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As trade optimism fades, Asian stocks slump and the dollar falls
The dollar stumbled on Tuesday, as renewed concerns about the impact of U.S. President Donald Trump’s trade policies on the global economic climate kept risk sentiment at bay. European futures indicated a weaker opening, while Chinese stocks were flat. They failed to latch on to the strong Wall Street rally following a 90-day stop in the Sino-U.S. Trade War. The S&P 500 futures and Nasdaq futures were both slightly lower during the afternoon of Asia, highlighting the cautious mood on the markets. 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." MSCI's broadest Asia-Pacific share index outside Japan fell 0.2% after reaching a session high of more than six months earlier. 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 it was in 2024. Since Trump announced his tariffs at the beginning of April, the markets have been roiled by concerns about U.S. economic growth and a lack of progress on negotiating deals with its trading partners. Since then, investors have withdrawn from U.S. assets and pushed safe havens such as the yen (yen), Swiss franc (franc suisse) and gold higher. The dollar initially surged on Monday following the announcement of the pause in tit for tat tariffs. However, the dollar fell in the afternoon Asian trading session on Tuesday as the rally faded. The U.S. announced it would reduce tariffs on Chinese imports from 145% to 30%, while China announced it would lower duties on U.S. imported goods from 125% to 10%. The markets were relieved, despite the fact that there is still concern about how tariffs might affect the global economy. Hong Kong's Hang Seng Index was down 1.67%, while Japan's Nikkei rose over 2% and reached its highest level since the 25th of February. "Fundamentally uncertainty still persists, particularly around the possible pullback in corporate and consumer spending," said Charu C. Chanana. Chief investment strategist for Saxo, Singapore. Institutional investors were mostly on the sidelines, and held a neutral stance on U.S. stocks. This opens the door to aggressive dip-buying on any retracement. US INFLATION TESTS Investors will now focus on the details of the contract and what happens following 90 days. The U.S. Inflation data will come into focus later 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. Trade relations between the United States and China have changed, leading traders to reduce Federal Reserve rate-cut bets. They expect policymakers to be less under pressure to ease interest rates in order to boost growth. The traders are now pricing in 56 points of reductions this year. This is down from the over 100 points they were quoting during the peak of tariff-induced panic in 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 at the start of trading on Tuesday. The yield on the two-year bond was at 3.9873% while that of the benchmark 10-year bond was last at 4.4512%. Bitcoin, the most popular cryptocurrency, was unchanged at $102,676 Tuesday. It is still above the $100,000 threshold it broke last week. On Tuesday, oil prices eased after reaching a two-week peak in the previous session due to optimism about trade deals. Gold prices recovered some of their losses from Monday when they fell 2% as investors fled some safe havens.
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German reinsurers report a drop in profits after $1.9 billion Los Angeles Fire claims
Munich Re and Hannover Re reported a sharp drop in their first-quarter profits on Tuesday, after they received a total of 1.7 billion euro ($1.89 billion), in claims related to the Los Angeles fires. Wildfires in the area larger than Paris have killed or injured nearly 30 people, and destroyed more than 16,000. Clemens C. Jungsthoefel, Hannover Re's Chief Executive Officer said: "The devastating California wildfires are yet another example of climate change exacerbating risks of extreme weather," Both companies, however, said that they would stick to their full-year profits forecasts. Munich Re, world's biggest reinsurer, reported a net profit of 1.094 billion euro in the quarter that was reported, down from the 2.115 billion euro a year ago. Analysts had expected a net profit of around 1.112 billion euro. However, the company maintained its forecast for 2025, which projected a rise from 5.7 billion euro in 2024 to 6 billion euro by 2025. Hannover Re, the rival insurer, reported a profit drop of 14% on Tuesday. The company cited wildfire claims totaling 631 million Euros. Hannover's profit for the quarter dropped from 558 to 480 millions euros. This is slightly higher than analyst expectations of 447 millions euros. $1 = 0.8999 euros (Reporting and editing by Tom Sims, Alexander Huebner and Friederike Heine)
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Birla's paints bet shakes Asian Paints India's reign
Elara Securities, which has shared exclusive data with us, shows that Asian Paints, India's largest paint manufacturer, has lost more share of the market than analysts had expected in the first year after billionaire Kumar Mangalam Birla launched his ambitious paints venture. Elara Securities' data shows that Asian Paints market share dropped to 52%, from 59%, in the 12-month period ending March 31. This puts pressure on the leader of the industry to spend more money on marketing and promotions to maintain its crown. Birla Opus has reached a market share of 6.8% for the last quarter. "Whenever there is a new entry, their strategies are aggressive. This time the scale has been much larger," said Geojit Financial Services Analyst Antu Thomas. He had originally expected Grasim's market share to be only 1%-2 %. Birla Opus is the paints division of Aditya Birla Group's Grasim. They have borrowed heavily from Asian Paints to gain ground on the $9.5 billion market that includes Berger Paints Kansai, Indigo Paints, and AkzoNobel India. Analysts said that after its launch in February 2024 with an investment 100 billion rupees (1.18 billion dollars), the sector expanded at a rate never seen before. According to interviews with former Asian Paints and paint dealers, the company offered discounts to attract paint dealers. It also hired managers at mid-level positions from Asian Paints and built factories close to its rival's established units. "Asian Paints accounted for 70% of my paint sales in 2023." In 2024 the share was only 30%," Sunny Rahman said, a paint seller in Kolkata's eastern city, who switched brands because of cheaper prices. Asian Paints has been hurt by the moves. Last week, it reported a 45% decline in profit for the fourth quarter that was higher than expected. It also warned of the worst demand conditions in decades. Amit Syngle, CEO of Asian Paints, said in the call after earnings that "in a market where things are already slow the intensity of the competitive action was much more." "It's a double whammy," said Syngle. INTENSIFYING BATTLE Asian Paints has not responded to any requests for further information. Rakshit H. Hargave, CEO of Birla Opus, said that the company has no plans to slow its pace. Hargave stated that "our objective is to increase market share and, I believe, we have already built that into the plan we have." He denied that the Birla Opus factory locations were chosen based on their proximity to Asian Paints units, and claimed Birla Opus hired across the industry. Analysts at ICICI Securities have flagged "downside risks" in Asian Paints' forecast, which calls for an EBITDA margin of 18%-20% (operating profit). "Asian Paints' future is not in steep discounts. Thomas stated that it will be successful by introducing products with differential values. $1 = 84.8553 Indian Rupees
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Shanghai copper prices fall as caution tempers US/China trade optimism
The copper prices fell on Tuesday. The most traded contract on the Shanghai Futures Exchange dipped lower as caution continued to linger, tempered by the relief of a U.S. - China tariff truce. As of 0432 GMT the SHFE contract fell 0.3% to 77,790 Yuan ($10,818.89), while the London Metal Exchange's benchmark contract for copper rose 0.1% to $9.526 per ton. Industrial metals saw a surge in demand on Monday following the Sino-U.S. agreement to temporarily reduce tariffs. Chinese duties on U.S. imported goods will fall to 10%, from 125%. U.S. duty on Chinese imports will drop to 30%, from 145%. Copper prices reflected the fear that further negotiations would be a long and tedious process. "78,000 Yuan is not a low amount, and the remaining U.S. Tariffs on China's Exports are still high, even though they are better than the 145% tariffs that were previously in place," said a Beijing based metals analyst. He also mentioned the slower decline in SHFE copper inventory last week. SHFE copper stock fell 10% between the end of April and last week. This is less than the declines that were 23.5% in the previous two weekends. Other London metals include aluminium, which fell by 0.1% on Tuesday to $2477.5 per ton, zinc, which fell by 0.1%, and lead, up 0.3% at $1982.5, while nickel dropped 0.7% to 15520. Tin fell 1.2% to $22,200. The SHFE Nickel fell by 2%, to 123230 Yuan. Aluminium gained 1.1%, to 19,980 Yuan. Zinc eased by 0.6%, to 22,185 Yuan. Lead gained 0.2%, to 16,950 Yuan. Tin was unchanged at 261,030 Yan. Hongmei Li (Reporting and Editing)
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Delays in Store for Two Wells at Shell’s Perdido Development
Shell, the top U.S. offshore producer, said this week that two of its wells to boost production at the Perdido offshore development were delayed to the end of the year, while one was brought online in March.All three wells, part of Perdido's Great White unit, were originally expected to be online in April and set to produce up to 22,000 barrels of oil equivalent per day (boepd) at peak rates, expanding output from the platform.Perdido, which began production in 2010, has an output capacity of 125,000 boepd at peak rates. Shell is the operator of the field with a 35% working interest, while Chevron CVX.N and others hold the remaining stake.Shell in December had also announced plans to bring online two additional wells as a part of the Silvertip unit to boost Perdido's output. These wells are expected to collectively produce up to 6,000 boepd at peak rates, with first oil expected in 2026.(Reuters - Reporting by Arathy Somasekhar in Houston)
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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.
Oil prices drop from 2-week highs following US-China tariff war
The oil prices fell on Tuesday, from the two-week high they reached in the previous session. This was after the U.S. & China agreed to temporarily reduce tariffs. This sparked optimism that the trade war between two of the largest economies in the world would end.
The U.S.-China agreement to reduce steep tariffs by at least 90 day sent Wall Street stocks, U.S. dollars and crude oil prices sharply higher Monday.
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.
Brent crude futures fell 14 cents or 0.2% to $64.82 a barrel at 0011 GMT. U.S. West Texas Intermediate crude (WTI), which is a derivative of WTI, fell by 13 cents or 0.2% to $61.82.
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.
Investors were worried that the U.S. China trade war would slow economic growth and reduce oil demand. The Organization of the Petroleum Exporting Countries decided to increase oil production by more than expected. (Reporting and editing by Jacqueline Wong; Stephanie Kelly)
(source: Reuters)