become a highly sought-after global resource due to its wide range of applications, from electric cars to mobile phones. According to U.S. estimates, the Ukraine has about 500,000 tonnes of lithium reserves, while Russia has twice that amount. Reporting by Andrew Osborn, Writing by Mark Trevelyan; Editing by Marktrevelyan
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Stocks extend record run despite Fed pressures as dollar falls to 3-year low
The dollar fell to its lowest level in three years, while the world stock market reached its second record high within three days after a report that Donald Trump planned to select the next Federal Reserve Chief early fueled fresh bets about U.S. interest rate cuts. Dollar selling continued as U.S. trade picked up after Wall Street Journal reported that the U.S. President - who had been urging Fed to reduce rates faster – was toying with idea of choosing Chair Jerome Powell’s successor in the next few month before his formal departure in May. The greenback was down by nearly 0.5% Thursday, and over 10% for the entire year. If the greenback continues to fall in the coming days, it will be the biggest half-year drop since the beginning of the free-floating currency era in the early 1970s. Wall Street's major markets opened modestly up, keeping MSCI's world stock benchmark at a record high for the year. The euro was at its highest level since 2021, and Washington is preparing to hold trade tariff negotiations next week ahead of the July 9 global deadline set by Trump. Michael Metcalfe, State Street's chief economist, said: "The dollar has struggled to appreciate in virtually any market regime." He added that the economy was in a "structural decline" and cited State Street data showing investors are now more negative than ever about the dollar, or "underweight", in banking-speak. This is since the COVID Pandemic. Euro traders were also encouraged by the NATO summit on Wednesday, where members agreed to spend 5% of their output on defense - 3.5% for troops and weapons, and 1.5% for looser defence-related measures. The U.S. president Trump also announced plans for talks with Iran to be held next week in order to get Tehran to commit to curtailing their nuclear ambitions. SHADOW MOVEMENTS Overnight, Nikkei shares in Tokyo rose 1.65%, reaching their highest level since last January. MSCI's Asia-Pacific index outside Japan also finished marginally higher. In the currency markets, the Swiss Franc strengthened to a decade high while the Japanese yen grew again and passed 144 per US dollar. Trump has also intensified his criticisms of the Fed for not acting quickly enough. He has repeatedly attacked Fed chief Powell. His idea to name a successor before Powell leaves his office could create a cloud over Powell's head and undermine him. Tony Sycamore is a market analyst for IG. He said: "It's a certainty that Trump's choice to replace Powell will be someone who sits on the dovish side of the political spectrum and will support Trump’s agenda of lowering rates." "The problem with this (is) that it will bring back questions raised earlier in the year about the Fed's independent, which, we saw, undermined confidence in the Fed, and the USD." After its decline this year, the dollar index, which compares the U.S. currency to six other currencies, is now at its lowest point since March 2022. The markets are also watching as Trump's deadline of July 9 for a trade deal to be reached approaches. If not, sharply higher import tariffs will take effect. The CME FedWatch tool shows that traders now price in nearly 25% of the chance that the Fed will cut rates at its meeting on the last day of July, up from 12.5% the previous week. The yield on the two-year U.S. Treasury, which moves typically in line with expectations of interest rates, fell by 1.5 basis points to 3.74%. This was its lowest level for seven weeks. Germany's benchmark, which is used for Europe as well, was about the same with 1.83%. Oil prices are back on the upswing after a sharp drop following the Trump-brokered truce between Middle East rivals Israel and Iran early this week. Brent crude futures increased 0.6% to $68 a barrel, U.S. West Texas Intermediate Crude (WTI), gained 1% to $60.60, while gold fell to $3,323 per ounce.
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Gold falls on easing Mideast tensions and Fed rate cut uncertainty
Gold prices fell on Thursday due to easing geopolitical tensions and the uncertainty surrounding the Federal Reserve’s interest rate policy. As of 1333 GMT, the spot price for gold was $3,316.47. This is a 0.5% drop. U.S. Gold Futures fell 0.4% to $3329.20. Gold has fallen over the last few sessions as a result of the de-escalation that took place in the Middle East. The market has also been under pressure due to the delayed interest rate cut, which is eagerly anticipated by the market, but continues to be held up by rising inflation expectations fueled by Trump's tariffs. Thomas Barkin, President of the Fed Bank of Richmond, cautioned that it is difficult to predict how tariff increases in the U.S. will translate into an increase in inflation. Chicago Fed President Austan Goolsbee stated that a decision made by U.S. president Donald Trump to replace Fed Chair Jerome Powell will not have any influence on the monetary policy of the central bank. The markets are currently anticipating two rate reductions totaling 50 basis points in this year. Gold is more attractive when interest rates are higher, as it does not earn interest. The data showed that the U.S. economic contraction was a little faster than originally thought during the first quarter, despite tepid consumption. This highlights the distortions brought about by tariffs. Investors will be watching Friday's Personal Consumption Spending (PCE) data. Palladium fell 2.5% to $1.084.41. Platinum reached its highest price since September 2014 by adding 1.7%, to $1,377.62. Nitesh Sha, commodities strategist with WisdomTree, says that internal combustion vehicles will likely remain relevant as long as governments continue to delay their phase-out goals. Biofuel adoption is still dependent on platinum group metals. Spot silver rose 0.2% to $36.39. (Reporting by Sarah Qureshi in Bengaluru; Editing by Shailesh Kuber)
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Sources say that the Russian cartel office has proposed a complete ban on gasoline exports.
Three industry sources said that the Russian Federal Anti-Monopoly Service has proposed an export ban on gasoline to combat high fuel prices. At the moment, only a small percentage of gasoline exported by re-sellers is restricted, whereas oil companies have a license to sell fuel abroad. The restrictions will last until August 31. FAS refused to comment. The government decides on any possible export ban, but the regulator can make its own proposals. The proposal to tighten restrictions was made as the domestic wholesale gasoline price in Russia on a commodity market jumped up to a 2-year high this month, to approximately 65,000 roubles (US$828.55) per ton. The Russian government has repeatedly applied temporary bans on gasoline exports in the last two years, to combat fuel shortages. Current restrictions do not apply to supplies to the Moscow led Eurasian Economic Union (a grouping of five former Soviet States) and to Mongolia, with whom Russia has intergovernmental agreements for fuel supply. Nigeria, Libya Tunisia, and the United Arab Emirates are among the largest importers of Russian gas.
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Greece orders evacuation of a coastal town after wildfire near the capital.
Greek firefighters fought a wildfire on Thursday that spread to houses in the coastal town Palaia Fokaia (40 km south of Athens). The authorities also ordered the evacuation of four seaside villages nearby. Eight aircraft, five helicopters, and 28 vehicles were used to help 90 firefighters in the area around Palaia-Fokaia put out fires caused by strong winds and burning houses. The number of people who had fled their homes in Palaia-Fokaia was not immediately known. The Greek TV showed a helicopter dropping a water bomb as thick grey smoke rose above the area, where temperatures reached 38 Celsius (100 Fahrenheit). Greece, located on Europe's southernmost edge and experiencing a hot climate, has suffered the environmental and economic impact of wildfires and flooding in recent years. Scientists say that this has been made worse by a rapidly changing climate. The country spent hundreds of millions to compensate farmers and households for damages caused by extreme weather conditions and to acquire modern and advanced firefighting gear to combat wildfires that have grown more difficult to control due to rising temperatures in the summer. In anticipation of a difficult wildfire season, Greece has increased the number of firefighters in its ranks to a new record of 18,000 for this year.
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McGeever: A hawkish Fed can cause the biggest "pain trades" on markets.
Financial markets are in limbo as the first half of this year ends. They're waiting to see if the global trade deal kaleidoscope will come together - or not - after July 9 when Washington's "reciprocal" tariffs expire. Which trades are most at risk if investors get caught off guard? Today's market is in a state of suspended animation. This is an incredibly bullish situation. The U.S. forecasts for growth are increasing, S&P earnings growth estimates are at 14% next year, corporate deal making is on the rise, and global stocks are at records highs. It seems that the uncertainty following President Donald Trump’s "Liberation Day", April 2, tariffs is a distant past. The relief rally raged for almost three months and only took a short pause during the 12-day conflict between Israel & Iran. Some might even say it's too rosy. What will be the "pain trades", if we see a decline? Unsurprisingly, the major pressure points occur in asset classes and on markets where sentiment and positioning are heavily skewed in one direction. A sudden price change can cause too many traders to rush out of the market at once. Bank of America's global fund manager monthly survey is a good way to identify positions that are overloaded. According to the Bank of America's June survey, long gold is the most popular trade right now (according 41% of respondents), followed by long "Magnificent Seven Tech Stocks" (23%), and then short U.S. Dollar (20%). These three trades are popular because they have proven to be highly profitable. The "Mag 7", a basket of Nvidia shares, Microsoft shares, Meta stock, Apple stocks, Alphabet, Amazon and Tesla, accounted for more than half of S&P 500’s 58% return over two years in 2023-2024. The Roundhill "Mag 7" ETF, which is equal-weighted, has risen 40% in the past year. This week, the Nasdaq 100, a market index that includes these seven companies, reached a new high. Gold prices have nearly doubled over the past two and a half years. They reached a record-breaking $3,500 per ounce in April. The dollar has fallen 10% in this year and is on course for its worst half-year since the establishment of the free-floating rate system more than 50 year ago. Slash and... BURN? These three positions are essentially derivatives of a fundamental bet. The belief that the Federal Reserve is likely to cut U.S. rates substantially over the next 18-month period, which would turn all of these positions into moneymakers. Rates futures markets are increasing their bets for lower rates despite the Fed's revised projections of economic growth last week being notable for their hawkish tone. This is mainly due to dovish remarks from several Fed officials, and a sharp drop in oil prices. The traders now predict a 125 basis point rate cut by the end next year. Morgan Stanley's economists are even more pessimistic, predicting no change in the forecast for this year and 175 basis point cuts next year. This would bring the Fed funds rate down to between 2.5% and 2.75%. A reduction in borrowing costs is especially beneficial for companies with high growth potential, such as Big Tech. In theory, low rates would also be good for gold as it is a non-interest bearing asset. On the other hand, it is difficult to imagine a scenario where the economy continues to grow, and equity prices are rising, while at the same time the Fed cuts rates by 175 basis points. A Fed that eases at this speed and scale would almost certainly be trying to quell a raging fire in the economy, which is most likely to cause a recession or severe economic slowdown. Risk assets may not necessarily crash in this environment, but overextended positions will be exposed. This isn't a first for investors to have bet on Fed cutbacks in the last three years. However, we haven't seen a major crash as a consequence. The markets have fared better than most observers predicted, and reached new highs. If "pain trading" does emerge in the second part of the year, this will be due to one particular sore spot: A hawkish Fed. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X.
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Brazil's inflation drops in early June due to lower food prices
Brazil's consumer prices increased less than expected at the beginning of June, bringing relief to the central bank after they voted to increase interest rates last week. IBGE, a statistics agency, reported on Thursday that the IPCA-15 Consumer Price Index rose by only 0.26% from the previous month, compared to 0.36%. This is below the 0.30% increase expected by economists. IBGE reported that annual inflation was 5.27% during the period. This is down from 5.40% at mid-May, and below all poll estimates, which predicted a median of 5.31%. Statistically, the lower-than expected figures were a result of a decline in food and drink prices. The agency noted that this was the first time in ten months the sector had seen a 0.02% decrease. IBGE said that the increase in electricity prices was largely responsible for the rise in housing costs. Brazil's central Bank released the data last week Interest rates on the rise By 25 basis points, the borrowing cost in the country has risen to its highest level since July 2006. Bank policymakers have expressed their displeasure with an inflation rate above target, but they've indicated that interest rates should remain unchanged for now. Extended period The impact of the tightening cycle has yet to be felt. Reporting by Gabriel Araujo, Editing by Aida Pelaez-Fernandez
Top sources of U.S. imports of steel and aluminum
On Wednesday, the U.S. tariffs on steel and aluminum imports doubled as President Donald Trump intensified a global trade conflict.
Here is a list of major trading partners that will be affected.
STEEL:
About a quarter (25%) of the steel used in America is imported. The bulk comes from Mexico and Canada, or other close allies such as Japan, South Korea, and Germany.
China is the largest producer and exporter of steel in the world, but it only sends a small amount to the United States. In 2018, tariffs of 25% were imposed on Chinese steel, which effectively shut the market out.
Last year, China exported 508,000 tons of steel net to the U.S. This is 1.8% of all American steel imports.
ALUMINUM:
The U.S. relies more on imports for aluminum. Approximately half of the aluminum used in the U.S. comes from imports, the majority of which is Canadian. Canadian aluminum imports exceeded the combined total of nine other countries by 3.2 million tonnes last year.
United Arab Emirates (UAE) and China are the next two largest importers, with 347,034 metric tons and 222,872 respectively.
According to global standards, the U.S. aluminium smelting sector is relatively small. According to the U.S. Geological Survey, the total smelter capability in the country is just 1.73% the global total.
(source: Reuters)