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Stocks and the dollar cautiously welcome recent US-China trade agreement
The dollar and stock markets welcomed the latest progress in the trade talks between China and the United States with caution on Wednesday, while they waited for more details about what had been decided and if it would last. Bond investors also prepared for an auction of Treasury bonds that will test the demand for the country’s debt, as well as a reading of U.S. Inflation that could reveal the early impact on prices from tariffs. Washington and Beijing negotiators said in London that they had "agreed on a framework for trade", which would be presented to their respective leaders. Howard Lutnick, the U.S. Secretary of Commerce, said that a plan to implement the implementation plan would result in removing restrictions on rare Earths and magnets. However, he did not provide any specifics. Carol Kong, currency strategist at Commonwealth Bank of Australia, said that even though the details were scanty, markets would be happy as long as both sides talked. She said, "It's going to be hard for both sides and will take a very long time before they can reach a comprehensive agreement." "This type of comprehensive agreement usually takes years to reach, so I am sceptical about a framework agreed at the London meeting being comprehensive." A federal appeals court on Tuesday allowed the most comprehensive tariffs of President Donald Trump to remain in place while it reviewed a lower court ruling blocking them. Elon Musk, the billionaire who owns Tesla, also admitted that he regretted some of his posts about Trump last week. This could be the beginning of a reconciliation of a sudden rift which has caused Washington to become tense and affected the shares of Musk's Tesla. Investors who have suffered from trade tensions before, remain cautious. Both the S&P 500 and Nasdaq Futures are down by 0.2%. The performance of European and Asian shares was slightly better, with the STOXX benchmark index for major European stocks gaining 0.14% and MSCI's broadest Asia-Pacific share index outside Japan gaining 0.6%. AUCTION ANGST Dollar slightly strengthened against the Japanese yen, trading at 145.05. The dollar index rose to 99.091 as the euro fell 0.1% to $1.1422. Bond investors also awaited an auction later that day of $39 billion worth of 10-year notes, eager to see whether foreign buyers would show up. The 10-year Treasury yields remained unchanged at 4.4898%. Investors are demanding a higher premium on Treasuries due to concerns about the huge U.S. deficits and debt, as well as their unease with White House trade policies. Analysts expect that the data on U.S. Consumer Prices for May will also show an initial increase in prices due to tariffs. However, it may take several months before this is fully reflected. The median forecast for the consumer price index is a 0.2% rise in the headline and a 0.3% increase in the core, which would push the annual rates to 2.5% and 2,9% respectively. Any increase would undermine the hopes of further rate cuts by the Federal Reserve, and bonds could be sold off. The markets have little hope that the Fed will relax at its meeting in July or next week, but they've priced in a 60% probability of a move for September. Gold gained 0.6% on the commodity markets to $3,345 per ounce. As markets assessed the outcome from the U.S. - China trade talks, oil prices rose to a new seven-week-high. Brent crude futures gained 9 cents, to $66.96 per barrel. U.S. crude rose 18 cents, to $65.16.
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Russia is ready to remove Iran's excess nuclear material
Russia announced on Wednesday that it is ready to remove Iranian nuclear materials and convert them to fuel in an effort to narrow the differences between Iran and the United States over the Islamic Republic’s nuclear program. Tehran claims it has a right to nuclear power for peaceful purposes, but the rapid progress of its uranium-enrichment programme has raised concerns in the West as well as across the Gulf region that the country is trying to build nuclear weapons. Washington and Tehran are divided over the fate of Iran's nuclear enrichment. U.S. president Donald Trump believes that Iran must not be allowed to build nuclear weapons. Supreme Leader Ayatollah Ali Khamenei, however, says Iran can never abandon its enrichment. Vladimir Putin, the president of Russia, told Trump that he was going to a phone call He was The Kremlin stated last week that it would use its close relationship with Iran to aid in negotiations regarding Iran's nuclear program. Sergei Ryabkov is the Russian deputy foreign minister who oversees U.S. and arms control relations. He told Russian media that Wednesday, efforts should be intensified to find a solution and that Moscow would help in both ideas and practical ways. Ryabkov stated that "we are prepared to offer assistance to Washington and Tehran in a variety of ways, including providing ideas and concepts to aid in the negotiations, as well as practical help, such exporting excess nuclear material from Iran for use in producing fuel for reactors." The United States want all the highly enriched Iranian uranium to be exported out of Iran. Tehran claims it will only ship out the excess above a ceiling agreed upon in a 2015 agreement. Russia, as the world's largest nuclear power, believes that Iran has every right to develop a civilian nuclear program and any use of force against Iran would be illegal and inacceptable. Moscow bought weapons from Iran to fight the war in Ukraine. It also signed a strategic partnership agreement with Tehran for 20 years earlier this year. (Reporting and Writing by Guy Faulconbridge, Editing by Andrew Osborn.)
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The US-China trade negotiations have made progress with major Gulf markets.
The major stock markets in the Gulf rose early on Wednesday, in line with Asian stocks. This was due to signs of progress between the U.S. Both countries' top officials said that they had reached an agreement on a framework for resuming their trade truce and removing China's export restriction on rare earths. The broadest MSCI index of Asia-Pacific stocks outside Japan increased by 0.5%. Saudi Arabia's benchmark stock index, which was traded after a break of four sessions, advanced by 1.2%. This was led by an increase of 1.7% in Al Rajhi Bank as well as a rise of 1.6% in Saudi Aramco. According to trade sources reported on Tuesday, the kingdom's crude supply to China will dip slightly in July. However, it is still expected to be strong for a 3rd consecutive month, as the OPEC kingpin regains market share supplying China, the world's largest crude importer. Dubai's main stock index rose 0.1% thanks to a rise of 1.1% in Emaar Properties, a blue-chip developer. ADNOC Gas climbed 1.2% in Abu Dhabi. ADNOC Gas announced on Tuesday that it had made a final decision regarding the first phase Rich Gas Development Project (RGD), awarding contracts worth $5 billion to expand the project and improve its efficiency. ADNOC Logistics & Services, a company that streamlines maritime deliveries and is part of the chemicals manufacturer Borouge, gained 0.6%. The official responsible for expanding the financial hub in Abu Dhabi has also predicted that the rush by financial firms to set up shop in the emirate, which is rich in oil, will continue apace. The Qatari Index rose by 0.4%. This was mainly due to a 0.4% rise in the largest lender of the Gulf, Qatar National Bank.
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London copper market eases as it awaits details of US-China trade talks
London copper prices eased Wednesday as investors awaited more details following the latest signs that progress had been made in U.S. China trade talks. U.S. officials and Chinese officials have agreed on a framework for re-establishing their trade truce and resolving China's export limitations on rare earth minerals, magnets and other materials. This was announced by U.S. Secretary of Commerce Howard Lutnick on Tuesday after two days of intensive negotiations in London. The London Metal Exchange's three-month contract for copper fell by 0.1% at $9,743.5 as of 0728 GMT. Meanwhile, the Shanghai Futures Exchange's most traded copper contract gained 0.2%, reaching 79,290 Yuan per ton ($11 034.57). After the talks, the U.S. Dollar was stable against its major counterparts. (=USD) Carol Kong, currency analyst at Commonwealth Bank of Australia said, "It's going to be very difficult and take a lot of time for both parties to reach a comprehensive trading agreement." "This type of comprehensive deal is usually reached over years, so I am sceptical that the framework agreed upon at the London meeting will be comprehensive." Other LME metals include aluminium, which rose 1.2% to 2,522.5 per ton; zinc, up 0.8% at $2,678.5; nickel, up 0.4% at $15,385, while lead was down 0.1%, to 1,984. Aluminium, one of the other SHFE metals rose 1.3% to 20250 yuan per ton, as the metal gained some support from dwindling stock, according to a Shanghai commodity research house, SHMET. Aluminium stocks Since the end of March, SHFE-registered storages have seen a decline. As of June 6, this number had almost been halved to 118.165 tons. Zinc rose 1.2% to 22140 yuan. Tin gained 0.7% to 265530 yuan. Nickel increased 0.1% to 121790 yuan. Click here to see the latest news in metals, and other topics. (Reporting and editing by Harikrishnan Nair; Sonia Cheema and Harikrishnan Nair)
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Low grade Australian iron ore changes global benchmark
Pricing service Platts announced that the long-standing global benchmark price for iron ore cargoes, which is used to determine most of the world's trade, will be adjusted by 2026 in order to reflect a decline in quality ore coming from Australia. The global price reporting agency, PRA, announced on Tuesday that Platts (part of S&P Global Commodity Insights) proposed to reduce the iron content of its benchmark index from 62% to 61% due to a declining quality of Australian ore fines. In an announcement on its website, it stated that the updated baseline specifications would more closely reflect those of major medium grade fines traded on the market. Since decades, the benchmark 62% Iron Ore Index has been used as a contracting tool between international buyers and miners. Rio Tinto, the world's biggest iron ore mining company, announced on Wednesday that the iron content in its Pilbara Blend Lump and Fines had been reduced to 60.8%, but did not specify when this change began. Rio Tinto's spokesperson said that the change was due to "both customer needs and ore grades available". The Platts Benchmark Prices Futures, Options and Swaps on the Singapore Exchange is one of the largest iron ore futures market in the world. Pei Hao is a senior analyst based in Shanghai at the international brokerage Freight Investor Services. Platts also proposes to reduce the iron content in its benchmark 62.5% Fe China Iron Ore Spot Lump Premium to 62%. According to the notices, both changes will come into effect on January 2, 2026. Platts published a daily basis spread of 62%/61% on Tuesday to reflect the calculated value difference between current and proposed specs. Recently, other price reporting agencies, including Mysteel and Argus, launched new iron ore indices of 61%. Reporting by Amy Lv in Beijing and Lewis Jackson. Hongmei Li contributed additional reporting from Singapore. Sonali Paul, Mark Potter and Mark Potter edited the article.
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First visit by Serbian President Aleksandar Vucic to Ukraine
Aleksandar Vucic, Serbia's populist president and a friend of Moscow, visited Odesa in Ukraine on Wednesday for a regional conference. It was the first visit to the country by the leader during his 12-year tenure. Vucic’s office released a statement saying that he will travel to Ukraine to attend the Ukraine-Southeastern Europe Summit at the Black Sea Port of Odesa. This week, Odesa was the target of a Russian drone attack and missiles. The summit was expected to bring together senior politicians from 12 nations in Southeastern Europe. Gazprom, Gazprom NEFt and Gazprom are the majority owners of the only oil refinery in Serbia. Belgrade, despite refusing to join Western sanctions against Russia for its invasion of Ukraine has condemned Moscow’s policies at the United Nations. It has also expressed support for Ukraine’s territorial integrity. Vucic also met Ukrainian President Volodymyr Zelenskiy at least 3 times. Belgrade recognizes Ukraine as a whole, including the territories that Russia has seized since 2014. Kyiv, on the other hand, refused to acknowledge Kosovo's 2008 independence, Serbia's former predominantly Albanian southern province. SVR, Russia's foreign intelligence service, claimed that Belgrade had "stabbed in the back" by selling weapons and ammunition to Ukraine through intermediaries. Boris Tadic was the only Serbian President to visit Ukraine after 2006, when the Balkan nation became independent. Petro Poroshenko visited Serbia as Ukraine's former president in 2018. (Reporting and editing by Alex Richardson; Aleksandar Vasovic)
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Gold prices rise as US-China trade tensions persist and inflation data is in focus
Investors remained cautious on Wednesday, as they awaited key inflation data which could give clues to the Federal Reserve on its next policy move. As of 0808 GMT, spot gold rose 0.7% to $3344.93 per ounce. U.S. Gold Futures increased 0.7% to $3366.40. U.S. officials and Chinese officials announced on Tuesday that they had reached an agreement on a framework for re-establishing their trade truce and removing China's export limitations on rare earths. The talks did not show any signs of a lasting resolution to the long-standing trade disputes. In April, both the U.S.A. and China implemented tit-fort-tat tariffs. This triggered a trade conflict. Both countries agreed, following negotiations in Geneva last week, to lower their tariffs. Han Tan, Exinity Group's chief market analyst, said: "Markets know that the road to a trade agreement between major economies will not be a simple one." "Gold should be supported so long as the global trade tensions are at risk of escalating or staying elevated longer." Investors could get more information on the U.S. Federal Reserve policy by watching the U.S. Consumer Price Index report at 1230 GMT. Tan said that the markets are expecting a rise in CPI, which will keep the odds of Fed rate reductions in check. Most economists polled believe that the Federal Reserve will hold interest rates for at least a couple more months. This is because there are still risks of inflation resurging due to President Donald Trump’s tariff policies. Silver spot was also down 0.1% at $36.54 an ounce. This is near the highest price in more than a decade. "We expect that silver will reach $38/oz within the next few months." UBS stated that market deficits and a weaker USD are the keys to higher prices. A test of $40/oz could be possible. Platinum increased 2.9% to $1.257.06, reaching its highest level since may 2021. Palladium rose 2.1% to $1.081.90. (Reporting by Anushree Mukherjee in Bengaluru; Editing by Joe Bavier)
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Solar demand and lower prices are driving down spot prices
The European electricity market saw its prices rise on Wednesday as a result of a combination of a slightly lower demand and a higher solar energy generation. LSEG's analysis revealed that the growth of solar power in Germany, its main producer country, outweighed a decline in wind power. The increase in coal-to power production in Germany also exceeded a decrease in gas power in the region. At 0750 GMT, the French baseload day-ahead was trading at 25.5 Euros ($29.12 per megawatt hour), 8.9% lower than its previous close. The German baseload on Thursday was not traded, and the indicated price on Friday was 10% lower than the previous close. LSEG data indicated that the German wind power production was expected to drop by 2.4 gigawatts per day to 12.5 GW for Thursday. The German solar power generation was projected to rise by 3 GW, to 20.8 GW. The French nuclear capacity remained unchanged at 71%. The demand for electricity in Germany will be down by 300 MW per day to 53.5 GW. In France, it is expected to rise by 100MW per day to 43.7GW. This leaves the total usage of the region at a lower level. The temperature was expected to increase between 1 and 2,7 degrees Celsius until Thursday. Warm temperatures usually boost the European carbon market as they require additional energy to cool devices, which is often generated using carbon-intensive fossil energies. The German baseload power for the year ahead was up by 2.4% to 89.0 Euro/MWh. The French equivalent, at 66.4 Euros, was 5.7% more expensive. The benchmark European carbon contract, for delivery in December 2020, rose by 1.8% to a little under 74 euro per metric ton. Scientists at the EU Climate Information Programme C3S said that May was the second warmest month since records began in this year. A record-breaking Heatwave in Greenland was a result of climate change.
Taiyo Oil purchases first Russian crude oil in over two years at government request
The Japanese refinery Taiyo Oil said that it had purchased its first Sakhalin Blend from Russia in over two years, at the request of the Japanese government. This was to ensure the stability and reliability of the plant, which also supplies Japan with liquefied gas.
Trade data shows that Japan imported its last Russian crude oil in February 2023 after Tokyo and other G7 nations agreed to phase out the imports as a response to Moscow's invasion of Ukraine in 2022.
According to Kpler and traders, China is the only importer of Sakhalin Blend since the Biden administration imposed sanctions in January against ice-class tankers used to transport oil from Sakhalin.
Sakhalin-2, a complex of islands owned by Gazprom, a Russian company, and Japanese companies, plays a vital role in Japan's energy supply, as it represents 9% its LNG imports.
Tokyo asked refiners to consider purchasing Sakhalin Blend crude earlier this year, a byproduct from LNG production, to ensure the project could continue to run smoothly.
Sakhalin-2 oil and its byproducts are exempt from U.S. sanctions until June 28, 2025 if they are imported exclusively to Japan.
A Taiyo Oil representative told us by phone that, "At request of the Ministry of Economy, Trade and Industry, it was decided to deliver 600,000 barrels of Sakhalin blend crude oil."
This decision was taken to ensure that Japan has a stable supply of energy or LNG.
LSEG shipping data shows that the Aframax tanker Voyager - which is subject to U.S. sanctions - arrived in Kikuma, Japan, on Monday, and left once it had discharged its cargo.
Fuels are handled by an official in the Industry Ministry.
A spokesperson for Taiyo Oil said that there is no plan to purchase additional Sakhalin-2 at this time. (Reporting and writing by Yuka Obayashi, Florence Tan, Jan Harvey).
(source: Reuters)