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MORNING BID - Risks flow as trade discussions unclog
Wayne Cole gives us a look at what the future holds for European and global markets. In Asia, the start of the week was already risky when the news broke that trade talks between Canada and the United States were back in action after Prime Minister Carney agreed not to implement a digital tax demanded by Trump. The new deadline is July 21. This extends Trump's original date of July 9. Treasury Secretary Bessent suggested last week that they could be completed by Labor Day, September 1, if the talks are extended. Wall Street futures have risen by around 0.4% to record highs, as investors pile in for megacaps ahead of the new quarter. European and German stock-futures are also up around 0.3%. The majority of Asian markets are in the black as well, thanks to a continued decline in oil prices due to the Mideast ceasefire. Investors keep a close eye on the progress made by a massive tax-cutting bill and spending bill that is slowly making its journey through the Senate. There are signs that it may not reach Trump's July 4th deadline. In a bid to save time, Democrats have clerks read every line of the 940-page bill. They are likely the only people who know what it contains. The Congressional Budget Office estimates that the bill will add $3.3 billion to the nation's national debt over a ten-year period, a test of foreign appetites for U.S. Treasury bonds and another blow to U.S. exceptionalism. The dollar has seen the most impact, while the euro saw gains of 1,7% last week. James Reilly, a Capital Economics analyst, said that the dollar has fallen more this year than any other year since 1973, when the U.S. switched to a freely-floating currency. This slide is forcing foreign investors to hedge against the dollar, which leads to more selling and a downward cycle of the currency. Investors' expectations of Federal Reserve policy ease to 65 basis points over the remainder of the year have not helped either. It's still a long shot that a move in July will happen, but this could change if Thursday's payroll report is a disappointment. A rise in the unemployment rate to above 4.3%, for example, would bring it up to levels that have not been seen since the end of 2021. This would certainly alarm the Fed. Market developments on Monday that may have a significant impact The European Central Bank Forum in Sintra, Portugal begins - German, Italian CPI data Fed's Bostic & Goolsbee talk
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Gold recovers from over a one-month low due to weaker dollar
Gold reversed its course on Monday and increased, supported by the weaker dollar. It had previously hit a record low after easing U.S. China trade tensions lowered demand for safe haven assets and boosted risk appetite. Gold spot rose 0.3%, to $3,281.65 an ounce at 0216 GMT after reaching its lowest level since May 29, earlier in the session. U.S. Gold Futures rose 0.2% to $3,293.30. Tim Waterer, KCM Trade's Chief Market Analyst, said that there is less of an 'all is doom' outlook regarding both tariff talks as well as events in the Middle East. This is making gold play second fiddle behind risk assets. The dollar index dropped 0.2%, but Wall Street futures rose. The greenback price of bullion is less expensive when the dollar falls. Treasury Secretary Scott Bessent announced on Friday that the U.S.-China have settled issues relating to shipments of magnets and rare earth minerals into the U.S. He also said the Trump administration could complete its various trade agreements with other countries by Labor Day, September 1. Donald Trump, the U.S. president, abruptly ended trade talks with Canada over Canada's tax that targeted U.S. tech firms on Friday, claiming it was an "attack" and he will set a new rate of tariff on Canadian goods in a week. After a 12-day conflict, the ceasefire between Israel and Iran also seemed to hold. This further reduced demand for safe havens. The dollar is still under pressure, which limits the decline of gold. The $3,250 mark is a crucial support level for the gold price. Waterer warned that if this level is breached, losses could accelerate to the $3200 level. Gold's appeal as a safe haven is often reduced by stable geopolitical or economic conditions. Silver spot was down by 0.1%, at 36.02 per ounce. Platinum was up 1%, at 1,353.13, and palladium rose 0.2%, at $1135.48. (Reporting and editing by Harikrishnan Nair, Rashmi aich and Anmol Choubey from Bengaluru)
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At least one gunman is still active in Idaho shooting that killed two firefighters
The Kootenai Sheriff reported on Sunday that two firefighters were killed while responding to an ensuing fire in northern Idaho. Law enforcement officers are still under sniper fire, as they continue their hunt for one or possibly more gunmen. Sheriff Bob Norris urged the public to avoid the area surrounding Canfield Mountain. This is a popular nature zone for hikers in Coeur d'Alene (about 260 miles / 420 km east of Seattle). Norris said at a press briefing that "we are prepared to neutralize the suspect who is actively shooting public safety personnel" and added that civilians could have been trapped in the incident. Sheriffs said that the shooter was using high-powered sporting guns to fire quickly at first responders and were "not, at this point, showing any signs of surrendering." He said that shots were coming in multiple directions. This was a clear indication of multiple shooters. He added that the perpetrators had chosen a location "with thick brush, and are well-prepared and blend in with their environment." Norris stated that if these individuals were not neutralized immediately, it would likely be a multi-day mission. ABC News reported that Kootenai Sheriff's Lieutenant Jeff Howard is investigating the possibility that the fire was intentionally lit to attract first responders. ABC News reported that Kristi Noem, the Department of Homeland Security secretary, was briefed about the Idaho shooting. The video footage showed that armed responders were preparing and smoke was billowing up from heavily forested hillsides. Ambulances and emergency vehicles could be seen entering the hospital. FBI deputy director Dan Bongino posted on X that "FBI tactical assets and technical teams are currently on scene providing support." It is still a very active and dangerous scene. Norris reported that firefighters received their first call about a fire at around 12:21 p.m. local. About 40 minutes later they heard reports of gunfire. Brad Little, the Governor of Idaho, said that this was a direct attack on brave firefighters. I ask all Idahoans, as we await further information, to pray for the firefighters and their families. Little didn't give any further details about the incident or casualties. Little said, "Please stay away from the area as this situation is still evolving to allow law enforcement to do their job." The U.S. Constitution guarantees the right to "keep and carry arms" for all Americans. Gun violence is a common cause of death. According to the latest data available from the Centers for Disease Control and Prevention, 17,927 Americans were killed by a firearm in 2023. Reporting by Brad Brooks from Colorado and Costas Pitas from Los Angeles. Editing by Humeyra Pamuk and Diane Craft; Lincoln Feast, Stephen Coates, and Humeyra Pamuk.
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Copper prices are high as the market waits for US tariff clarification and trade talks.
On Monday, copper prices traded at a range of levels on the London Metal Exchange (LME) and Shanghai Futures Exchange as investors awaited clarity about potential import tariffs and progress in U.S. Trade talks. The LME's three-month copper fell 0.15%, to $9,863 a metric ton, as of 1105 GMT. Meanwhile, the SHFE's most traded copper contract gained 0.13%, to 79840 yuan (11,132.03 dollars) per ton. After President Donald Trump abruptly terminated negotiations with Canada, on Friday, he left the talks in a cloud of uncertainty. He called Canada's tax on U.S. technology firms a "blatant" attack and promised to impose tariffs on Canadian products within a week. While metal has been diverted to the U.S. due to expectations that it will be taxed on imports, there are shortages in other countries. "The continued squeeze on the LME also supported prices," ANZ stated. "Spot contracts for copper continue to trade at a huge premium to futures with a later date." The LME's warehouses are partly empty due to record-breaking shipments to the U.S. in anticipation of tariffs. Copper Stocks In LME-registered storages, Friday's total dropped by 1,800 tonnes to 91.275 tons, the lowest level since August 2023. Inventories In the SHFE monitored warehouses, the weekly average for the week ending Friday was 81,550 tonnes, the lowest level since May 9. LME tin dropped 0.41% to $33,625 per ton. Lead fell 0.34% to $2,000, zinc shed 0.32 % to $2770, nickel declined 0.23% at $15,210, and aluminium eased by 0.19% to $1,590. SHFE tin dropped by 0.63%, to 268,030 Yuan. Lead fell by 0.29%, to 17,145 Yuan. Aluminium fell 0.22%, to 20,530 Yuan. Nickel gained 0.13%, to 79840 Yuan. Click or to see the latest news in metals, and other related stories. Data/Events (GMT 0600 UK GDP QQ YY Q1 1220 Germany CPI prelim YY June 1200 Germany HIPCP prelim YY Juni ($1 = 7.1721 Chinese Yuan) (Reporting and Editing by Sumana Niandy; Reporting by Hongmei Li)
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Trump says that the US could purchase more oil from Japan if it were to be deemed unfair.
In an interview broadcast Sunday, Donald Trump stated that Japan engaged in "unfair trade" in automobiles with the United States. He also said Japan should import more energy and other goods from the United States to reduce the U.S. deficit. Tokyo is trying to find a way to convince Washington to exempt Japan’s automakers from the 25% tariffs that are specific to the automobile industry and which hurt Japan's manufacturing sector. Japan will also face a reciprocal tariff of 24% starting July 9 unless a deal can be reached. They won't accept our cars and yet we import millions of cars from them into the United States. Trump stated that Japan understood what he meant when he said it in an interview with Fox News' "Sunday Morning Futures With Maria Bartiromo". "And they also understand that we have a large deficit with Japan. We have oil now. They could take lots of oil and other things. Last year, the automobile industry accounted for 28% of Japan's total exports to the U.S. of 21 trillion yen (roughly 145 billion dollars). (1 dollar = 144.4800 Japanese yen). (Reporting and editing by Stephen Coates; Reporting by Chang-Ran Kim)
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Demands for debt cancellation and climate action by protesters ahead of UN summit
On Sunday, activists marched through Seville, southern Spain, in scorching heat, demanding debt cancellation, climate justice, and taxing super-rich people on the eve a UN summit about financing development, which critics claim lacks ambition. The four-day summit, held every ten years, promises to tackle poverty and disease by defining the global framework for sustainable development. The United States' decision not to attend the summit and the shrinking appetite of wealthy countries for foreign aid has dampened expectations that it will lead to significant changes. Greenpeace members sat on a globe and carried a float that depicted Elon Musk, the billionaire, as a baby holding a chainsaw. Other banners read "Make Human Rights Great again", "Tax Justice Now" or "Make Polluters Pay". Beauty Narteh, of Ghana's Anti-Corruption Coalition, said that her group wanted "dignity and not handouts" in the tax system. Sokhna Nidiaye of the Africa Development Interchange Network called on public and private sector to "show more solidarity and less selfishness" towards developing countries. The Spanish Prime Minister Pedro Sanchez had said earlier that the fact that this event is taking place while conflicts are raging around the world is reason for hope. Sanchez, speaking at an event organized by the non-profit Global Citizen reaffirmed Madrid's commitment of reaching 0.7% GDP in development assistance and encouraged other countries to follow suit. Jason Braganza of the pan-African advocacy organization AFRODAD, who participated in the yearlong negotiations on the final outcome document for the conference, claimed that countries such as the U.S. and the European Union, along with Britain, had blocked efforts to organize a UN convention regarding sovereign debt. He added, "It is a shame that these countries chose to protect themselves and their creditors' interests over the lives of people who are dying." Reporting by David Latona, Silvio Castellanos and Andrea Ricci
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After Trump's attacks, Republican Senator Tillis withdraws from the 2026 re-election race
Republican U.S. Republican U.S. Tillis is one of only two Republican Senators who voted against the opening debate for Trump's tax-cutting and spending bill on Saturday. This was a necessary procedural step to advance this legislation. The midterm elections in 2026, when both chambers of Congress are at stake, will see his North Carolina Senate seat as one of only a few competitive Senate races. Trump welcomed Tillis' decision on Sunday. "Great News! "'Senator Thom Tillis' will not seek reelection," said he in a Truth Social posting. While the Republican-controlled U.S. House of Representatives is considered up for grabs, Democrats face an uphill battle in trying to reclaim a Senate majority. Republicans have a 53-47 advantage, and all Republicans except Tillis and Susan Collins are running for office in states Trump won easily in the presidential election of 2024. Wiley Nickel, a former U.S. representative, is the most prominent Democrat to announce a bid against Tillis. However, party leaders are hoping that Roy Cooper, the popular former governor of the state, would jump into the race. Tillis did not mention Trump in his statement but lamented the political gridlock which has gripped Congress. He said that in Washington, "it has become more evident over the past few years that leaders who are willing and able to embrace compromise, bipartisanship, and independent thinking, are an endangered species." Trump attacked Tillis on Twitter after he voted "no" on the tax cut bill on Saturday. He said the senator made a "big error" and promised to meet with any potential Republican challengers within the next few weeks. Tillis voiced several concerns about the bill. He was concerned that the cuts to Medicaid, the healthcare program for low-income Americans, could affect his constituents. Reporting by Katharine J. Jackson, Joseph Ax, and Bo Erickson. Editing by Scott Malone.
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More than a third on the sinking Tuvalu are seeking climate visas from Australia
Official figures show that more than a third of the population of Tuvalu in the Pacific, whose scientists predict the nation will be submerged under rising seas due to climate change, has applied for an historic climate visa to migrate from the country to Australia. Tapugao Falefou said on Sunday that he was "surprised by the large number of people competing for this opportunity" and that the small community would be interested in learning who the first group of climate migrants will be. Tuvalu is one of the most vulnerable countries to climate change. Experts say that it's causing sea levels to rise. It has 11,000 people living on nine atolls spread across the Pacific Ocean between Australia and Hawaii. Since the Australian visa lottery applications opened in this month, 1,124 applicants have been registered. Family members bring the total number of visa seekers to 4,052, under the bilateral climate treaty and security agreement. Officials said that the deadline for applications is July 18. An annual visa cap of 280 visas will be implemented to prevent brain drain in Tuvalu from migration to Australia. Tuvaluans can now live, study and work in Australia with the same health and educational benefits as Australians. Falefou stated that "Moving from the Falepili union treaty to Australia will provide an additional remittance for families back home." NASA scientists predict that by 2050, the daily tides of Funafuti will submerge half of its main atoll, which is home to 60% Tuvalu residents. The villagers are clinging to a 20-metre strip of land (65 feet), where they live. This forecast assumes that sea levels will rise by 1 metre, but the worst-case scenario would see 90% of Funafuti submerged. Tuvalu's sea level has risen 15 cm (6") in the last three decades. This is 1.5 times higher than the global average. It has constructed 7 hectares (17 acre) of artificial land and plans to build more. The island hopes that the land will remain above the tides up until 2100.
Saudi Arabia's GDP grew by 3.4% in the first quarter, exceeding flash estimates
Saudi Arabia's economy grew more than anticipated in the first quarter 2025, according government data estimates. Lower oil prices had a less significant impact on the economy than originally forecast.
The Saudi General Authority for Statistics released a flash estimate of 2.7% in May. This was a significant improvement over the initial estimates.
Monica Malik is the chief economist of Abu Dhabi Commercial Bank. She said that "the upward revision" was due to both a smaller contraction in the oil sector each year and a stronger growth in private sector.
Initial estimates showed a contraction of 1.4%.
The non-oil sector grew by 4.9%, compared with estimates made last month that indicated a 4.2% rise.
Increased oil production in the Kingdom may have blunted the impact of lower oil price.
Riyadh faces an increasing budget deficit. The International Monetary Fund says that Riyadh requires oil prices above $90 per barrel for its books to be balanced. Prices of $60 per barrel were the norm in recent weeks.
Saudi Arabia, the largest oil exporter in the world, lowered the price of its July crude oil for Asian buyers beginning of June after the Organization of the Petroleum Exporting Countries (OPEC+) increased output for a forth month.
OPEC+ has agreed to a further big increase in output of 411,000 bpd, after increasing output by the same amounts in May and June.
Saudi Arabia has embarked on a costly transformation program called Vision 2030, which aims to wean its economy off of oil dependence. It has also been investing billions in massive new development projects.
The Financial Times reported that in May, Saudi Finance Minister Mohammed Al-Jadaan stated the kingdom would take stock of its priorities as a result of a decline in oil revenues.
Malik said that he expects to see a reduction in government spending, to reduce the growing fiscal deficit. This will also likely have an impact on the non-oil sector's growth.
Daniel Richards is a senior economist with Emirates NBD. He said the bank still believes that spending levels will continue to be high.
He wrote that there are still enough projects in progress to support growth at least through this year and the next.
Saudi Arabia has committed to hosting a number of large international events. Each event will require significant expenditure on construction and development.
The 2029 Asian Winter Games will feature artificial snow, a freshwater lake created by man, and the World Cup in 2034, where 11 new stadiums and some renovated ones will be constructed.
Saudi Arabia's fiscal deficit in 2025 is expected to be around 101 billion Riyals ($27 billion). Pesha Magd is reporting; Toby Chopra is editing.
(source: Reuters)