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Iron ore gains for the week on Trump-Xi discussions and resilient China demand
The price of iron ore futures rose to an all-time high on Friday, and was set for a weekly gain, buoyed up by the progress made in Sino-U.S. negotiations and the steady demand from China, its largest consumer. However, seasonally low steel consumption limited gains. The September contract for iron ore on China's Dalian Commodity Exchange closed the daytime trading 0.86% higher, at 707.5 Yuan ($98.48), logging a week-long gain of 0.6%. Earlier in the session, the contract reached its highest level since 26 May at 713.5 Yuan per ton. As of 0716 GMT on Friday, the benchmark July iron ore traded at the Singapore Exchange had risen 0.9% to $95.7 per ton. This is a 0.1% increase this week. In the early part of the session, it reached its highest level since May 29, at $96.4. The market was optimistic after U.S. president Donald Trump and his Chinese counterpart Xi Jinping addressed weeks of brewing tensions over trade and a fight over vital minerals during a rare leader to leader call on Thursday. Analysts at Everbright Futures wrote in a report that the call between Sino-U.S. leader is a sign that trade tensions are easing between the two superpowers. This has sparked a risk-on mood. Analysts at Chaos Ternary Futures say that near-term ore consumption is expected to remain firm, as steelmakers will need to stockpile cargo in order to maintain production. Hot metal output has been relatively high, and the mills' inventory remains low. A survey by consultancy Mysteel revealed that the average daily hot metal production, which is a measure of iron ore consumption, was 2.42 million tonnes as of 5 June, up 2.6% compared to a year ago. As summer temperatures increased, construction was hampered. Coking coal, coke and other steelmaking ingredients have increased by 3.18% and 0.67 percent, respectively. The Shanghai Futures Exchange saw a majority of steel benchmarks rise. Rebar was up 0.57%, while hot-rolled coils and wire rod were also higher. Stainless steel fell 0.16%.
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Investors cautious as US jobs data approaches, European shares fall
Investors resisted placing large bets before the release of important U.S. employment data. Trade tensions also added to the uncertainty. As of 0709 GMT the pan-European STOXX 600 index held steady at 551.9 points. If momentum continues, it could be on course for a second weekly gain. Investors can gauge the Federal Reserve's ability to navigate the uncertain trade environment by assessing the monthly U.S. Non-Farm Payrolls. The U.S. president Donald Trump doubled the tariffs on imports of steel and aluminum earlier this week. This heightened trade tensions. The Trump administration has asked countries to submit best offers before Wednesday but the markets are yet to see any concrete results. Investors have lowered their expectations of further interest rate cuts after President Christine Lagarde signaled that the central banks is nearing the end its easing cycle. Adidas and Puma shares fell by nearly 1% each after U.S. competitor Lululemon Athletica reduced its profit forecast for the year.
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Gold prices rise as US data weakens and optimism over Trump-Xi meeting is tempered
Gold gained on Friday, and investors were looking forward to the U.S. payroll report. This was due out this week. As of 0548 GMT, spot gold was up by 0.3%, at $3,363.33 per ounce. Bullion is up 2.3% this week. U.S. Gold Futures rose 0.4% to $3387. Trump and Xi held a rare call between leaders on Thursday to discuss escalating tensions in trade and disagreements over minerals. However, key issues are still unresolved. Tim Waterer is the chief market analyst of KCM Trade. He said that the initial excitement for risk appetite after the Trump-Xi phone call has begun to fade, allowing gold to creep upward. Last week, the number of Americans who filed new claims for unemployment benefits reached a record high. Investors await the U.S. Nonfarm Payroll data at 1230 GMT after a series of data this week that highlighted a softening labor market. The economists polled predicted that non-farm payrolls would increase by 130,000 jobs by May, and the unemployment rate will remain at 4.2%. Waterer stated that "the upcoming NFP could be a catalyst for a break-out if the data produced a significant miss either side of expectations." Federal Reserve policymakers stated that inflation is a greater concern than the cooling of the labor market, which suggests a longer hold on monetary policies adjustments. Gold is often viewed as a safe haven asset. It tends to do well in times of economic uncertainty, and when interest rates are low. This week, the high price of gold dampened purchases in major Asian cities. In India, discounts reached their highest level in more than a month. Silver spot fell by 0.7%, to $35.92 an ounce. This is near the 13-year high. Platinum rose by 1.7%, to $1149.85, and palladium gained 0.7%, to $1012.60. All three metals are headed for weekly gains.
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Tesla falls as Trump-Musk's bromance soured. Stocks are on alert for payrolls
Asian shares fell on Friday, as investors prepared for the important U.S. payrolls data. Tesla also suffered heavy losses due to the public spat between Elon Musk and President Donald Trump. The markets are wary after a string of weak economic data, and they're worried about a surprise downturn in the payrolls report due later that day. This would increase fears of stagflation, while increasing pressure on the Federal Reserve. Tesla shares rose 0.8% after hours trading, after plummeting 14% overnight and wiping out $150 billion of market value. Trump had threatened to stop government contracts for Elon Musk's businesses after the relationship, which was once very close, deteriorated into an open and bitter disagreement. Trump told Politico, when asked about their relationship, that "it's fine" and that White House staff had arranged a phone call with Musk on Friday to try to find a solution. Nasdaq and S&P futures both rose by 0.3%, while losses in European stocks futures were reduced to just 0.1%. MSCI's broadest Asia-Pacific share index outside Japan fell 0.2% Friday from its eight-month high. The index is still on track for a 2.1% weekly increase. The Hang Seng in Hong Kong fell 0.5% and the blue chips of China dropped 0.2% as a phone call between Trump's and Xi Jinping's offered little clarity on how to ease trade tensions. Luke Yeaman is the chief economist of the Commonwealth Bank of Australia. He said: "I believe that the fact they are talking and that the channels of communication are opened is a good thing." "But it is clear that there are many tensions and that neither party wants to give away too much... There is not a great deal of goodwill with which to improve the trade relations." The majority of Asian shares are slightly down, but Japan’s Nikkei has been a bright spot, rising 0.4% and helping to reduce its weekly decline to 0.7%. WAIT FOR PAYROLLS Payrolls report expectations have been dampened by weaker-than-expected labour data. This includes a 47% jump in Challenger's layoffs year-on-year and a major surprise on the downside in ADP private payrolls. Forecasts predict a gain of 130,000 new jobs in May with the unemployment rate remaining at 4.2%. A sudden weakness in the U.S. economy could trigger a rate cut and cause a massive rally in Treasuries. The futures market indicates that there is little chance of a rate reduction until September. This is 93% priced-in, and another move will likely come in December. The yields on benchmark 10-year Treasuries remained flat at 4.3887 percent, after rising 3 basis points over night to recover from a 1-month low. In a client note, analysts at TD Securities said that they expect payrolls in May to print below consensus levels of 110,000. In recent weeks, the markets have been focusing solely on tariffs and debts. Macro has taken a backseat. We may not have enough information to help catalyze a renewed focus on macroeconomics, but we do expect that downside surprises will cause a greater market reaction. The dollar rose 0.2% against its major counterparts on Friday, just a little above a six week low due to soft economic data that dented the U.S. Overnight, the euro reached a six-week high of $1.1495 after the European Central Bank lowered rates. However, it also signaled the nearing end of the year-long cycle of policy easing. Investors are no longer expecting a move to be made in July. The final move is more likely to occur in October or in December. On the commodities market, oil prices are slightly lower than last week but they will likely rise by a large amount this week due to supply concerns. U.S. Crude Futures fell 0.4% to $63.12 per barrel, but rose 3.8% in the past week. Gold prices rose 0.4%, to $3,366.78 per ounce. They are up 2.3% for the week.
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Indian dealers offer steeper discounts on ASIA GOLD as price rally dampens demand
The gold discounts in India reached their highest level in over a month this week, due to a rise in prices that were near record highs. Meanwhile, the rising rates in other major Asian cities also dampened demand. On Friday, domestic gold prices traded at around 98.300 rupees for 10 grams, having rebounded from a monthly low of 90.890 rupees and approaching the all-time record of 99.358 rupees. Indian dealers were forced to offer discounts due to the price spike Up to $56 per ounce less than official domestic prices. This includes a 6% duty on imports and a 3% tax on sales. Prices have increased, which has really affected demand. "Harshad Ajmera, wholesaler JJ Gold House of Kolkata, said that there were few buyers this week. The monsoon, which started earlier than usual in India this year, is usually a time when gold demand in India remains low. A Mumbai-based bullion seller with a private banking firm said that jewellers have stopped making purchases due to the lean season. They also don't wish to accumulate high-cost inventories. Dealers in China, the world's largest gold consumer, charged premiums between $10 and $14 per ounce above the global benchmark spot rate. Last week, gold bullion was traded at par or a $15 premium. Hugo Pascal is a precious metals dealer at InProved. He said that the increased gold price has negatively affected Chinese demand. In Hong Kong, gold In Singapore, the price was $0.30 to $1.30 higher. Gold traded at par prices with a premium of $2.50. We've also seen wholesalers selling due to high prices, said Brian Lan. In Japan, bullion Traded anywhere between a discount or premium of $0.5 over spot prices.
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The oil price is expected to rebound this week after US-China trade talks resume
Oil prices fell on Friday, but are on track to gain their first weekly increase in three weeks following the resumption of trade talks between U.S. president Donald Trump and Chinese President Xi Jinping. This has raised hopes for stronger growth and demand in two of the world's largest economies. Brent crude futures dropped 19 cents or 0.3% to $65.15 per barrel at 0441 GMT. U.S. West Texas Intermediate Crude lost 20 cents (0.3%), to $63.17 after having gained around 50 cents Thursday. Both benchmarks are on course to end the week higher, after two weeks of falling. Brent is up 2.1%, and WTI is up 4% this week. China's official Xinhua News Agency said that trade talks between Xi Trump were held at Washington's request. Trump said that the conversation had ended in a "very good conclusion" and added that the U.S. is "in very great shape with China, as well as the trade agreement." According to Melanie Joly, Canada has also been in trade discussions with the U.S. The Prime Minister Mark Carney is directly in contact with Trump. The oil market continues to be volatile with the news of tariff negotiations, and data that shows how the U.S. levies and trade uncertainty are affecting the global economy. Analysts at BMI (a Fitch affiliate) said that the possibility of increased US sanctions on Venezuela, which would limit crude exports, and an Israeli strike against Iranian infrastructure could add upside risks to prices. The price of oil will continue to fall in the next quarters due to both increased production by OPEC+ producers and non-OPEC producers. Saudi Arabia, the top exporter of crude oil to Asia, has cut its July crude price for Asia near the two-month low. This was a lower price drop than expected, after OPEC+ agreed in July to increase output by 411,000 barrels a day. The Kingdom had pushed for a larger output increase as part of a broader plan to regain market share and discipline the over-producers within OPEC+. This grouping includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia. (Reporting and editing by Sonali Freed and Jamie Freed; Sudarshan Varadhan)
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MORNING BID EUROPE-Trump-Musk feud shakes markets pre-payrolls
Stella Qiu gives us a look at what the future holds for European and global markets. The most expensive divorce ever could cost you a lot of money. The bromance-turned-to-brawl between U.S. President Donald Trump and billionaire Elon Musk sparked a 14% drop in Tesla shares overnight, wiping out $150 billion in market value. Trump has also threatened to cancel government contracts worth tens and tens billions of dollars with SpaceX. Investors haven't lost sight of the U.S. Payrolls Report that will be released later today. After a week of weak economic data, markets are wary of any negative surprises. After assessing the inflationary impact from Trump's tariffs, the Federal Reserve has been hesitant to cut rates. But the Trump-Musk spat was not without wider implications for markets. Bitcoin prices fell 4% over night as investors realised that Trump's support may not last forever. Asian technology shares fell in line with Wall Street, pushing most stock markets of the region into negative territory. Japan's Nikkei, however, was the exception. It rose 0.3%. In the morning of Friday, there were some signs that tempers might be cooling. Trump told Politico "it's fine" when asked about the split and Tesla stock prices stabilized in after-hours trade. Investors found little to celebrate in the meantime about the telephone call between Trump and Chinese president Xi Jinping on trade, which resulted in little more than a promise to continue to speak. Forecasts for May's U.S. payrolls predict a gain of 130,000 new jobs, while the unemployment rate remains at 4.2%. Fed funds futures indicate that there is little chance for a rate reduction until September. However, a cut at this time has been priced in about 90% with a second expected in December. Markets were subdued by fears of a negative surprise in payrolls. Wall Street futures are mostly flat, and European markets will open lower with EUROSTOXX futures down by 0.2%. On the currency market, the euro hit a six-week peak of $1.1495 over night after the European Central Bank reduced rates. However, it signaled that the policy easing cycle was coming to an end. Investors have given in to the idea of a July cut, but the final decision is expected in December. The following are key developments that may influence the markets on Friday. German Industrial Output and Trade Data for April Retail sales in the Eurozone for April Payrolls of non-farm workers in the U.S. for May
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Wall Street Journal, June 06
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. Boston Consulting Group has fired two North American Partners involved in a joint Israeli-American effort for the distribution of humanitarian aid to Gaza. Senate Republicans in the United States are working on a proposal that would protect some NASA programs against large cuts proposed by White House. People familiar with the transaction have confirmed that Iran ordered thousands of tonnes of ballistic missile ingredients from China. The country is seeking to regain its military strength as it talks with the U.S. about the future of its nuke program. Humana, second-largest Medicare insurer, told congressional staffers it would support measures that would curb billing practices that result in billions of extra payments for the industry. Staffers and The Wall Street Journal viewed a document that was viewed by the staffers. U.S. president Donald Trump spoke with Chinese leader Xi Jinping on Thursday and suggested that after the call, one of the points leading to a break down in trade negotiations--the exportation of rare-earth mineral which is critical to the U.S. automotive industry--had already been addressed. Israel's military announced that it had targeted an underground drone facility located in southern Beirut, on Thursday. This was one of the largest strikes against Hezbollah assets in recent memory since a ceasefire agreement was reached in November.
What are the risks and outlines of a potential Ukraine peace deal?
What are the possible contours of a peace agreement between Russia and Ukraine?
SECURITY GUARANTEE
Ukraine, which has been subjected to a full scale invasion in 2022, and witnessed Russia annex Crimea, needs security guarantees from major powers, primarily the United States.
The Budapest Memorandum of 1994, in which the U.S., Russia and Britain agreed to refrain from using force against Ukraine and respect Ukrainian sovereignty was not enough for the Ukrainian government. The powers agreed to take the matter to the United Nations Security Council in the event of an attack on Ukraine.
Sources involved in the talks say that the problem is that any security agreement that does not have teeth will leave Ukraine vulnerable.
Diplomats in draft proposals of a possible settlement for peace, seen by us, spoke about a "robust guarantee" including a possible agreement similar to Article 5. Article 5 of NATO's treaty binds allies together to defend one another in the event of a military attack. Ukraine is not part of NATO.
According to a draft of the failed 2022 agreement, Ukraine had agreed to permanent neutrality as part of a deal with the five permanent members on the U.N. Security Council - Britain, China France, Russia, the United States and other nations such as Belarus, Canada Germany Israel, Poland, and Turkey.
Officials in Kyiv, however, say that they will not accept neutrality for Ukraine.
NATO AND NEUTRALITY
Russia has said repeatedly that a possible NATO membership by Kyiv is inacceptable and that Ukraine should be neutral, with no foreign bases. Zelenskiy said that it was not up to Moscow to decide Ukraine’s alliances.
NATO leaders in Bucharest agreed to admit Ukraine and Georgia as members one day at the Bucharest Summit of 2008. In 2019, Ukraine amended its constitution to commit to full membership in NATO and the European Union.
U.S. ambassador General Keith Kellogg said that NATO membership for Ukraine was "off the table". Donald Trump said that the U.S.'s past support of Ukraine's NATO membership was the cause of war.
Ukraine and Russia discussed neutrality in 2022. According to a draft of an agreement, Russia wants limits placed on the Ukrainian military. Ukraine is opposed to any restrictions on the size or capabilities of its military.
Russia has stated that it does not object to Ukraine's EU membership bid, although some members of the EU could oppose Kyiv’s bid.
Territorial
Moscow claims to control about a fifth (or a fifth) of Ukraine, and that the territory now belongs formally to Russia. This is a position that most countries don't accept.
In 2014, Russia annexed Crimea. According to Russian estimates, Russian forces control nearly all of Luhansk and more than 70% Donetsk and Zaporizhzhia regions. Russia controls a small part of Kharkiv.
Putin's most detailed peace proposals, which he outlined in June of 2024, stated that Ukraine would be required to withdraw from all these regions, including those not currently under Russian rule.
According to a draft plan of peace drafted by the Trump Administration, the U.S. will de jure recognize Russian control over Crimea and de facto acknowledge Russian control over Luhansk, Donetsk, Kherson, Zaporizhzhia and other parts.
Ukraine would gain territory in Kharkiv Region, and the U.S. will control and administrate Zaporizhzhia Nuclear Power Plant which is currently under Russian control.
Kyiv has said that officially recognising Russian sovereignty over occupied territories is not possible and would be a violation of Ukraine's Constitution. However, territorial issues could be discussed in talks after a ceasefire.
Steve Witkoff, a Trump envoy, told Breitbart last week that the main issues are the regions and the nuclear plant. It's also about how the Ukrainians can use the Dnieper River to reach the ocean.
Sanctions
Russia is in favor of Western sanctions being lifted, but it's sceptical they will happen soon. Even if US sanctions were lifted, EU sanctions and other Western sanctions such as those imposed in Australia, Britain and Canada could continue for many years. Ukraine wants sanctions to stay in place.
The U.S. government has been reported to be studying ways to ease sanctions against Russia's energy industry as part of a broader plan that would allow Washington to provide swift relief in the event Moscow agreed to end the Ukraine conflict.
OIL AND GAS
Trump suggested that Putin who is the second largest oil exporter in the world, may be more inclined towards a resolution of the Ukraine War following the recent drop in oil price, although the Kremlin stated that national interests always trump oil pricing.
Some diplomats speculate that the U.S. and Russia are looking for lower oil prices in a larger grand bargain that includes issues ranging from the Middle East to Ukraine.
In the beginning of this month, it was reported that Washington and Moscow officials had held talks about how Washington could help revive Russian gas exports to Europe.
CEASEFIRE
Before talks can begin, European powers and Ukraine want Russia to agree to a truce. But Moscow insists that a truce will only be effective once the verification issues have been resolved. Kyiv claims that Moscow is trying to buy time.
RECONSTRUCTION UKRAINE
European powers are looking to utilize some of the Russian assets that have been frozen in the West, to assist Kyiv. Russia rejects this.
Reports from February indicate that Russia may agree to use $300 billion in sovereign assets that are frozen in Europe as part of the reconstruction of Ukraine, but that it will insist on spending a portion of that money in the one-fifth that is controlled by Moscow's forces.
Ukraine wants to use all $300 billion in assets seized for post-war reconstruction. (Reporting and editing by Gareth Jones, Guy Faulconbridge)
(source: Reuters)