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Canada's trade surplus narrows in May; US exports fall to their lowest level since the pandemic
Data released on Thursday showed that Canada's May trade deficit narrowed following a record-breaking one in April. Total exports increased and imports decreased, even though the U.S. Tariffs impacted shipments south of border. Statistics Canada reported that the trade deficit for May was in line with expectations, at C$5.9 (US$4.34) billion. This is down from C$7.6 billion which had been revised downwards in the previous month. Exports rose by 1.1% monthly after a 11% drop in April. Statscan reported that this was the first rise in exports for four months. This was due to record exports outside the U.S. Prince Owusu is a senior economist at Export Development Canada. He said, "The most important thing I take away from these data is diversification." He said: "While we continue bleeding in the U.S. we are diverting trade to another market." In May, the share of exports and imported goods with the U.S. fell to its lowest level since the Pandemic Year of 2020. Exports to Canada's largest trading partner in the U.S. fell for the fourth consecutive month, with a 0.9% drop registered in May. Exports in volume terms increased by 0.7% during May. President Donald Trump imposed tariffs of 25% on automobiles made in Canada and 50% on steel and aluminum imports. Canada also imposed retaliatory duties. The trade dispute between Canada and the United States, whose bilateral trade exceeded a trillion Canadian Dollars last year, has hurt Canada's exports as well as the Canadian job market. Mark Carney, Canada's prime minister, and Donald Trump aim to reach a deal on trade by July 21. Statscan reported that Canada's exports in May totaled C$60.81 Billion, a significant increase from C$60.12 Billion in April. This category grew by 15.1%. The main driver was the exports of unwrought metals, which grew by 30.1% and reached a record amount of $5.9 billion. The statistics agency stated that "most of the increase was due to increased physical shipments to the United Kingdom." The statistics agency said that excluding metal and nonmetallic mineral products the total exports fell by 1.2%. Canadian companies are looking for ways to expand their trade outside the U.S. as trade with that country has declined. Statscan reported that exports to other countries than the United States reached a record-high in May, but this was not enough for the U.S. and China to offset the loss of canola, crude oil, and other products. Total imports fell by 1.6%, to C$66.66 Billion. Imports from the U.S. dropped by 1.2%. After the trade data, the Canadian dollar was down 0.23% at 1.3615 against the U.S. Dollar. The yields on two-year government bond rose 3.7 basis points, to 2.706%. The May deficit, although smaller than the previous month, was still one of the largest in history. Economists predicted that two months' decline would bring the deficit down. second quarter GDP
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Iran's Foreign Minister says Iran is committed to Non-Proliferation Treaty
Abbas Araqchi, the Foreign Minister, said that Iran is committed to the Nuclear Non-Proliferation Treaty (NPT) and its safeguards accord. This was a statement made on Thursday after Tehran passed a law that suspended cooperation with the U.N.'s nuclear watchdog. Araqchi, in a blog post on X, wrote: "Our cooperation will be channeled via Iran's Supreme National Security Council (for obvious safety and security purposes). The United States called the move "inacceptable" by President Masoud Pezeshkian, who on Wednesday signed into law the legislation that was passed last week by the parliament to suspend the IAEA's cooperation. Araqchi made his comment about X in response to a request from the German Foreign Ministry, which urged Tehran to reconsider its decision to discontinue cooperation with IAEA. Araqchi accused Germany "of explicit support for Israel’s unlawful attack against Iran, including safeguarded nucleosites". Iran accuses the IAEA for siding with Western nations and justifying Israel's actions. Airstrikes against Iranian nuclear facilities from June 13-24 The saga began the day after the board of directors of the U.N. agency voted to declare Tehran as in breach of its NPT obligations. Western powers have suspected for a long time that Iran's declared civil atomic energy program is a cover to build nuclear bombs. Iran has said that it enriches uranium for peaceful nuclear purposes only. Inspectors of the IAEA are responsible for ensuring compliance with the NPT, by attempting to verify whether nuclear programmes in countries that have signed treaties are not diverted to military purposes. The new law, which came into force on Wednesday, stipulates that the Supreme National Security Council of Tehran must approve any future inspections by IAEA of Iranian nuclear sites. We are aware of the reports. "The IAEA awaits further official information from Iran", the Vienna-based global watchdog of nuclear technology said in a press release. U.S. State Department spokeswoman Tammy Bruce Regular briefing On Wednesday, the IAEA said that Iran must immediately cooperate with it. (Reporting and editing by Timothy Heritage, Mark Heinrich and Elwely Elwelly)
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Oil prices ease on US tariffs and OPEC+ production expectations
The oil prices dropped slightly on Thursday, as concerns about the possible reinstatement of U.S. Tariffs raised doubts over demand in advance of an anticipated supply boost from major producers. Brent crude futures dropped 34 cents or 0.49% to $68.77 per barrel at 1326 GMT. U.S. West Texas Intermediate Crude fell 31 cents or 0.46% to $67.14. The two contracts reached their highest levels in a week on Wednesday, as the oil producer Iran halted cooperation with the U.N. Nuclear Watchdog. This heightened concerns that the long-running dispute over Iran's nuclear program could once again escalate into an armed conflict. Prices were also raised by a preliminary trade agreement between the U.S. However, tariff uncertainty is a major concern. The 90-day suspension of the higher U.S. Tariffs expires on July 9. Several large trading partners, such as the European Union and Japan have not yet concluded trade agreements, which raises concerns over the economic impact and its implications for fuel consumption. The OPEC+ oil producer group is expected to increase its output by 411,000 barrels a day during their policy meeting this weekend. A private sector survey revealed that in June, service activity in China -- the world's largest oil importer -- expanded at its lowest pace in nine-months as new export orders and demand declined. The unexpected increase in U.S. crude oil inventories has also raised concerns about demand in the world's largest crude consumer. Energy Information Administration reported on Wednesday that the U.S. crude oil inventories increased by 3.8 millions barrels, to 419,000,000 barrels. In a poll, analysts had predicted a drop of 1.8 millions barrels. Data showed that the U.S. unemployment rate dropped unexpectedly in June, while job growth was strong. This could allow the Federal Reserve to defer its decision to cut interest rates. "Thursday’s jobs report exceeded expectations, which shows the resilience we've seen in the economy for the past few months is still intact." David Laut, Chief Investment Officer of Abound Financial, said that we still expect the Federal Reserve will continue to wait and see on interest rates. (Reporting and editing by Barbara Lewis; Robert Harvey)
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After a jolt, the dollar and UK bonds are stable after strong US jobs data
The dollar and Wall Street rose on Thursday as the U.S. employment data was strong. In Europe, Britain's bonds recovered from renewed debt concerns. The announcement of a trade deal between the United States of America and Vietnam before the deadline for worldwide U.S. tariffs next week encouraged bulls over night. And the strong U.S. job numbers helped the dollar double the gains of the day and ensured that the S&P 500 opened at new all-time highs. The Labor Department reported on Thursday that nonfarm payrolls grew by 147,000 jobs after increasing 144,000 in May. The economists polled predicted that 110,000 new jobs would be added in June. As traders delayed the timing of Fed rate cuts, they accompanied the rise in stocks and dollar with a surge in U.S. Treasury Yields. The yield on the 2-year note, which is usually in line with expectations of interest rates from the Federal Reserve, increased 8.9 basis points, to 3.88%. The yield on the benchmark U.S. 10 year notes increased 4.9 basis points to 4,342% Seema Sha, Principal Asset Management's Chief Global Strategist said that the fact that payrolls were higher than expected, the drop in unemployment rates, and the fall in claims for joblessness "completely dispels the argument" of imminent rate cuts. She added that it "implies there is no absolute urgency for Fed support" and predicted no cuts until the end of the year. The pan-European STOXX 600 Index remained 0.4% higher, and MSCI's main 47 country world shares gauge remained on track for its seventh highest record in the last eight session. The bonds of Britain recovered some of the losses suffered on Wednesday due to uncertainty about Finance Minister Rachel Reeves’ future. However, they remained lower than recent levels. The 20-year bond yield, a proxy for longer-term borrowing costs by the UK government, has eased 8 basis points since its highest spike on Wednesday in October 2022, during Liz Truss' ill-fated tenure as premier. Reeves' tearful appearance in parliament raised questions about Reeves' future and Britain’s public finances, after the government had to abandon billions of pounds of cuts in welfare spending. Susannah Streeter is the head of money markets and financial services at Hargreaves Lansdown. Analysts were closely watching the data after the private sector payrolls report, released on Wednesday, surprised them with its first decline in more than two years. Investors also waited to see if the tax and spending bill of U.S. president Donald Trump was passed by Congress. According to nonpartisan analysts, the bill will add $3.3 trillion over the next 10 years to the United States’ $36 trillion national debt. Ding Ding The U.S. announced overnight that it had reached a deal with Vietnam. This included a 20% tariff for exports to the U.S., which is still higher than the previous rate of 46%. Vietnamese shares rose 0.5%, the most since April 2022. However, the dong currency fell to a record low at 26,229 dollars per dong. Shane Oliver is the chief economist of AMP. He said, "Although more trade deals will be announced soon, the 20 percent tariff with Vietnam is not a good sign. That or even higher rates could become the standard for many, including Europe and Japan." In fact, Japan invoked its national interests when talks with the U.S. stalled, and South Korean President Lee Jae Myung stated on Thursday that U.S. Tariff negotiations looked difficult, but he couldn't say if they could be concluded by next Tuesday. MSCI's broadest Asia-Pacific share index closed 0.3% higher. China's blue chip index rose 0.6% as weak services data led to expectations of further stimulus. Japan's Nikkei, meanwhile, finished flat. The dollar is still barely above its three-year low despite the payrolls increase. The pound was at risk of stagnating again after Wednesday's 0.8% drop. Futures indicate less than 25% likelihood of a Fed rate cut in this month. The Fed hasn't eased its policy this year and Trump is furious. He reiterated on Wednesday his call for Jerome Powell, the Fed Chair, to resign. Trump has been berating Powell since his January return to the White House for failing to lower borrowing costs. Trump said that rates should be reduced to 1%, from the current Fed benchmark rate of 4.25%-4.50%. UBS' survey of reserve managers on Thursday revealed that two thirds believe the Fed's independence is in danger and nearly half believe the U.S. rule of law may be deteriorating to the point where it could influence their asset allocation. Oil prices dropped on the commodities market after a 3% increase overnight, as Iran suspended its cooperation with U.N.'s nuclear watchdog. Brent crude futures fell 0.8% to $68,64 per barrel. U.S. crude oil was down 0.7% on the day. Gold prices fell 0.1%, to $3352 per ounce. (Reporting and editing by PhilippaFletcher; Marc Jones)
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Gold drops 1% after strong US payrolls data dampens rate-cut hopes
Gold fell 1% on Thursday as stronger-than-expected U.S. payroll data cemented expectations that the Federal Reserve is unlikely to cut interest rates as early as previously anticipated, denting the metal's appeal. As of 1303 GMT spot gold was down 1% at $3,325.48 an ounce, while U.S. futures gold were down 0.7% at $3,336.00. Bureau of Labor Statistics of the Labor Department reported that non-farm payrolls grew by 147,000 last month. Economists surveyed by had predicted payrolls to rise 110,000. A stronger dollar makes bullion more expensive for overseas buyers. The better-than-expected jobs numbers mean we are less likely to see the Fed cut rates sooner than anticipated. The dollar has strengthened, which puts pressure on the gold market, said David Meger. The key is that any idea or possibility of an interest rate cut in July is off the table. Investors now expect a Federal Reserve rate cut of 53 basis points by the end the year starting in October. This is down from the 66 basis point estimate prior to the report. Gold that does not yield tends to do well in an environment of low interest rates. A trade agreement was announced between the United States of America and Vietnam on Wednesday, ahead of the deadline for U.S. Tariffs to go into effect on July 9. Republicans in the U.S. House of Representatives are advancing Trump's massive spending and tax-cut bill that could add up to $3.4 trillion dollars to the national debt to a final vote. Carsten Menke is an analyst with Julius Baer. He said that as the US debt continues to rise, investors may become more worried about the US dollar. This should help gold on a longer-term basis. Silver spot fell 0.2%, to $36.51, platinum dropped 2.9%, to $1376.80, and palladium lost 2.3%, to $1128.78. (Reporting by Anushree Mukherjee in Bengaluru; editing by Philippa Fletcher)
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Volvo Cars has delayed the start of production at its new Slovak factory until early 2027
Volvo Cars, according to a spokesperson on Thursday, has delayed the large-scale production of its factory in Slovakia from 2026 until early 2027 to optimize the Swedish automaker’s product launch schedule. The Gothenburg-based firm, owned by China’s Geely Holding, hasn't made it public which model will be manufactured at the Kosice plant, except to say that it will be next-generation Volvo. The spokesperson declined to say when the decision was made, but said that it had not been taken recently. Polestar, which is also owned by Geely and will begin production of its new Polestar 7 SUV in Kosice, Poland, starting 2028. The factory is expected to produce 250,000 vehicles annually. Hakan Samuelsson, the new CEO of Volvo Cars in April, said that the automaker would be reviewing the cars it planned to build at the factory and preferred to build cars for Geely as well. Samuelsson, an analyst in April, said: "We have to take a closer look at the possibilities of bringing in other Geely brand there." Shared plant "would be really good for us, because it's an expense that must be carried by the production volume of the factory." Samuelsson, now back at the helm of the Swedish automaker has implemented a number big changes, including the elimination of 3,000 white collar jobs, the launch of a cost cutting programme, and the slowing down investment. Marie Mannes is the reporter. Nick Carey is the writer. (Editing by Mark Potter and Susan Fenton)
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Ambani's Reliance spins off India consumer products business into a new unit
Reliance Industries, owned by Indian billionaire MukeshAmbani, said it would spin off its consumer products unit to create a new company to attract additional investors to the business. Reliance has a consumer business that includes brands like Campa Cola which competes against Coca-Cola and Pepsi. There are also dozens of snacks and confectionery products, such as Mondelez Cadbury chocolates, who fight for shelf space. According to a June 25 order, which was reported for the first time by Indian media, India's National Company Law Tribunal approved the internal restructuring, under which Reliance would transfer its consumer business, from its retail arm, into a subsidiary directly, New Reliance Consumer Products Ltd. According to the order, Reliance stated in its application for approval before the tribunal that "this is a very large business requiring special attention and expertise, as well as different skill sets compared to retail businesses." This business requires large capital expenditures on a continuous basis, and it can attract different investors." Reliance Industries holds a stake of 83.56% in the entity. Reliance Retail has been planning its own IPO. Reliance Retail announced on Thursday a strategic investment in FACEGYM (a facial fitness company and skincare firm based in the UK), without disclosing a specific investment amount. (Reporting and editing by Aditya K. Kalra, Sharon Singleton and Dhwani Paandya)
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French nuclear regulator allows EDF 1300MW reactors to have their lifespan extended
The French nuclear regulator ASNR announced on Thursday that EDF's 1300MW EDF reactors can operate for longer than their 40-year original lifespan. It said that this would require upgrading to raise the safety standards in order to match those of European Pressurised Reactors. During its 40-year inspection, the regulator will set specific safety requirements for every reactor. EDF must also submit annual reports describing its progress towards meeting these requirements. The decision relates to 20 reactors of the 56-strong country's fleet that will reach their current lifespan approved between now and 2020. The regulator approved the extension of EDF's smaller 900MW nuclear reactors. The French President Emmanuel Macron made the expansion of the country's nucleo-production capability a major project. This included extending the lifespans of existing nuclear sites as well as building at least six reactors over the next decades. EDF has been struggling with project delays, overruns in budgets for new plants, and reactor defects. The state spent around 10 billion euro to nationalise the EDF, which was heavily indebted. The CEO Bernard Fontana was appointed earlier this year and has been given the task of accelerating nuclear expansion. He is now looking for ways to raise money to fund upgrades and new construction, and may even consider asset sales.
US court recommends Dalinar’s $7.38 Billion bid for Citgo parent
According to a filing in court and a statement from the company, a U.S. court official overseeing the auction of PDV Holdings - the parent company of Venezuelan owned U.S. refiner Citgo Petroleum - has recommended that Gold Reserve subsidiary Dalinar Energy submit a bid for $7.38 billion.
Two sources familiar with the bid told us on Wednesday that a group led by commodities trading company Vitol submitted a bid in excess of $10 billion during the last hours of an auction organized by a U.S. federal court.
In the second round of bidding for PDV, the court chose an offer of $3.7 billion from Red Tree Investments, a Contrarian Funds affiliate. The bid included an agreement with holders of Venezuelan defaulted bonds to be paid.
According to court documents, Robert Pincus, the court officer, said that he thought Dalinar's offer was the best of all those submitted.
The filing stated that "Dalinar’s proposed sale transaction" was approximately $3.576 Billion higher than Red Tree's stalking horse transaction, and that Dalinar’s bid was "the highest offer that meets the requirements".
Gold Reserve reported that Dalinar’s revised $7.38 billion offer relies on equity and debt funding and is backed by a consortium consisting of Rusoro Mining and two units of U.S. company Koch, as well as Germany’s Siemens Energy.
Dalinar initially bid $7.1 billion for PDV.
A judge must approve the sale.
(source: Reuters)