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Gold prices fall as US-Japan deal boosts risk appetite but the weak dollar limits losses
Gold prices fell on Wednesday, as risk appetite increased after U.S. president Donald Trump announced an agreement with Japan before the impending deadline for tariffs. However, a weaker dollar and lower Treasury yields helped to limit losses. As of 0136 GMT spot gold was down by 0.2%, at $3,423.44 an ounce. It had earlier reached its highest level since June 16, during the session. U.S. Gold Futures also fell 0.2% to $3.437.70. Trump claimed that the U.S. has struck a deal with Japan that includes a 15% tax on imports to the U.S. from Japan. U.S. Treasury secretary Scott Bessent announced that U.S. officials and Chinese officials would meet in Stockholm, Sweden next week, to discuss extending the deadline for negotiating a deal to August 12. Tim Waterer, Chief Market Analyst at CM Trade, said that if more trade agreements are signed before August 1, it could increase general risk appetite as well as reduce demand for gold. "But if USD pressure continues, a return to 3,500 will remain a realistic prospect near-term for the precious metal." After Trump announced the Japan trade agreement, Japanese shares led a rally in Asian stock markets on Wednesday. The U.S. Dollar Index, which is a measure of the value of the dollar against other currencies, has been near its lowest level in two weeks, allowing gold priced in greenbacks to be more affordable for holders of other currencies. The benchmark 10-year U.S. Treasury rate on Tuesday reached its lowest level since July 9. Trump has continued to attack U.S. Federal Reserve Chairman Jerome Powell. He called him a numbskull who kept interest rates high, and he said he would be gone in eight months. The volatility could easily decrease if the pressure to fire Powell eases. Matt Simpson, senior analyst at City Index, said that bears could be waiting to fade into moves under $3,500. Other than that, silver spot fell 0.3% per ounce to $39.15, platinum was down 0.3% at $1,437.83, and palladium dropped 0.8% to 1,264.96.
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Nikkei gains as Trump announces Japan Trade Deal
The Asian market rallied on Wednesday, after President Donald Trump announced that he had signed a trade agreement with Japan. This fueled hopes for more deals to come and helped temper the disappointment of U.S. earnings which highlighted the drag caused by higher tariffs. Trump said late Tuesday that a deal with Tokyo would see Japan pay a lower tariff of 15% on shipments into 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. Charu Chanana is the chief investment strategist for Saxo. She said that expectations for a breakthrough had been low. Trump's announcement has delivered a mild surprise, providing relief to Japanese stocks in the near term. The deal is a strategic one, as it allows Japan to avoid immediate tariff increases, while Trump's focus shifts elsewhere. The Nikkei index rose 2.6% in Japan on Wednesday, as automakers' shares surged after news that the proposed auto tariff will be reduced to 15% from 25%. Mazda Motor rose 17%, while Toyota Motor increased 11%. The yields on 10-year JGBs increased by a staggering 8.5 basis points to 1.585%. This helped clear the way for the Bank of Japan's return to interest rate increases. The yen's reaction was muted. It only managed a 0.1% increase to 146.42 dollars. The Japanese Prime Minister Shigeru Shiba is planning to decide soon whether he will step down, after assessing the result of the trade agreement. Yomiuri reported. Trump said that representatives of the European Union will be coming to trade negotiations with him on Wednesday. This sparked hopes for a deal in Europe as the markets worried about wider EU countermeasures, despite fading signs of a Washington-based trade agreement. The EuroStoxx 50 futures increased by 0.8% while Wall Street Futures rose by about 0.1%. 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 0.5%, while Chinese blue-chips gained 0.3%. MSCI's broadest Asia-Pacific share index outside Japan rose 0.6%. Wall Street ended the night mixed after investors analyzed a series of earnings reports that showed signs that Trump's Trade War is hitting profit margins. General Motors fell 8.1% after it reported that tariffs had taken a $1 billion toll on its quarterly results. RTX shares fell 1.6% as the aerospace and defence giant was hit by tariffs despite a strong demand for their engines and aftermarket service. Investors now await the results of Tesla and Google parent Alphabet, the Magnificent Seven stocks that drove much of the rally in the stock market fuelled by AI optimism. The foreign exchange market is a bit quiet, with dollar's overnight losses and lower Treasury yields holding firm. 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 step down right away. 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 oil prices rose a bit on Wednesday. U.S. crude oil rose by 0.4% to $65.60 a barrel. Brent is now at $68.88 a barrel, up by 0.4%. The spot gold price remained at $3.429 per ounce.
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US inventories and the Japan trade agreement indicate a stronger demand for oil.
Early trading on Wednesday saw oil prices stabilize after three straight sessions of falling. A U.S.-Japan trade agreement signaled progress in tariff negotiations, and a survey showed that U.S. crude stocks fell last week indicating a stronger demand. Brent crude futures were up 33 cents or 0.48% to $68.92 per barrel at 0023 GMT. U.S. West Texas Intermediate Crude Futures rose 33 cents or 0.51% to $65.64 a barrel. 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 price of oil had dropped in the previous session, after the EU announced it was considering countermeasures to U.S. Tariffs. Hopes for a deal before the deadline on August 1 faded. A poll conducted on Tuesday showed that the U.S. crude stockpiles, as well as distillate and gasoline stocks, were all expected to be down last week. Nine analysts polled ahead of the weekly inventory data, estimated that crude inventories had fallen by an average of 1.6 million barrels during the week ending July 18. Market sources cited American Petroleum Institute data on Tuesday to report that U.S. crude, gasoline, and distillate stocks decreased last week, while inventories increased. The U.S. Energy Secretary said that sanctions against Russian oil could be considered to end the conflict in Ukraine. This is another positive sign for the market. 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 lack of U.S. involvement would hamper the effectiveness of the package. (Reporting and editing by Muralikumar Aantharaman; Colleen howe)
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The World Court will mark the future of climate litigation
On Wednesday, the highest court of the United Nations will issue an opinion that could determine the future course of climate action around the globe. The 15 judges of The Hague's International Court of Justice have issued a non-binding advisory opinion. Legal experts claim that it has legal and political significance and future climate cases will be unable ignore the opinion. Payam Akhavan is a professor of international law. She said, "The advisory opinion was probably the most significant in the history the court as it clarifies the international law obligations that are necessary to prevent catastrophic harm which would threaten the survival of humanity." Akhavan, who represents low-lying island states, represented them in two weeks of hearings at the ICJ (also known as the World Court) last December. Over a hundred countries and international organisations expressed their opinions on the two questions that the U.N. General Assembly asked the judges about. The questions were: What are the obligations of countries under international law in protecting the climate against greenhouse gas emissions? And what are the legal implications for countries who harm the climate system. The judges heard from wealthy countries in the Global North that they should base their decisions on existing climate treaties. This includes the 2015 Paris Agreement which is largely non-binding. Small island states and developing nations argued that stronger, and in some cases legally-binding, measures were needed to reduce emissions, and that the largest emitters of greenhouse gases, which are climate-warming, should provide financial assistance. The PARIS Agreement and the Upsurge in Litigation At the end of 2015 U.N. talks held in Paris, over 190 countries pledged to continue efforts to limit global heating to 1.5 degrees Celsius. The agreement failed to reduce global greenhouse gas emissions. The U.N. said in its latest "Emissions Gap report" late last year that the current climate policies would result in a global warming of over 3 C (5.4 F), above pre-industrial levels, by 2100. Climate-related litigation is intensifying as campaigners try to hold governments and companies accountable. According to figures released by the Grantham Research Institute for Climate Change and the Environment in London, nearly 3,000 lawsuits were filed in June across 60 countries. The results so far have been mixed. In May, a German court threw out the case between a Peruvian farm and German energy giant RWE. But his lawyers and environmentalists said that this case, which had dragged on over a decade, still represented a victory in climate cases and could inspire similar lawsuits. In a recent advisory opinion, the Inter-American Court of Human Rights (which has jurisdiction over 20 Latin American countries and Caribbean islands) said that its members should work together to combat climate change. The campaigners believe that Wednesday's ruling should be a turning-point and, even if it is only advisory, the decision should determine that U.N. members have violated the international law that they signed up to enforce. The court has confirmed that inaction on climate change, particularly by major emitters is not a failure of policy but a violation of international law, said Vishal Prasad of Fiji, one of the students who lobbied Vanuatu, in the South Pacific Ocean, to take the case before the ICJ. Lawyers say that although it is technically possible to ignore a ruling of the ICJ, countries tend to be reluctant to do so. This opinion applies binding international law to which all countries have committed themselves. This opinion will be cited by national and regional courts as persuasive authority, and will guide judgments that have binding consequences in their legal systems," said Joie Chowdhury. The court will begin reading its opinion at 3 pm (1300 GMT). (Reporting by Stephanie van den Berg, additional reporting by Ali Withers in Copenhagen; editing by Barbara Lewis)
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Nikkei rally boosts Asian shares after Trump announces Japan Trade Deal
Japanese shares led a rally in the Asian share markets on Wednesday, after U.S. president Donald Trump announced that he had signed a trade agreement with Japan. This fueled hopes for more deals to follow. It also offset mixed U.S. earnings which highlighted the drags of higher tariffs. Trump announced late Tuesday a trade agreement with Tokyo, which he claimed will see Japan invest $550 billion in the United States while paying a reciprocal 15% tariff. The deal came after an agreement reached with the Philippines, where the U.S. will collect a tariff of 19% on all imports. Norihiro Yamaguchi is a senior Japan economist with Oxford Economics. In the short term, I believe that a reduced level of uncertainty will be welcome in the equity markets. The global trade policy will remain uncertain, so today's outcome will have little impact on the real economy. On Wednesday, the U.S. President also announced that representatives of the European Union will be coming to trade negotiations. 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. The Nikkei soared 1.7% Wednesday, as automakers' shares surged. Mazda Motor rose 12%, while Toyota Motor increased 10%. The MSCI broadest Asia-Pacific share index outside Japan grew by 0.2%, boosted by stronger openings in Australia and South Korea. The yen initially rose on the news but ended up flat at 146.68 to the dollar. In Asia, Nasdaq and S&P futures both gained 0.2%. Overnight, Wall Street ended mixed as investors assessed the results of a variety of companies and signs that Trump’s trade war has impacted 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 driven by AI optimism. The dollar index, which is a measure of the value of the US currency, was unchanged at 97.45 versus its major counterparts, after slipping 0.4% overnight. This marks the third consecutive day that the dollar index has declined. The benchmark 10-year U.S. Treasury Yields increased by 2 basis points, to 4.3579 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 step down right away. 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 spot gold price remained at $3.429 per ounce.
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India and UK Free Trade Agreement: Key Facts
After three years of negotiation, Britain and India will sign a formal free trade agreement during the visit by Prime Minister Narendra Modi to the UK on Thursday. After three years of negotiations, the British Parliament and India's Federal Cabinet will need to approve the deal. This is likely to happen within a year. The following are the main points of the Agreement: Tariff Cuts India reduces tariffs on almost 90% of UK products Whisky and Gin levy will fall from 150% down to 75% then to 40% within a decade Tariffs on automobiles to drop from 100% plus to 10% under quota Other goods, such as cosmetics, medical equipment, salmon, chocolates and biscuits, will be subject to a reduction in tariffs According to the Indian Commerce Ministry, UK will offer duty-free entry to nearly 100% of Indian items BENEFITS TO INDIAN SECTORS Indian exports like textiles, footwear and gems & jewelry, furniture, auto parts, chemicals, machinery, sporting goods, and other items are likely to be duty-free, compared to the current UK levels of between 4%-16%. You can also find out more about According to the Indian commerce ministry, UK will grant temporary access to visitors, including businessmen and contract service providers, as well as yoga instructors, chefs, and musicians. Indian workers and their employers working temporarily in Britain will not be required to pay social security contributions for the next three years. This is estimated to save around 40 billion rupees (approximately $463 million) per year. UK FIRMS TO GET ACCESS TO INDIAN GOVERNMENT PROCUREMENT India will allow British suppliers to participate in non-sensitive government tenders within the federal government. The threshold is 2 billion rupees. According to estimates by the UK government, this deal will allow UK companies to access India's public sector procurement market. This market consists of around 40,000 tenders, with an estimated value of 38 billion pounds per year. BOOSTER TO UK ECONOMY According to British estimates, the trade pact will increase UK GDP in the long-term by 4.8 billion pounds ($6.5billion) per year, as consumers gain access to cheaper Indian clothing, footwear, and food products. INDIAN FIRMS WILL BENEFIT Duty-free access to the UK is likely to benefit Indian textile and clothing manufacturers like Welspun India. Arvind Ltd., Raymond. Vardhman. According to industry analysts, footwear manufacturers such as Bata India and Relaxo, as well automakers like Tata Motors Mahindra Electric, Bharat Forge, could benefit. UK COMPANIES Access to the fast-growing Indian markets could be beneficial for UK companies including Diageo, Aston Martin, Jaguar Land Rover and Tata owned Jaguar Land Rover.
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Vale's Iron Ore Production Up 4% With Record Q2 at Key Mine
The Brazilian miner Vale reported that it produced 83.6 millions metric tons (metric tons) of iron ore during the second quarter. This is up 3.7% compared to a year ago, according to the company. Vale's output and sales report said that the growth was mainly due to a second-quarter record set at the S11D project in northern Brazil. This is Vale's top iron ore producing mine. It also cited "strong performance" from its Brucutu mining operation located in the southeast. Vale stated that the combination of the new assets ramping-up and the greater operational reliability are supporting a stronger adherence to 2025 production plans. Iron ore production is expected to range between 325 and 335 millions tons this year. Citi analysts, including Alexander Hacking, said Vale had a "solid" quarter and noted that the firm was "on track to achieve (its) guidance". They added, "We expect that the stock will trade in line tomorrow." Vale's iron ore sales fell by 3.1% in the third quarter. The company's realized average price for iron ore was $85.1 per ton. This represents a 13.3% drop. Vale said that its portfolio optimization strategy, which prioritizes its medium-grade products, was responsible for the decline in sales. It also cited stock replenishment. BASE METALS Vale's production of copper rose by nearly 18% during the period, to 92,600 tonnes. It attributed this to the higher grades at Brazil's Sossego facility, the nominal capacity at the Salobo complex in Brazil and the ramp up at the Voisey's Bay Project in Canada. Vale reported that copper sales increased 17% to 89,000 tonnes. Vale attributes the increase in nickel production, up to 40,300 tonnes, to a better performance by its Canadian assets, its Onca Puma project in Brazil and "lower maintenance activities". Nickel sales increased by nearly 21%, to approximately 41 400 tons. Vale will release its full second quarter earnings on July 31, 2018. Reporting by Andre Romani from Sao Paulo, and Marta Nogueira from Rio de Janeiro. Editing by Kyrry Madry and Christopher Cushing.
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Ampol lowers half-year earnings forecast due to supply chain impact
Ampol Ltd, Australia's largest fuel retailer, forecast lower half-year earnings on Wednesday as the sea-freight situation impacted its supply chains. It also reported a 1,1% decline in its Lytton Refinery's second-quarter margins. The company anticipates that first-half earnings will be A$400m ($262.04m) on a replacement costs basis, compared to A$502.1m a year ago. The company's second-quarter refinery margin in Queensland at its Lytton Refinery, one of its key assets, dropped to $8.71 a barrel, from $8.81 a barrel last year. The Queensland refinery has suffered from a number of operational disruptions, including planned maintenance, and loss of production due to Cyclone Alfred. This, combined with the weak margins of Singapore's refining industry, has impacted the refinery's margins and output. The refinery margin, which is the difference between crude oil prices and refined petroleum product prices, increased in the second half of the year. The Sydney-based company reported a second-quarter sales volume of 6.304 million liters, down 4.7% compared to a year ago. The second-quarter output of the Lytton refinery was 1,406 ML. This compares to 1,420ML recorded a year ago. The company will report its financial results for the first half of the year on August 18. (1 Australian dollar = 1.5265 dollars) (Reporting and editing by Adwitiya Shrivastava in Bengaluru, Sherin Sunny)
Argentina's steelmaker Sidersa seeks $286.3 mln investment via incentive scheme
According to a document published in the Official Gazette of Argentina on Tuesday, Argentine steelmaker Sidersa was approved to participate in a government incentive program for funding a $286.3 million steel plant aimed at boosting production.
Why it's important
The project is in line with Argentina's efforts at promoting industrial growth and economic stabilization through the Large Investment Incentive Regime.
KEY QUOTE
According to the company, the Sidersa Argentine Steel Project aims "to increase the production capacity of steel long, meet unsatisfied local demand, diversify their product offerings, and boost its productivity by implementing cutting-edge technology that is focused on sustainability."
By the Numbers
Sidersa plans to invest $142,87 million in the first and $127.33 millions in the second years under the RIGI framework.
The new plant is expected to have a capacity installed of 360,000 tons a year. Production projections are 290,000 tonnes per year starting in its fourth year.
CONTEXT
The libertarian government of Argentine president Javier Milei is trying to boost the promising mine sector in order to increase income and maintain macroeconomic stability.
The RIGI framework aims to provide tax, customs and exchange rate advantages, as well access to international arbitrage in the event of disputes.
What's Next?
The approval of Sidersa by Argentina's Economy Ministry could pave way for the construction of a modern steel mill that would diversify local offerings, and reduce Argentina's dependence on imports. Report by Walter Bianchi, Writing by Aida Pelaez Fernandez, Editing by Chizu Niyama
(source: Reuters)