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Rare earth miners fall after US-China truce to pause export restrictions and tariffs
Shares of U.S. listed rare earth miners dropped as much as 8% on Monday before the bell, after Washington and Beijing agreed on a framework of a trade agreement that could pause U.S. planned tariffs and Chinese controls on exports of critical minerals. This would ease fears of supply disruptions which had boosted this sector in the past year. The rare earths ceasefire marks a pause on one of the most important fronts in U.S.-China tensions over trade. China processes over 90% of rare earths in the world. It has recently increased export restrictions, adding new elements to their control list as well as tightening oversight of foreign producers who rely on Chinese material. The U.S. has only one rare earth mine, whereas the U.K. is rushing to acquire minerals essential for electric vehicles, defence systems, and advanced manufacturing. Donald Trump, the President of the United States, proposed a 100% tariff on Chinese imports that would take effect November 1, after the latest restrictions. Trump and Chinese president Xi Jinping are expected to review the preliminary agreement later this week, at the Asia-Pacific Economic Cooperation summit (APEC), in Gyeongju. Investors have unwound bets on the U.S. mining industry benefiting from a prolonged trade dispute. Ramaco Resources dropped 5.7% and NioCorp Developments fell 5.4%. MP Materials, USA Rare Earth, and Trilogy Metals all fell by more than 6.5%. The Trump administration also benefited several U.S. miners of rare earths such as MP Materials and Critical Metals. Lithium Americas, USA Rare Earth, and Lithium Americas all gained from the Trump administration's acquisitions and supply-chain agreements to reduce dependence on China. (Reporting and editing by Sriraj Kalluvila in Bengaluru)
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Stocks rise on hopes of trade; Argentina is in focus following Milei's win
Investors also looked at Argentina, where President Javier Milei’s party won the midterm elections with a decisive win. These moves will help emerging markets start the week strong, in anticipation of a possible trade agreement between two of the largest economies on the planet that could remove a major cloud on global growth prospects. The MSCI index that tracks emerging market stocks rose by 1.3%. The currencies index, on the other hand, remained flat and rangebound. Later on, the focus will shift to Latin America where the party of Argentina's President Milei won the midterm legislative elections that were held over the weekend. This victory will give Milei political capital that will allow him to push ahead with reforms which have reduced triple-digit inflation and may also attract foreign capital. "Foreign investments are very low in Argentina. The current administration wants to continue reform. The opportunity in Argentina has never been better," Thea Jamison said, founder of investment firm CHANGE Global. TURKEY JITTERS RESURFACING The main BIST 100 index in Turkey fell 0.1%, after reaching a new three-week high the previous session. The Turkish court has issued a new arrest order on suspicion of "political spying" for Istanbul's imprisoned Mayor Ekrem Imanoglu, marking a further stage in the unprecedented crackdown against President Tayyip Erdogan’s opponents. Investors have been uneasy in recent months due to concerns about a democratic backsliding. The data released Monday shows that the unemployment rate in Canada remained at 8.6% for September. Separately the rand of South Africa strengthened by 0.1% against the US dollar, while the stock market also rose 0.1% following the removal of the country from the Financial Action Task Force "grey list". After its removal from this list, the Nigerian naira is poised to strengthen for the second consecutive day against the US dollar. Oil prices increased after fears were eased that trade tariffs and export restrictions between the U.S., and China, two of the world's largest oil consumers, would dent the global economy. In a recent note, economists from ING stated that they believed the meeting between U.S. president Donald Trump and Chinese president Xi Jinping could lead to a formal agreement as well as a delay in the severe tariffs threatened by both countries in April. Saudi Arabia's benchmark oil price index was up 0.4%. Saudi Aramco shares rose 0.2%. (Reporting and editing by Conor Humphrey in Bengaluru, with Niket Nishant from Bengaluru)
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Gold prices fall as a potential US-China trade agreement dents demand for safe-haven assets
As investors looked for clues on rate cuts, gold prices dropped nearly 2% in the first week of April. As of 0837 GMT, spot gold was down by 1.3% to $4,059.22 an ounce. Prices reached a record-high of $4,381.21 in October, boosted by bets on U.S. interest rate cuts and geopolitical, economic and financial uncertainties. Since then, prices have fallen over 5%. U.S. Gold Futures for December Delivery fell 1.6% to $4 072.40. Asian stocks surged on signs of a detente between China and the United States in trade tensions. This was a positive start to a busy week, which will include central bank meetings as well as megacap earnings. The UBS analyst Giovanni Staunovo stated that a possible trade agreement between the U.S. U.S. president Donald Trump announced that the U.S. will "come away" with a deal between China and the U.S., a day following a meeting of top officials from both countries to discuss a framework on which Trump and Chinese president Xi Jinping would decide during their upcoming summit in South Korea. The Fed is expected Wednesday to reduce rates by a quarter of a percentage point, as a result of a lower-than-expected inflation rate for September. Markets are waiting for any remarks that Jerome Powell, Fed chair, may make at the meeting. Lower real interest rates should still be able to support the demand for gold. Staunovo said that the market consensus was for the Fed's rate to be cut by 25 basis points. "I don't anticipate much movement at the FOMC meeting." In a low interest rate environment, gold that does not yield tends to be more profitable. Silver fell by 1.3% per ounce to $47.36, platinum was down 0.3% at $1,601,75, and palladium rose 0.1% to $1429.61. (Reporting by Ishaan Arora in Bengaluru; Editing by Sumana Nandy and Subhranshu Sahu)
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Stocks rise, safe-havens fall on optimism about trade deals
Investors were encouraged by signs that trade tensions have cooled between the U.S. and China. This marked a positive start to a busy week of central bank meetings, megacap earnings, and other events. On Sunday, top Chinese and U.S. economists hammered out the framework for a trade agreement that U.S. president Donald Trump and his Chinese equivalent Xi Jinping will decide on this week during a meeting in South Korea. Investors are less concerned about the possibility of a break in a trade truce that has been established between the two world's largest economies if a deal is reached to halt higher U.S. import tariffs and Chinese export controls on rare earths. This sent Asian stocks soaring, with South Korea, Taiwan, and Japan indexes reaching record highs. In Europe, the positive mood was also felt, with shares rising modestly on a global basis, and the STOXX600 index up around 0.1%. US STOCK FUTURES - JUMP Investors will be looking for confirmation that the current trade truce is still in place and that China’s reform and stimulus signals are translating into a tangible growth momentum, said Charu Chanana. Chief investment strategist at Saxo. Futures for U.S. stocks jumped. Nasdaq futures rose 1%, while those for S&P 500 futures increased by 0.7%. George Boubouras said that the U.S. and China momentum was satisfactory in recent days. Over the past few weeks, the market has watched global tariff negotiations with the understanding that some of the commentary could be theatre and noise. The Chinese yuan rose to its highest level in over a month against the dollar of 7,1091. The People's Bank of China announced the official midpoint dollar rate before the market opened at 7.0881, its highest since October 15, 2024. This was above the estimate of 7.1146. Derek Halpenny, MUFG's head of research, said that the yuan could see further gains if a deal was made based on the details reported today. He said that investors would be more inclined to look at non-dollar currencies as they have better prospects. Gold, a safe-haven, fell by 1.3%, to $4,058 per ounce. U.S. Treasurys also slipped, resulting in a rise of 3.1 basis points for the benchmark 10-year yield, which is now at 4,027%. Commodities such as soybeans, corn, and wheat rose due to trade deals. CENTRAL BANK RESULTS ARE AWAIT This week, investors will be focused on the central bank meetings taking place in Japan, Canada and Europe. Federal Reserve rates are expected to be cut by 25 basis points, after September data showed that U.S. consumer price increases were slightly lower than expected. However, the impact of the government shutdown on data is still a concern. The dollar was slightly up at 152.87yen. It hovered near its two-week high. The euro remained flat at $1.1627. The dollar index was unchanged at 98.92. Both the European Central Bank (ECB) and Bank of Japan (BoJ) are expected to keep rates unchanged this week. As concerns about a recession caused by tariffs ease, the BOJ will likely debate whether it is time to resume rate increases. However, political complications could keep this on hold. Focus on Megacap Earnings This week, the U.S. earnings reporting season will be at its busiest. Megacaps like Microsoft, Apple and Alphabet, as well as Amazon and Meta Platforms, are all expected to release results. The profit margin of the "Magnificent 7" companies is shrinking. Their huge market capitalisation means that their shares dominate equity indices. Stock market performance has been driven by the enthusiasm of a number of megacap companies in the artificial-intelligence industry.
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SandboxAQ, Bahrain's sovereign funds, signs deal with AI to speed up drug development
SandboxAQ - a U.S. artificial intelligence and quantum tech firm - signed an agreement on Monday with Bahrain's sovereign fund to speed up the development and creation of biotech assets valued at $1 billion. Mumtalakat, Bahrain, will license SandboxAQ’s large, quantitative models that are trained in physics, chemistry, and biology, to speed up drug discovery and scientific investigation. The deal was announced at the Future Investment Initiative, Saudi Arabia's premier investment conference. The statement said that the collaboration would help to position Bahrain as a regional hub for biotech, with a joint committee leading a program of three years aimed at creating valuable new drugs. SandboxAQ CEO Jack Hidary said the partnership will empower Bahrain to create, own and use intellectual property (IP) in biotech. This includes therapies that target diseases common in the region like diabetes and genetic disorders. "Traditionally, most biotech IP belongs to a few countries. Hidary explained that Bahrain can now develop its own assets focusing on both regional and global priorities in health. Bahrain's hospital infrastructure and digital health datasets will be used to develop treatments under the agreement. Hidary said that clinical trials will begin in Bahrain with the potential of multi-site studies. SandboxAQ is also receiving interest for similar partnerships from other countries including the Gulf. Aramco, the Saudi oil giant, signed an agreement in January with SandboxAQ that would allow it to use their models to boost the value of its downstream products. Mark Potter edited the report by Yousef Sabah.
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Exosens expands its capacity to meet the strong demand for night vision equipment
Exosens announced on Monday that it will nearly double its planned investment in capacity after the French defence tech firm's revenue for nine months jumped by 23%, due to an increase in demand for night-vision equipment from NATO member countries. The manufacturer of night vision equipment and components for scientific instrumentation expects to increase their global capacity by 40% by the year 2027. This is an increase from the 25% it announced in March. An additional investment of £17 million ($20 million) will be made in Europe. In a recent press release, Exosens CEO Jerome Cerisier stated that the company had decided to expand its capacity in an additional way. In the first nine-month period of this year, the company's sales grew to 327.8 millions euros. This was due to a 21% increase in the Amplification division and a 26% rise in the Detection & Imaging division. The company also confirmed its outlook for the full year. The number of military equipment orders has risen following the Russian invasion of Ukraine, and Washington's call for European allies' to increase defence spending. NATO countries committed in June to spending 3.5% of gross domestic product (GDP) on core defence, and 1.5% for broader measures of defence. This is a huge jump from the current target of 2% GDP. Exosens anticipates that night vision equipment will remain in short-supply through 2027. This is due to the fact that militaries are unable to reach their equipment targets. Cerisier stated that "Defense momentum is strong and continues gaining traction in Amplification, Detection & Imaging and Exosens, which is seizing growth opportunities driven by emerging applications like drone warfare and advanced technologies for night vision," Cerisier. The group said that it would also divest the loss-making Microwave Amplification division under an asset acquisition deal. Closing is due in early 2026.
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Japan's first fusion energy company achieves key milestone towards commercial reactor
Helical Fusion, a Japanese start-up company, announced on Monday that it had completed a crucial performance test of a superconducting coil at high temperatures. This marks a significant milestone in the commercialisation of nuclear fusion. Nuclear fusion is the process of smashing together atoms at high temperatures to produce heat, similar to the sun. It could, one day, generate enormous amounts clean energy with minimal radioactive waste compared to the fission reactors we use today. Despite 70 years of global research, there has yet to be a commercially viable fusion reactor. Helical Fusion announced that the HTS coil it tested, which is a key component in commercial fusion reactors replicated the magnetic field inside the device. It also achieved a stable flow of current under superconducting condition, marking a first for the world. The company can now proceed to build and manufacture its integrated demonstration device Helix HARUKA. This device is designed to demonstrate the feasibility of continuous and stable fusion reactions. Helical Fusion CEO Takaya Taguchi stated at a press conference that "this means the possibility of achieving the fusion power generation before the rest of world has been demonstrated." The company, as the sole inheritors of the helical fusion technologies developed by the National Institute for Fusion Science(NIFS), is developing the Helical stellarator. It aims to become the first commercially viable fusion plant based on the design in the 2030s. Sanae Takaichi has been appointed as Japan's prime minister. She has shown strong support for nuclear fusion, and this has led to increased expectations in the sector. Taguchi said that while the United States, China, and other countries have spent over one trillion dollars ($6.6 billion) to speed up fusion research, Japan has only spent about 100 billion dollars. Taguchi stated that he hoped the Takaichi Administration would bridge the gap between the U.S.A. and China or even surpass them through increased funding and policies support. According to a group representing the industry, global fusion energy investments have grown by $2.64 billion since July last year. However, companies say that more capital is required to make the industry commercial. Helical Fusion claims that out of the 50 fusion projects in the world, they aim to be the first to achieve all three key requirements of commercial viability: produce stable power, produce more energy than the system consumes and demonstrate the ability to maintain regular component maintenance. Commonwealth Fusion Systems (a spin-off of the Massachusetts Institute of Technology) plans to build what it calls "the world's very first grid-scaled fusion power plant" in Virginia. The power plant is expected to be operational by early 2030s.
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Copper jumps 16 months high on optimism about trade deals
The copper price rose to a 16 month high on Monday as optimism grew over a possible U.S. China trade agreement. This was after the two world's largest economies outlined their framework for negotiation ahead of the leaders' meetings. The Shanghai Futures Exchange's most traded copper contract closed the daytime trading at 88,370 Yuan ($12,406.29) a metric ton. This is a rise of 1.73%. It reached 88,700 Yuan per ton during the session. This was the highest level since May 2024. As of 0725 GMT, the benchmark three-month price for copper at the London Metal Exchange increased by 0.76% to $10,046 per ton. London futures reached a 16-month-high of $11,094 per ton during the session. This was a significant decrease from the previous all-time record high of $11,104.5 per ton. On Sunday, Chinese and American negotiators reached an agreement on a framework of a new trade deal. On Thursday, Donald Trump, the U.S. president and Xi Jinping, the Chinese president will meet in South Korea. U.S. Treasury secretary Scott Bessent stated that the framework would pause steep American duties on Chinese goods. He also said he expected Beijing to delay by a year its rare-earth export controls regime and resume purchases of U.S. soy beans. Li Chenggang, China's top trade negotiator, confirmed to reporters the "preliminary agreement". After the announcement of the framework, most other base metals gained as well. Other base metals in the SHFE rose by 0.61%. Zinc and nickel grew 0.34%. Tin jumped 1.15%. Lead was barely moved. The LME's other metals saw a slight increase in aluminium, with a gain of 0.84%. Zinc was up by 0.41%. Tin was up by 1.01%. Nickel was down 0.10%. Lead was not affected. $1 = 7.1230 Chinese Yuan Renminbi (Reporting and editing by Harikrishnan Nair, Ronojoy Mazumdar and Lewis Jackson)
Take Five: Make or Break
The week will be dominated by trade talks between Washington and Beijing, and Canada, as well as central bank decisions from the United States, Canada, and Europe. Meanwhile, Argentina's stock markets are digesting the results of a decisive election for President Javier Milei.
Dhara Ranasinghe, Alden B. Bentley, Lewis Krauskopf, and Rodrigo Campos in New York and Kevin Buckland, in Tokyo, give you all the information about what to expect in the world markets this week.
1/ A MIDTERM DRAMA Argentina’s bonds and shares are expected to rise on Monday, after President Javier Milei’s party won a decisive victory in the crucial midterm elections on Sunday. This is a requirement to keep economic reforms in motion and a U.S. backstop has been put in place. The right-wing president Javier Milei is now expected to consolidate his minority position, after his economic reform program that has crushed inflation and his deepening of ties with Washington delivered some the best returns in emerging markets since he assumed office in December 2023. But despite the unprecedented support of U.S. president Donald Trump, which included direct intervention in the FX market, a central bank swap line worth $20 billion and the prospect for another $20 billion loan, the peso has continued to fall to record lows.
Since mid-April, when the foreign exchange controls were partially lifted, the peso's value has fallen by about 25%. It is also down close to 30% from the beginning of the year.
IT'S AI, STUPID
The earnings of megacap tech companies and growth companies are the highlight of a week full of corporate results in the United States that may shed light on how the "AI trade" is doing. Microsoft, Apple Alphabet Amazon Meta Platforms and Amazon are all "Magnificent 7" megacaps that dominate equity indices. They report earnings. This week, one-third of the S&P 500 companies will report earnings, including oil giants Exxon, Chevron, and Visa and Mastercard.
Investors will also examine data to determine the cost and impact of a shift in U.S. Trade Policy. According to LSEG data, S&P 500 companies have reported a 9.2% increase in Q3 earnings compared to the previous year. A greater than usual number of companies has exceeded profit expectations so far.
3/COUNTING on a CUT The markets are almost certain that the U.S. Federal Reserve is going to cut interest rates a quarter point when they conclude their meeting on Wednesday. They are also confident about another reduction in December.
This year-end cut could be less obvious if the shutdown continues, as data-driven policymakers will have no official economic indicators. Trump will meet Chinese President Xi Jinping Thursday, as part of a visit to Asia. The meeting is scheduled to take place on the sidelines the Asia-Pacific Economic Cooperation CEO Summit.
Trump on Monday
The U.S. will "come away" with a trade agreement.
Recent trade tensions have escalated and there is a dispute over China's export restrictions for rare earths.
U.S. curbs
The Fed will continue to be concerned about the impact of Trump's threats to impose tariffs on all technology exports.
It's not all about the FED. That's correct, the Bank of Canada will also cut rates on Wednesday, despite Trump's announcement to terminate all trade negotiations with Canada. The European Central Bank will meet on Thursday. It appears to be "nothing new to see" as a poll of economics predicts that it will likely leave rates at 2% for the third consecutive meeting and remain on hold through the end of the calendar year. The downside risks of the economy are causing traders to predict a 65% chance that a quarter point cut will be made by mid-2026. However, headwinds are on the horizon. Aside from the trade tensions, France is also experiencing political turmoil and there will be an election on Wednesday in The Netherlands that is dominated by populist currents. ECB head Christine Lagarde could be asked if the bloc is still in a good place.
5/HIKE HOLDED? Bank of Japan will likely hold off on a rate increase next Thursday, opting instead for a hike in December or early January. This is not because of pressure from Japan's new dovish premier. Sanae Takaichi - the new fiscal and monetary dovish premier - is expected to continue tightening monetary policy, according to two-thirds polled. However, she has repeatedly stated that the central banks should align with government policies. Analysts and traders instead point to BOJ governor Kazuo Ueda’s consistently cautious tone. This is especially true on the potential fallout from tariffs, despite his board making a conspicuously aggressive pivot last month.
Most analysts are looking at a December increase as soon as possible, based on his desire to have more data. This includes U.S. holiday shopping trends.
(source: Reuters)