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Analysts' reactions to the US-China Trade Agreement
U.S. commerce secretary Howard Lutnick stated that restrictions on magnets and rare earths should be resolved as a result of a framework for trade and implementation plan reached with China in London. Li Chenggang, Vice Minister of Commerce in China, said that the two teams agreed to implement their Geneva consensus. They would then take the framework agreed upon back to their respective leaders. QUOTES: CHRIS WESTON HEAD OF RESEARCH PEPPERSTONE MELBOURNE The devil is in the detail, but the lack reaction indicates that this outcome was fully expected. The Geneva agreement is a good thing, but the fact that there was no reaction on S&P500 Futures and only small movements in CNH and AUD suggests the outcome was expected. Details matter, particularly the amount of rare earths going to the US and the freedom of US chips to go East. But for now, as long as headlines about the talks between the parties are positive, risk assets will be supported. The reaction of Chinese equity markets could be telling, and I suspect US equity Futures will closely track the developments today. CAROL KONG CURRENCY STRATEGIST, COMMONWEALTH BBANK OF AUSTRALIAN, SYDNEY "I believe in this climate...any hints of progress on a possible trade agreement will be beneficial for the markets. Although details are scarce, as long the two parties are in communication, I believe markets will be happy. "It's going to be hard for both sides and 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 skeptical that the framework agreed upon at the London meeting will be comprehensive. "Tensions may have de-escalated temporarily, but will escalate in the coming months." RAY ATTRILL HEAD OF FOREX STRATEGY, NATIONAL AUSTRALIA BANK SYDNEY "The devil will be in the detail of what I call a handshake deal and, more importantly, if this can help to reestablish the trust between President Xi, and President Trump which was clearly broken since the Geneva Agreement has been published. It's too early to declare that a new US-China trading agreement is imminent. "The entire year was littered by positive omens of reaching agreements, but we haven't seen any real progress. Or we've seen a backsliding in things that seemed to be agreed. "Our view remains that, whatever is agreed upon in the next few weeks and months, we will end up with an international tariff situation that is much worse than it was before Trump became president. We'll still have a tariff climate that we believe is detrimental to global growth." TONY SYCAMORE MARKET ANALYST IG SYDNEY If we maintain the terms of the Geneva Agreement we will see US tariffs for Chinese goods remaining at 30% for some time, and Chinese tariffs for US goods remaining at 10%. This is a reduction from 145% and 125%, respectively. This would be amazing. "Now, that was for me probably the consensus of the market...and now, people are just trying to figure out whether or not they're going to buy or sell US dollars and I think that reflects a little bit of this indecision. I thought that Geneva would be extended and it appears we are getting what I expected. This is why the U.S. equity market has held up at this time. They still seem overheated and need to take a step back. We've had a great run, and now we're pushing up against our February record highs. For me, I think it's a good idea for them to take some time off. It hasn't been above or below expectations. It's exactly where I expected we would land, and that's the reason I think there's now a bit of uncertainty in US equity futures."
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Analysts' reactions to the US-China Trade Agreement
U.S. commerce secretary Howard Lutnick stated that restrictions on magnets and rare earths should be resolved as a result of a framework for trade and implementation plan reached with China in London. Li Chenggang, Vice Minister of Commerce in China, said that the two teams agreed to implement their Geneva consensus. They would then take the framework agreed upon back to their respective leaders. QUOTES: CHRIS WESTON HEAD OF RESEARCH PEPPERSTONE MELBOURNE The devil is in the detail, but the lack reaction indicates that this outcome was fully expected. The Geneva agreement is a good thing, but the fact that there was no reaction on S&P500 Futures and only small movements in CNH and AUD suggests the outcome was expected. Details matter, particularly the amount of rare earths going to the US and the freedom of US chips to go East. But for now, as long as headlines about the talks between the parties are positive, risk assets will be supported. The reaction of Chinese equity markets could be telling, and I suspect US equity Futures will closely track the developments today."
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Sources say that US and Mexico have discussed a deal to reduce Trump's steel tariffs.
Sources in the industry and trade said that on Tuesday, the United States and Mexico were negotiating an agreement to reduce or eliminate President Donald Trump’s 50% tariffs on steel imports up until a certain amount. A source in the industry familiar with the discussions said that the likely outcome was a quota agreement, where a certain volume of imports from Mexico would enter duty-free or at a discounted rate and that any imports over that level would face the full 50% tariff. Source: It is unclear whether the agreement will eliminate tariffs for steel import volumes within the quota from Mexico, or if it will reduce them to a lesser level. Source: The exact volume of the quota has not been determined. Bloomberg News reported first on the negotiations for tariff reductions in Mexican steel. They cited people who were familiar with the issue as saying the two sides are close to an agreement. The report stated that the terms of the deal had not yet been finalized, but that U.S. steel imports would be tariff-free if total shipments were kept below a certain level based on historic trade volumes. A spokesperson from the White House declined to comment. Meanwhile, a spokesperson from the Commerce Department that administers Trump’s “Section 232” national security tariffs for steel and aluminum didn't respond to a comment request. According to data compiled by American Iron and Steel Institute from the U.S. Census Bureau, Mexico was the third-largest source of U.S. imports of steel in 2024. The total amount imported dropped 16% compared to the 4,18 million tons in 2024. In 2024, Canada will be the world's largest steel exporter with 6.56 million tons of net production. Brazil is second at 4.5 millions. Mexico and Canada received exemptions from the steel tariffs when Trump first implemented them in 2018. Special procedures were used to curb any import surges that exceeded historical volumes. These measures did not include a formal quota system like that of Brazil. Trump cancelled all steel and aluminium quotas, exclusions and exemptions in April, to increase the metals tariffs. Second trade source said that officials from the industry were pushing for a clearly-defined steel quota for Mexico due to past import surges. U.S. officials are trying to stop the transshipment from China and other third-country countries to the United States via Mexico. At a morning press conference, Mexican Economy Minister Marcelo Ebrard informed reporters that his government had told U.S. officials the tariffs are unjustified. He noted that the United States has a surplus in trade with Mexico for steel and aluminum. "Putting a tax on a product that you have an excess is debatable, because the goal of the tariff is reducing the deficit," added he. Ebrard stated that countries such as the UK were exempted of similar measures, and encouraged the U.S.A. to do the exact same thing with Mexico. He warned that the tariffs could harm jobs and supply chains due to their economic interdependence. Reporting by Ryan Patrick Jones, Natalia Siniawski and David Lawder from Mexico City and Chicago; editing by Sonali Paul
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US firms launch ETFs to take advantage of Trump's deregulation drive
The partners of the venture announced on Tuesday that a group of three investment firms has teamed up to create an exchange-traded funds (ETF) which will invest in companies in which they believe deregulation and the free market in capital markets will benefit. The Free Markets ETF began trading on NYSE on February 2. It will invest in companies of any size and in any industry that its managers believe are likely to profit from President Donald Trump's second administration's pursuit of deregulation. Hal Lambert, the founder of Point Bridge Capital (one of three firms managing the ETF portfolio), said, "I began thinking about this when the Supreme Court overturned its Chevron doctrine last summer." In June 2024 the Supreme Court ruled 6 to 3 to overturn an 1984 decision which had given regulatory agencies wide latitude in interpreting laws that they administered. Lambert said that Trump's victory (in the election) would allow for this process of deregulation to proceed even faster. Lambert contacted Todd Stankiewicz, SYKON Asset Management's Todd Stankiewicz and Michael Gayed of Tactical Rotation Management after the election to work on the ETF. They partnered up with Tidal Investments. This "white label" ETF issuing company provides the platform, operational support and other companies can launch their own ETFs. Gayed said that there was no other product that focused on deregulation. The portfolio will include bitcoin, gold, and shares of companies that are likely to gain from deregulation. These range from small financial firms to nuclear energy. The largest stakes are in Uranium, Robinhood Markets, and Old National Bancorp. Gayed said that this is not about politics, but rather profits. He added, however, that he believes the current U.S. politic trends will translate into profits for ETF portfolio.
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Cenovus CEO: Despite Trump's remarks, US oil is dependent on Canadian sources,
Cenovus Energy's CEO stated on Tuesday that the U.S. is dependent on Canadian oil imports despite Donald Trump's comments to this effect. Trump has repeatedly threatened to impose tariffs on Canada’s oil. Nearly 4 million barrels of Canadian oil are exported daily to the United States. Canada is the fourth largest oil producer in the world, and also ranks fifth for natural gas production. Trump said previously that the U.S. doesn't need to import oil and gas from Canada. Mark Carney, Canada's minority prime minister who was elected in April as a result of anti-Trump voter sentiments, said that the old relationship between Canada and the U.S., based on an increasing level of economic integration, is over. Jon McKenzie is the CEO of oil sands firm Cenovus, and the chair of the Canadian Association of Petroleum Producers. He said that trade tensions have brought to light the need for Canada's exports to be more diverse. He said the need to have energy in both countries is not negated by the fact that they are interdependent. What hasn't altered is energy economics or energy physics. McKenzie, speaking at a Calgary energy conference, said: "The reality is that we are hardwired to the U.S. System." The vast majority of Canada's oil exports are purchased by U.S. refining plants, which are located in the Midwest. These refineries can process crude produced by Canada. McKenzie stated that Canada can grow its oil production in the next decade. He added that the new government must recognize Canada's dependence on the U.S., and work to improve the relationship. He said: "We must act intelligently and not viscerally in the face of threats, but rather act intelligently for our long-term interests." Carney, as part of Canada's response to the U.S. threat of tariffs, has pledged that he will identify and accelerate projects of national importance aimed at helping Canada to become what he describes as a conventional and a clean energy superpower. McKenzie stated that the oil and gas industry does not want to see the federal government pick winners and losers when it comes to deciding which projects are to be fast tracked. He said that the industry wants to see a broad regulatory reform to remove barriers to investment in oil and natural gas projects. (Reporting and editing by Chris Reese, Rod Nickel and Amanda Stephenson from Calgary)
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Tanure, a Brazilian businessman, has been courting banks since he hatched Braskem with Novonor.
Nelson Tanure, a Brazilian businessman, has started talks with banks to secure a deal for the petrochemical company Braskem. He hopes to close a deal by year's end and give Petrobras an increased role in its operations. Braskem, Latin America's biggest petrochemical company, has been looking for a buyer since years. Novonor is the controlling shareholder and wants to get out of bankruptcy protection. It also wants to put an end to a massive corruption scandal. Tanure is a new bidder trying break the deadlock between Novonor and the banks that hold Braskem shares in collateral, and Petrobras which is a key shareholder and supplier to the company. Tanure, in his first public remarks since announcing his Braskem offer last month, said that he had begun courting the engineering group Novonor (formerly known as Odebrecht) after Abu Dhabi National Oil Company’s failed bid to purchase its Braskem share over a decade ago. Tanure responded to questions by writing: "After Adnoc withdrew its offer, I started confidential discussions with Novonor in absolute secrecy." Tanure stated that Novonor will remain a shareholder of the proposed deal. The latest proposal reduces its stake from 38.3% down to 3.5%. He added: "I wouldn't make an agreement without them remaining involved." Tanure confirmed that the deal is still being discussed. Novonor confirmed that the talks took place in May but declined to comment further on details provided by Tanure. In the decade prior to the scandal, Novonor had used its Braskem shares as collateral for bank loans totaling 15 billion reais (US$2.7 billion). As profit margins on petrochemical markets have fallen, the value of these shares has decreased and covers less than one quarter of this debt. According to two sources familiar with the situation, despite Tanure's progress in Novonor, its creditor view his offer as sceptical, since they have other plans for Braskem. Reports in November stated that the State Development Bank BNDES, along with other major banks, have proposed to pool the shares pledged for collateral into a Private Equity Fund. This fund would then make investments and turn around the company before selling its shares. Aloizio Mercadante, President of BNDES, confirmed that talks were underway with Petrobras and the other banks at the time to resolve the dispute. The bank refused to comment on Tanure’s competing offer to Novonor. Tanure said that "the success of this acquisition depends on alignment (with the banks)" but he rejected the notion that lenders control Braskem. It's important that we clarify that these shares are still owned by the Novonor Group. The shares are pledged as collateral to the banks. The Rio de Janeiro businessman has a history of investing in companies undergoing controversial restructuring. He is a major investor in the oil and power company Prio. Tanure believes that Petrobras will have a greater role if he is able to close the deal with Braskem. Petrobras has a first right of refusal on Novonor’s stake, as per their shareholder agreement. Tanure stated, "I think their presence (in Braskem's operations) is small and should be expanded." We must recognize that Petrobras' seniority in the oil industry and its management expertise are comparable to those of the world's best. Petrobras declined comment. Last week, Petrobras CEO Magda Chambriard said Braskem is a great asset, but the current management "is not what we want." When asked by about Tanure’s offer, she replied: "We cannot do anything but applaud." We are looking for a solution. Tanure stated that his goals for Braskem included transforming the Camacari Complex in Bahia into a center for sustainable innovation, "green" petrochemicals and lower emissions. Reporting by Luciana Magnalhaes Editing done by Brad Haynes Lisa Shumaker Nia Williams
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Sudanese Army accuses Libyan Haftar forces border attack
Tuesday, the Sudanese Army accused the forces of eastern Libyan commander Khalifa Hastar of attacking Sudanese borders posts. This is the first time the army has directly accused its northern neighbour of involvement in the two-year conflict. Multiple foreign countries have been drawn into the war between Sudan's military and the paramilitary Rapid Support Forces (whom the military has also accused of being involved), while international efforts to bring about peace so far have failed. Early in the war, Sudan accused Haftar from eastern Libya of supporting RSF through weapons deliveries. The Sudan has accused Haftar and his ally, the UAE, of also supporting the RSF. This includes direct drone attacks last month. The UAE denies these allegations. Egypt, which also supports Haftar and the Sudanese Army, has supported them for a long time. The army released a statement saying that the attack occurred in the triangle of Libya-Egypt-Sudan, a region to the north from one of the main frontlines of the war, al-Fashir - the capital of North Darfur. Khaftar's Forces could not be immediately reached for comment. The Sudanese Army said, "We will defend and protect our country, our national sovereignty and we will prevail regardless of the extent to which the United Arab Emirates, its militias and their conspiracy in the region will be supported." (Reporting and writing by Menna alaa el-Din; Khalid Abdelaziz, Jaidaa taha and Nafisa eltahir, Editing and rewriting by Kevin Liffey, Hugh Lawson and Nafisa eletahir)
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OPEC Secretary general: Oil demand will continue to grow, but there is no peak in sight
Haitham Al Ghais, OPEC secretary general, said that the growth in oil demand will continue to be robust for the next 25 years as the global population continues to grow. The organization predicts that the global energy demand will increase by 24% between now and 2050. Oil consumption is expected to exceed 120 million barrels of oil per day during this time period. This estimate is consistent with the World Oil Outlook 2024. Al Ghais, who spoke at the Global Energy Show, held in Calgary, Alberta, said that there was no imminent peak in oil demand. He said OPEC admired the efforts made by Canada's oil industry to increase its output of oil in recent years. OPEC has unwinded its production cuts faster than initially anticipated. Production for May, July and June increased by 411,000 barrels a day. Oil prices have been pushed up by the increases and concerns about President Donald Trump’s trade war affecting the global economy. On Tuesday, global Brent futures traded at $67.28 per barrel. The U.S. Energy Information Administration said on Tuesday that it expects Brent oil prices to drop near $60 per barrel by the end the year and to average $59 per barrel next year. This will affect U.S. production of oil. Al Ghais said on Tuesday that OPEC also welcomed recent pushbacks against what he called unrealistic climate goals. He stressed the need to reduce emission but not to pick and choose energy sources.
Peru prime minister requires 'drastic' measures to help state oil business
Peruvian Prime Minister Gustavo Adrianzen said on Wednesday that state oil company Petroperu needs immediate and extreme procedures to deal with a financial crisis that has actually seen installing debts and with little cash to keep its operations running.
He stated Petroperu urgently requires a line of credit to make it possible for it to keep its operations, adding the government was considering working with a worldwide manager to assist run the business.
The business had previously argued for private management as part of a restructuring strategy, which would also sell off non-operative assets and slash payroll.
A presidential representative nevertheless stated earlier this year that the company would not be privatized.
Peru authorities have actually been looking at methods to assist Petroperu, the Andean nation's main supplier of motor fuels, prevent personal bankruptcy or liquidation.
In July,
Ecuador
said it would work with Peru to enhance integration around oil processing, potentially processing Ecuadorean oil at Petroperu's Talara refinery.
The business stated in May it needed $2.2 billion in imminent financial help, and has actually forecast millions of dollars in additional losses this year.
(source: Reuters)