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Sweden's SSAB lags behind earnings forecasts as tariff uncertainty weighs on the company
The Swedish steelmaker SSAB announced a sharper drop than expected in its operating profit for the second quarter on Wednesday. This was due to lower prices of standard-grade steel and a weakened European market, amid uncertainty over tariffs. In recent years, the steel industry of Europe has been hit by high energy costs as well as competition from Chinese producers. Meanwhile, President Donald Trump’s tariffs are a new challenge for exporters to the United States. Operating earnings dropped 28% on an annual basis to 2,14 billion Swedish crowns (224.93 millions) during the April-June period. A consensus poll by SSAB revealed that analysts expected an average of 2.29 billion crowns. In a press release, CEO Johnny Sjostrom stated that "the turbulence caused by tariffs and trade barriers increased uncertainty in the second quarter". He added that the biggest impact was felt in the European steel market. He added that the impact of U.S. Tariffs on SSAB was limited. Trump was among the first to implement tariffs on steel and aluminum. In March, Trump imposed 25% tariffs on the majority of steel and aluminum imported into the U.S. They were then increased to 50% in June for most countries. SSAB expects third-quarter shipments from its Special Steels division will be lower than the previous quarter. Shipments for the Americas and Europe businesses are also expected to be lower. Special Steels said that raw material costs and prices will remain stable in Europe and Special Steels' Americas unit, but the latter should experience higher material costs and slightly lower prices. $1 = 9.5140 Swedish Crowns (Reporting and editing by Milla Nissi - Prussak; Marta Frackowiak, Gdansk)
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Nikkei and EU stocks soar as US-Japan deal avoids worst
The Japanese stock market reached a record high of one year on Wednesday, as the country signed a deal with the United States to lower tariffs on autos. This also revived hopes for an EU-US trade agreement that would boost European stock futures. President Donald Trump on Tuesday said a trade deal with Tokyo will include Japan paying a lower-than-threatened 15% tariff on shipments to the U.S. The agreement came after the U.S. reached a deal with the Philippines, where the U.S. will collect a tariff of 19% on imports. Trump said that representatives of the European Union would be in town for trade talks on Wednesday. This sparked hopes of a deal being reached with Europe even though the EU was reported to be refining its countermeasures for the event that a deadlock occurred before the deadline on August 1. The German DAX futures rose 0.6%, while the EuroStoxx 50 futures jumped by 1.3%. Charu Chanana is the chief investment strategist for Saxo. She said that expectations for a breakthrough in U.S.-Japan negotiations were low. Trump's announcement was a mild surprise, providing relief to Japanese stocks on a near-term basis. The deal is a strategic one, as it allows Japan to avoid immediate tariff increases, while Trump's focus shifts elsewhere. The Nikkei soared 3.7% on the news that the U.S. auto tax would be reduced to 15% from the proposed 25%. Mazda Motor rose 17% while Toyota Motor surged 13.6%. The South Korean automakers have also rallied, as the Japan agreement has fueled optimism about possible progress in tariff negotiations between South Korea & the United States. Analysts noted that the trade agreement reduced a major threat to the fragile Japanese economic system, giving the Bank of Japan more room to increase interest rates in order to combat inflation. The bond market was slammed by this, as the yields on 10-year JGBs rose a staggering 8.5 basis points to 1.585%. Shigeru Shiba, the Japanese prime minister, was also reported to be stepping down soon in order to accept responsibility for Sunday's loss of upper house elections. Political uncertainty helped push the dollar up 0.2%, to 146.95 cents. Chanana, from Saxo, said that Ishiba’s departure could pave the way for a leadership more aligned to pro-market policies and stronger U.S. relations. His exit also clears the way for Japan to continue its accommodative fiscal policy and monetary policy." Extended Deadlines Treasury Secretary Scott Bessent announced that in another positive development U.S. officials and Chinese officials would meet next week in Stockholm to discuss an extension of the August 12 deadline to negotiate a trade agreement. Hong Kong's Hang Seng index rose by 0.8% and Chinese blue-chips gained 0.7%. The MSCI broadest Asia-Pacific share index outside Japan rose 1.0%. Wall Street was more cautious with S&P futures adding 0.2% while Nasdaq Futures added 0.1%. U.S. earnings reports showed signs that Trump's war on trade was hitting profit margins. General Motors fell 8.1% after it reported that tariffs had taken a $1 billion toll on its quarterly earnings. Investors await the results of Alphabet, the parent company of Google and Tesla - two of Magnificent 7, which have been driving the market rally fueled by AI optimism. The dollar has consolidated on the foreign exchange markets after slipping overnight, in line with Treasury yields. The dollar index rose a little to 97.45 after losing 0.4% in Tuesday's session, its third consecutive decline. The euro fell 0.1%, to $1.1738 after rising by 0.5% on the previous day. The European Central Bank is expected to hold rates steady on Thursday after eight consecutive rate cuts, with the prospect of steeper-than-expected U.S. tariffs looming. After falling 3 basis points overnight, the benchmark 10-year U.S. Treasury rate increased by 2 basis to 4.36%. Bessent stated that Powell did not have to resign immediately, but could remain until May next year if he so chose. Investors are concerned that the politicization of the Fed may lead to a rate cut that is too steep, causing inflation and a rise in long-term borrowing rates. On commodity markets, Spot Gold prices dipped a bit to $3,422 per ounce. The price of oil has risen, mainly due to the rising cost of diesel in the U.S. Brent crude was up 0.4% at $68.88 a barrel, while U.S. crude increased by 0.4%.
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Sources say that the Marathon refinery in Texas has restarted its diesel and gasoline units.
Marathon has restarted the diesel and gasoline production units at its Galveston Bay refinery, which produces 631,000 barrels per day (bpd). This was confirmed by people familiar with the plant's operations on Tuesday. Sources said that the refinery's residual hydrotreater unit (RHU), which produces 64,000 bpd, is shut down completely following an fire on the 14th of June. The date for restarting this unit has yet to be determined. Marathon's spokesperson didn't respond to our request for comment. Sources said that the 140,000-bpd fluidic catalytic unit-3 (FCCU-3), which produces gasoline, was shut down over the weekend. Production resumed on Monday. A compressor failure shut down the Ultracracker, which produces 60,000 bpd of diesel. This happened on July 9, 2009. According to sources, it was repaired until late last week. FCCUs convert gas oil to gasoline using a fine powder catalyst. The Ultracracker, a hydrocracker, uses a high-pressure catalyst in the presence hydrogen to convert gasoline to diesel. The RHU has three units that use hydrogen to remove sulfur in motor fuels, according to US environmental regulations. The fourth unit, a hydrocracker, converts residual crude into diesel. According to the U.S. Energy Information Administration, the Galveston Bay Refinery has the second largest capacity in the United States. (Reporting and editing by Janane Vekatraman; Erwin Seba)
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Morning Bid Europe-Surprise Japan Trade Deal raises others' Hopes
Stella Qiu gives us a look at what the future holds for European and global markets. As U.S. earnings start to suffer from increased tariffs, Donald Trump surprised investors by announcing an agreement with Japan. The prospects for an agreement between the U.S.A. and the European Union are improving now that representatives of the 27-member group will be in Washington on Wednesday for further talks. The optimism led to a 1.1% rise in European stock futures. South Korea's officials are in the U.S. to continue trade negotiations. They will be studying the Japan agreement. Next week, U.S. officials and Chinese officials will meet in Stockholm to discuss a possible extension of the tariff deadline. The Japan agreement included a reduction of 15% in tariffs on auto exports to America, from 25% previously. This deal lifted the shares of Japanese automakers. Toyota Motor jumped 15%, and Mazda Motor rose 17%. The Nikkei, the broad benchmark index, rose 3.2% and reached its highest level in over a year. Meanwhile the yield on the 10-year Japanese Government Bond benchmark increased by 9 basis points. This was due to the reduction of uncertainty that helped clear the way for the Bank of Japan's return to interest rate increases. The dollar fell against the yen initially, but rose 0.2% at the end to 146.9yen. This was after the Mainichi local newspaper reported that Prime Minister Shigeru Shiba had decided to resign due to the losses suffered in the upper house elections on Sunday. Investors will focus on the earnings reports of Alphabet and Tesla, two of Magnificent 7, which have been driving the market rally largely due to AI optimism. Investors have been evaluating U.S. earnings for signs of slowdown and the impact of Trump's tariffs. So far, they are mixed. General Motors fell 8.1% after it reported that tariffs had taken a $1 billion toll on its quarterly results. The following are key developments that may influence the markets on Wednesday. Eurozone consumer confidence flash July Earnings from Alphabet (including Tesla), IBM and IBM
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Iron ore falls on China's property weakness, but stimulus stems the losses
Iron ore futures declined on Wednesday. The weakness of China's real estate sector overshadowed the support provided by recent government stimulus plans and infrastructure projects. As of 0311 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.49% lower. It was 813 yuan (113.49 USD) per metric ton. The benchmark August Iron Ore at the Singapore Exchange fell by 0.61% to $104.7 per ton. China's outstanding real estate loans reached a record high of two years in June following a series property measures designed to stabilize the sector. The property slump continues to be a drag on the economy, despite the continued support of policy. Property investment fell in the first half year. New home prices declined in June by the most in eight months. Analysts from ANZ believe that the announcement of a $170-billion hydropower project could be a major boost for the struggling concrete sector and steel industry. Costs of the project are expected to be four times higher than those of Three Gorges Dam. Japan launched an investigation on anti-dumping of stainless steel sheets imported to Japan from China and Taiwan after data revealed that these imports are sold at prices 20-50% less than those in China. As a result, Japanese steelmakers are struggling to set up prices that reflect the rising costs. This is resulting in a decline in profit. Coking coal and coke, which are used to make steel, also increased in price, by 9.24% each and 2.2% respectively. Prices of coking coal remained high due to rumours about possible government inspections which could cause supply disruptions. This was coupled with the demand for hydropower projects. The benchmarks for steel on the Shanghai Futures Exchange have mostly fallen. Hot-rolled coils fell by 0.15%. Wire rods dropped by 2.48%. Stainless steel increased 0.04%. Rebar traded at the same level.
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Oil prices pause slide on US-Japan trade deal
The oil prices rose in Asian trade Wednesday, after three straight sessions of declines. A U.S.-Japan trade agreement signaled progress on tariffs. However, gains were limited by the fading hope for a breakthrough during an EU and China summit. Brent crude futures were up 21 cents or 0.31% to $68.80 per barrel at 0351 GMT. U.S. West Texas Intermediate Crude Futures rose 17 cents or 0.26% to $65.48 a barrel. The benchmarks fell about 1% the previous session, after the EU announced it was considering countermeasures to U.S. Tariffs. Hopes for a deal before the August 1 deadline faded. On Tuesday, President Donald Trump announced that the U.S. had reached a deal with Japan that included a 15% tariff for U.S. imports coming from Japan. He said that Japan agreed to invest $550 billion dollars in the U.S. The industry is not expecting much from the EU-China Summit on Thursday, which will be a test of the EU's resolve and unity amid rising trade tensions between Beijing and Washington. The price decline of the last three sessions has abated, but I do not expect much of a boost from the news of a U.S. Japan trade deal. As the delays and hurdles reported in the talks with China and the EU will continue to drag on sentiment," Vandana Hari said. The Chinese Ministry of Commerce reported that the European Union trade chief and China's minister for commerce had an "in-depth and candid" discussion about economic and trade issues as well as the other challenges facing both sides ahead of the Summit. Separately U.S. crude oil and gasoline inventories fell last week. Market sources cited American Petroleum Institute data on Tuesday. They added that distillate stocks increased by 3.48 millions barrels. The ING analysts said in a report that the low crude inventory will help support prices, even though a large surplus will be expected later this year. The U.S. Energy Secretary said that sanctions against Russian oil could be considered to end the conflict in Ukraine, which is another positive sign for the crude markets. The EU agreed on Friday to its 18th package of sanctions against Russia. This included a lower price cap for Russian crude. Analysts said that the absence of U.S. involvement would hamper the effectiveness of this package. (Reporting from Mohi Nrayan in New Delhi; additional reporting from Colleen H. Howe in Beijing. Editing by Muralikumar Anantharaman, Jamie Freed and Muralikumar Anantharaman)
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Malaysia PM announces new steps to combat rising living costs
Malaysian Prime Minister Anwar Ibrahim announced on Wednesday new measures in response to the growing discontent of the public about rising living costs. These included a cash gift for all adults and a pledge to lower fuel prices. Anwar was asked to resign by protesters who planned to demonstrate in Kuala Lumpur, Malaysia's capital, on Saturday. They were concerned about the escalating price of goods and services, as well as the failure to implement promised reforms. Anwar's government has implemented a number measures this year to boost revenue. These include a minimum-wage hike, higher electricity tariffs for heavy users of power, and new taxes on imported luxury goods and fruits. Anwar said that the measures were targeted primarily at large companies and wealthy individuals. However, critics expressed concerns about the possibility of higher costs being passed on to consumers including those with lower and middle incomes. Anwar announced on Wednesday that all Malaysians over 18 will receive an one-off 100 ringgit (US$23.67). The cash assistance will be distributed from August 31. He said the government would spend 15 billion ringgits ($3.55 billions) of cash aid by 2025. This is an increase from the 13 billion ringgits originally allocated to that year. The police have stated that they expect between 10 and 15 thousand people to attend Saturday's protest, which was organised by opposition parties. Anwar stated, "I accept the complaints and acknowledge that the cost-of-living remains a problem that needs to be addressed even though we've announced various measures so far." He said that he will launch new initiatives on Thursday to help those who are in poverty. Anwar stated that the government would also reveal details of a long-awaited program to eliminate blanket subsidies for the widely used RON95 transportation fuel by the end September. Anwar stated that once the changes to subsidy are implemented, Malaysians can expect to see fuel prices drop to just 1.99 ringgits per litre from the current 2.05 ringgits, Anwar added. He added that foreign nationals will be required to pay the unsubsidised prices of the market for fuel. Anwar announced that additional funds would be allocated to a government program aimed at improving access to goods and necessities. He also promised to improve existing aid measures. Malaysia's inflation has fallen this year but there are still concerns about the rising prices of food and other basic necessities. The latest data released showed that consumer prices rose 1.1% compared to a month earlier in the previous year. However, food and beverage costs increased at a faster rate of 2.1%. $1 = 4.2250 Ringgit (Reporting and editing by David Stanway, Danial Azhar, Rozanna Latiff)
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Nikkei surges as Trump announces Japan Trade Deal
The Japanese stock market reached a record high of one year on Wednesday, as the country signed a deal with the United States to lower tariffs on autos. This also revived hopes for an EU-US trade agreement that would boost European stock futures. Donald Trump said late Tuesday that a deal reached with Tokyo would see Japan pay a 15% lower tariff on all shipments to the U.S. The agreement came after the U.S. reached an agreement with the Philippines, where the U.S. will collect a tariff of 19% on imports. Trump said that representatives of the European Union would be in Washington for trade talks on Wednesday. This sparked hopes for a trade deal with Europe as markets worried about wider EU countermeasures in the face of receding hopes for a Washington deal. Futures on the EuroStoxx 50 index rose by 1% while Wall Street futures gained about 0.1%. Charu Chanana is the chief investment strategist for Saxo. She said that expectations for a breakthrough in U.S.-Japan negotiations were low. Trump's announcement was a mild surprise, providing relief to Japanese stocks on a near-term basis. The deal is a strategic one, as it allows Japan to avoid immediate tariff increases, while Trump's focus shifts elsewhere. Nikkei gained over 3% in Japan as automakers' shares surged after news that the agreement would lower auto tariffs to 15% from proposed 25%. Mazda Motor rose 17%, while Toyota Motor increased 13.6%. South Korean automakers have also increased their production as the Japan agreement has fueled optimism about possible progress in the tariff negotiations between South Korea & the United States. The yields on 10-year JGBs increased by a massive 8.5 basis points to 1.585%. However, the reaction of the yen, which was trading at 146.99 dollars per yen, was less pronounced. Investors reacted calmly to a report in the media that Japanese Prime Minister Shigeru ishiba was stepping down at the end of August. Ishiba is facing increasing opposition within his own party over his pledge to remain in power, despite Sunday's loss of the ruling coalition in upper house elections. Chanana, from Saxo, said Ishiba’s departure removed a source for political fragility. It also sets the stage to a leadership that is more aligned towards pro-market policies as well as closer U.S. relations. His exit also clears the way for Japan to continue its accommodative monetary and fiscal stance." Treasury Secretary Scott Bessent announced that in another positive development U.S. officials and Chinese officials would meet next week in Stockholm to discuss an extension of the August 12 deadline to negotiate a trade agreement. Hong Kong's Hang Seng index rose 0.7%. MSCI's broadest Asia-Pacific share index outside Japan rose 0.8%. Wall Street ended the night mixed after investors analyzed a series of earnings reports that showed signs that Trump's Trade War is affecting corporate profit margins. General Motors fell 8.1% after it reported that tariffs had taken a $1 billion toll on its quarterly results. Investors now await the results of Tesla and Google parent Alphabet, the Magnificent Seven stocks that drove much of the recent market rally fuelled with AI optimism. The foreign exchange market was relatively quiet, with dollar yields and overnight dollar losses holding steady. The dollar index remained flat at 97.45 after slipping 0.4% overnight, its third consecutive day of declines. The euro dropped 0.1% to $1.1739, after rising 0.5% overnight. The benchmark 10-year U.S. Treasury Yields increased by 2 basis points, to 4.3559% after falling 3 bps overnight. Trump continued to criticize Federal Reserve Chair Jerome Powell, for not reducing interest rates. Bessent, however, said that Powell did not need to resign immediately. Bessent said that the Fed's independence in monetary policy was threatened by the "mandate creep" it has taken into other areas. He called on the U.S. Central Bank to review these operations. The price of oil rose a bit. U.S. crude oil rose by 0.4%, to $65.60 a barrel. Brent, on the other hand, was up 0.4%, at $68.88 a barrel. The spot gold price remained at $3.429 per ounce.
Zinc reaches peak in 4 months as LME availability declines
The London Metal Exchange reported that more than half the stocks stored in their approved warehouses were marked for removal.
Benchmark zinc traded on the LME 0.7% higher, at $2,838 per metric ton. It had previously reached $2,876 per ton, its highest level since March 28.
The total stocks of zinc at the LME are 118,225 tonnes
Traders say that there are concerns about how much zinc will be removed from the LME's warehouses, as most of it is stored in Singapore.
Rent deals are agreements that allow warehouses registered on the LME to share their fees or rental revenue with companies who deliver metal.
Natalie Scott-Gray is a senior metals analyst with StoneX. She said: "It's unclear whether this latest volatility in stocks was driven by pure physical demands or market players who benefited from rent deals."
If we don't see the same quantity of material return to the market in the next 3 to 4 weeks, we can assume this latest order will at least partially satisfy the physical consumption needs in Europe.
The focus is also on large holdings of 0#LMEWHI> zinc warrants, which are title documents that confer ownership. Additional cancellations will add to the tightness that has been created.
The announcement by China that the construction of what is expected to be the largest hydropower project in the world, located on the eastern edge of the Tibetan Plateau at a cost estimated at at least $170 billion has begun, traders reported, provided a boost to zinc.
The plans of China, the world's largest consumer, to stabilize growth in the sectors of machinery, automobiles, and electrical equipment, have helped industrial metals grow.
Lead fell 0.3% and aluminium rose 0.5%. Tin was up 0.9% to $33,750. Nickel climbed 1.4% to $16,430 per ton. (Reporting and editing by Jan Harvey, Louise Heavens and Pratima Dasai)
(source: Reuters)