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Shanghai copper prices rise as caution tempers US/China trade optimism
The copper price ranged on Tuesday. The most traded contract on the Shanghai Futures Exchange - SHFE - was slightly lower as lingering caution tempered the relief of a U.S. - China tariff truce aimed to ease trade tensions. As of 0242 GMT, the SHFE contract had fallen 0.4% to 77,750 Yuan ($10,810.17) a metric ton. The London Metal Exchange's benchmark copper was unchanged at $9,521 per metric ton despite the trade agreement signed between Beijing and Washington. Industrial metals rose on Monday after the joint U.S. and China statement promising to reduce tit for tat tariffs over 90 days, as well as work towards ending their trade conflict. U.S. president Donald Trump has increased tariffs on Chinese imports to 145%. This is in addition to the duties imposed by the Biden administration and those he had imposed during his first term. Other London metals include aluminium, which fell by 0.1% on Tuesday to $2477 per ton, zinc, up 0.4% at $2691, and lead, up 0.2% at $1980. Nickel, however, dropped 0.4%, to $15,570. Tin fell 0.5% to $22,420. SHFE nickel dropped nearly 2%, to 123460 yuan. Aluminium gained 1.1%, to 19,975 Yuan per ton. Zinc was flat, at 22,235 Yuan. Lead gained 0.1%, to 16,940 Yuan. Tin fell 0.1%, to 260080 Yuan.
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Gold nears a more than one-week low following US-China trade truce
The gold price on Tuesday was hovering around a low of more than a week, which had been hit the previous session. A U.S. China agreement to temporarily halt tariffs reciprocally boosted risk appetite and diminished gold's appeal as a safe haven. As of 0309 GMT, spot gold remained unchanged at $3,230.99 per ounce. Bullion prices fell by 2.7% in the previous session. U.S. Gold Futures rose 0.2% to $3.235.20. After two days in Geneva of negotiations, the U.S. announced that it would reduce its tariffs on Chinese imports from 145% down to 30%, and China's duties on U.S. imported goods from 125% down to 10%. This led to an increase in global share prices. Last month, the U.S. imposed tariffs of equal value on China. This triggered a trade conflict. Tim Waterer, Chief Market Analyst at KCM Trade, said that the prospect of improved trade relations between two of the largest economies in the world has led to a rise in risk appetite as well as a decline in demand for safe havens. Waterer stated that "the dollar's consolidation has allowed gold to make a slight push higher". Federal Reserve Governor Adriana Kugler stated that the pause in import levies will reduce the chances of the U.S. Central Bank needing to lower interest rates as a response to a slowdown in the economy. Traders are waiting for the U.S. Consumer Price Index, which is due later today, to provide fresh information on the Fed's monetary policies. Markets expect a Fed rate cut of 55 basis points this year, beginning in September. In a low interest rate environment, gold, which is traditionally considered to be a safe haven during periods of economic and political uncertainty, thrives. Waterer stated, "I think that buyers will still be attracted to pullbacks on gold as economic and geopolitical risk haven't been completely eliminated." Citi forecasted a continuation of the short-term consolidation between $3,000 and $3,300, while downgrading the price target for the next 0 to 3 months to $3150. Silver spot rose 0.6%, to $32.78 per ounce. Platinum rose 0.8%, to $982.70. Palladium fell by 0.4% to $942.19. (Reporting and editing by Sherry Phillips in Bengaluru, Anmol Choubey from Bengaluru)
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Iron ore reaches 2-week high after China-US truce on trade, but caution limits gains
Iron ore futures prices reached a two-week high Tuesday, supported in part by a temporary U.S. China trade agreement. However, caution about a final agreement and a possible slowdown in near-term demand curbed gains. As of 0245 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 1.56% higher. It was 718 yuan (US$99.82) per metric ton. The contract reached its highest level since April 24, at 727 Yuan, earlier in the session. Iron ore benchmark June on the Singapore Exchange fell 0.45%, to $99.55 per ton after reaching its highest level since April 24, at $100.35. On Monday, the U.S. agreed to reduce tariffs on Chinese imports by 30% over a 90-day period of negotiation. China agreed to lower its duties from 125% down to 10%. This improved investor sentiment, which led to an increase in the number of investors. Price rally across commodities The initial excitement faded as the uncertainty of a final agreement between the two countries and the seasonal slowdown in demand led to concerns about a possible slowdown in ore demand over the next few weeks. Analysts at Shengda Futures wrote in a report that they expect the hot metal production to show signs of a slowdown in mid-to late May. Analysts at CICC say that the lower hot metal production is expected to coincide when miners increase shipments in order to meet quarterly targets. This will add downward pressure to prices. The hot metal product is usually used to gauge the demand for iron ore. On Tuesday, steel benchmarks at the Shanghai Futures Exchange increased. Rebar, hot-rolled coil, wire rod, and stainless steel all gained. Coking coal and coke, which are both steelmaking ingredients, fell by 0.74% and 0.622% respectively.
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Oil prices fall as rising supply concerns outweigh US-China trade relief
The oil price dropped on Tuesday, despite optimism about the pause in U.S.-China's trade war, after both countries temporarily reduced tariffs. Brent crude futures fell 22 cents or 0.3% to $64.74 a barrel at 0248 GMT. U.S. West Texas Intermediate crude (WTI), which is a blend of U.S. West Texas Intermediate and Brent crude, fell 18 cents or 0.3% to $61.77 per barrel. The benchmarks for both closed Monday with a 1.5% gain, their highest settlement since April 28. These gains are coming at a time when the global oil market is experiencing turmoil. Monday saw Wall Street stocks, crude oil prices and the U.S. Dollar surge sharply after the U.S.-China agreement to reduce steep tariffs. While a thawing of trade tensions between China & the US is beneficial, there is still a lot of uncertainty about what will happen in 90 days. In an email sent to clients, ING analysts warned that this uncertainty could continue to create headwinds for the oil demand. The dispute is not over, but the underlying issues that caused it remain. These include the U.S.-China trade deficit and U.S. president Donald Trump's demands for Beijing to take more action to combat the U.S. crisis of fentanyl. The markets also cited rising oil supplies as the main reason for the decline in oil prices. "Although demand has been a major concern for the oil markets, the supply increases from OPEC+ means that the market will be well-supplied through the rest of the year," ING analyst said. They added that the level of supply will depend on how long OPEC+ will stick to its plans for aggressive supply increases in May and Juni. Since April, the Organization of Petroleum Exporting Countries has increased oil production by more than expected. The May output is likely to be up by 411,000 barrels a day. Analysts' opinions on crude oil inventories are mixed. Walt Chancellor, Macquarie's energy strategist, expects U.S. oil inventories to increase by 7,6 million barrels. Reporting by Stephanie Kelly, Trixie Yap and Jamie Freed; Editing by Jacqueline Wong & Jamie Freed
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China stocks fall, Hong Kong falls as tariff optimism fades
China shares were flat on Monday, while Hong Kong stocks fell, as initial euphoria about a U.S. China trade agreement that would delay and reduce tariffs was replaced by growing caution due to the long negotiations to come. The agreement reached between U.S. officials and Chinese officials following weekend talks in Geneva exceeded market expectations, and led to overnight a strong rally on global markets. Investors are still concerned about the prospect of a lengthy negotiation process. Early morning trading saw the Shanghai Composite Index rise 0.2% and China's blue chip CSI 300 Index gain less than 0.1%. Hong Kong's Hang Seng China Enterprises Index fell 1.1% while the Hang Seng Index benchmark slid 1% from its six-week high. It might only be the beginning of an inevitable collision between the two biggest economies. "After enjoying a recovery, the markets may need to consider medium- to long-term risk," Ting Lu said in a Nomura note. After talks with Chinese officials at the Geneva International Conference, U.S. Treasury secretary Scott Bessent said that both sides agreed to a 90-day suspension of their tit for tat policies. Both sides announced on Monday that the U.S. would reduce its extra tariffs imposed on Chinese imports in April to 30%, from 145%. Chinese duties on U.S. imported goods will also fall to 10%, from 125%. Tariff relief has led to a 0.3% increase in the consumer electronics sector. Energy sector grew by 0.8%, and banking sub-index rose 0.7%. These are the main drivers of onshore markets. The rare-earths industry, which is strategically important but was not discussed in the trade negotiations, fell by 0.4%. China's stocks have recovered fully from the sharp drop last month that was caused by President Donald Trump's punitive measures regarding tariffs on "Liberation Day". The blue-chip CSI300 Index now trades 0.3% higher than its April 2, 2016 level - when Trump announced reciprocal duties. Kamil Dimmich is a partner and portfolio manager of North of South Capital's EM fund. He said: "We added to China in recent months, with the belief that the current tariffs will be reduced significantly over time." We are not in a hurry to add, but we remain satisfied with our exposures to China. There will likely be more ups and downsides in the weeks and months to come, so it may be a better time to add."
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Asian markets rejoice as US-China trade dispute pause boosts risk appetite
On Tuesday, Asian stocks joined a global rally. The U.S. Dollar held onto most of its gains as investors breathed a huge sigh after a temporary stop in the U.S.-China trade war eased fears of a worldwide recession. The Nikkei index in Japan rose by 2% to its highest level since 25 February. Taiwan, a country with a high tech component, also gained 2%. Chinese stocks were slightly higher at the start of trading. The broadest MSCI index of Asia-Pacific stocks outside Japan is now at its highest level in six months. After the U.S.-China agreement to reduce tariffs for 90 days, Nasdaq rose 4.3% and S&P 500 over 3%. The real victory here was the change in tone by both the U.S. The markets have reacted positively to words like "mutual respect" and "dignity", which are a departure from recent confrontational rhetoric. The U.S. announced it will reduce tariffs on Chinese imports from 145% to 30%, while China said that it would lower duties on U.S. imported goods from 125% to 10%, providing relief for the markets. However, concerns remain about the potential harm of tariffs on the global economy. After the announcement of the agreement, the U.S. Dollar surged against the Japanese Yen, Euro and Swiss Franc. However, on Tuesday morning, it was slightly weaker but still held on to its gains. Analysts have highlighted the uncertainty that is caused by tariffs still in place. Christopher Hodge is the chief U.S. economics at Natixis. He said that a de-escalation of tensions was inevitable. The tariffs are still going to be much higher than they were before and this will have a negative impact on the U.S. growth." The ratings agency Fitch estimates that the U.S. tariff rate has dropped to 13.1% from 22.8% before the agreement, but is still higher than 2.3% at the end 2024. U.S. INFLATION TESTS Investors will now focus on the details of the agreement, and what will happen after 90 days. But before then, the focus will be on U.S. Inflation data that will be released later on Tuesday. Matt Simpson, City Index's senior market analyst, said that if we were to receive another set of soft CPI numbers, traders could refocus their attention on Fed policy, including the possibility of cuts, and this would take some steam off the dollar's recovery. As a result of the shift in U.S. China trade relations, traders have reduced their bets on Federal Reserve rate reductions. They believe that policymakers will be less under pressure to lower interest rates in order to boost economic growth. The traders are now pricing in 57-basis-point cuts for this year. This is down from the over 100-basis-point reductions they were expecting during the peak of tariff-induced anxiety mid-April. The yields on U.S. Treasury bonds rose to an all-time high of one month on Monday, and they were still hovering around that level during early trading on February 2. The yield on the two-year bond was at 3.9873% while that of the benchmark 10-year bond was at 4.4512%. Bitcoin, the most popular cryptocurrency, fell 0.5% on Tuesday to $102,146 but still remained well above the $100,000 threshold it broke last week. Gold prices were stable on Tuesday, after falling 2% the day before as investors fled some safe havens. Oil prices also eased on Tuesday.
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Financial Times - May 13
These are the most popular stories from the Financial Times. These stories have not been verified and we cannot vouch their accuracy. Headlines ISS proxy adviser Elliott backs in the fight against Phillips 66 - Perplexity is nearing its second fundraising in 6 months at a valuation of $14 billion - Cobalt Holdings to IPO in London with Glencore taking a 10% stake UK announces "backstop" plan to force pension funds into private assets View the full article The activist investor Elliott Management won the support of Institutional Shareholder Services, a powerful proxy adviser in its campaign to stop Phillips 66. Perplexity is the artificial intelligence search engine that has just completed a $500-million funding round, which would value it at $14-billion. Cobalt Holdings, a metals investor, announced on Monday that it planned to raise approximately $230 million through an initial public offering (IPO) in London. The UK's Chancellor Rachel Reeves is set to announce controversial "backstop" plans on Tuesday that will force large pension funds, if they do not meet voluntary targets, to invest as much as 50 billion pounds ($65.91billion) in private assets.
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China stock market to rise on trade deal
China's stocks will open strongly on February 2, reacting to a U.S. China deal that will delay and slash the tariffs, and de-escalate tensions in trade between two of the world's largest economies. The agreement reached between U.S. officials and Chinese officials following weekend talks in Geneva exceeded market expectations, and led to an explosive rally in the U.S. Dollar and global stock markets. The news broke just after the mainland closed Monday, causing Hong Kong to rise ahead of its closing. On the news, the Hang Seng China Enterprises Index jumped more than 3%. Hong Kong's Hang Seng Index closed at a six-week high. Overnight, U.S. stock prices rose by nearly 3%. On Tuesday, the yuan was little different from Monday's level after it had risen 0.6%. Ting Lu wrote that the deal was "a pleasant surprise for markets and economies on both sides of Pacific Ocean." Ting is chief China economist with Nomura. It could be the beginning of an inevitable collision between the two biggest economies. The markets may need to consider the medium- to long-term risk after enjoying a recovery. After talks with Chinese officials at the Geneva International Conference, U.S. Treasury secretary Scott Bessent said that both sides agreed to a 90-day suspension of their tit for tat policies. Both sides announced on Monday that the U.S. would reduce its extra tariffs on Chinese imports from 145% to 30% and Chinese duties will drop to 10%. Before the news broke, China's blue chip CSI300 Index rose 1.2% and the Shanghai Composite Index gained 0.8%. China's stocks have fully recovered from the sharp drop in prices last month, triggered by President Donald Trump’s punitive measures against tariffs on "Liberation Day". The blue-chip CSI300 Index has risen 0.2% from its April 2 levels. The truce is a boon for Chinese consumer electronics manufacturers and other major U.S. exporters. Gold miners are likely to suffer, as the price of yellow metal, which is a safe haven asset, will drop on hearing the news. China's agricultural sector, which is vulnerable to increased imports from the U.S. The agreement's impact on China's rare-earth companies is not yet clear. The U.S. did not mention the sector, which is strategically significant. However, the U.S. stated that China would commit to "suspending the non-tariff measures or removing them". (Reporting and editing by Hong Kong Newsroom, Jamie Freed).
Oil jumps and soy gains with US-China tariff relief
After the United States and China suspended trade tariffs for 90-days, the markets felt some relief.
Two of the world's largest economies have agreed to temporarily reduce their reciprocal tariffs while they negotiate to stop a damaging trade conflict that has caused financial markets to rumble and raised fears of recession.
The U.S. is reducing the extra tariffs on Chinese imports from 145% to 30% and Chinese duties on U.S. imported goods will drop to 10% from 125%.
The new tariffs are a return to the pre-Liberation Day level and represent a de-escalation better than expected, said ING commodities analyst EwaManthey. She was referring to April 2, when U.S. president Donald Trump announced a slew levies against trading partners.
Brent crude and U.S. WTI futures, which were up by around 1.5% last week, are now adding around 1.5% to their gains. The benchmarks both rose to their highest levels since April 28.
Ole Hansen, analyst at Saxo Bank, said that crude oil was initially the biggest winner. The news helped to stabilize the demand outlook.
According to LSEG, the benchmark Dutch front month contract reached a intraday high at 36.25 Euros per megawatt-hour (MWh). This is the highest level since April 16.
The U.S. soybean crop has been hit the hardest by the trade dispute, as China, the top soy importer in the world, shifts purchases from the U.S. to Brazil, the second largest exporter.
CBOT soybeans, the most active Chicago Board of Trade product, settled at a 19-1/2-cents-higher price of $10.71-1/4 a bushel. This was their highest level since early February.
Gold prices dropped to $3,207.3 per ounce, and last fell 2.7%, at $3,233.78.
The price of industrial metals rose, as fears about growth and demand eased. However, traders noted that the market was still cautious.
The benchmark copper price on the London Metal Exchange was up by 0.6% at $9,502 per metric ton. Aluminium gained 2.3%, to $2,473.
Callum Macpherson, Investec's head of commodities, said: "Tariffs were lowered temporarily, but it is unclear what will happen next and whether the U.S. will be able reach a long-term agreement."
The longer the uncertainty continues, the more impact it will have on the economy. Reporting by Seher Daeen in London and Robert Harvey in New York; additional reporting from Stephanie Kelly in New York, Nora Buli and Pratima Deai in London and Brijesh Pattel in Bengaluru. Editing by Kirsti Donovan and Sonali Patel.
(source: Reuters)