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Siemens Gamesa Discusses European Production With Chinese Rare Earth Suppliers
Wind turbine maker Siemens Gamesa is in talks with Chinese suppliers of rare earth permanent magnets about the possibility of bringing production to Europe, in a bid to cut the region's reliance on imports after curbs on supplies from China.Delays in Chinese rare earth export permits have caused European car makers and their suppliers to scramble for alternatives in a market that is dominated by the world's No. 2 economy, threatening production stops across the continent.The wind sector also depends on rare earths processed in China, most notably neodymium, which is used in permanent magnets - a key turbine component - but currently not affected by export permit delays.A division of Siemens Energy, Siemens Gamesa, the world's biggest maker of offshore wind turbines, has already taken steps to diversify away from China, including a deal earlier this week under which it will get permanent magnets from Japan's TDK."Regarding the issue of Chinese magnet dependence it's also about the following question: Would I rather spend a little more money in Europe to become resilient? Or are there ways to incentivise suppliers from outside Europe to build a footprint in Europe?," Carina Brehm, Siemens Gamesa's chief operating officer said at a company event."In general, we are also talking to Chinese suppliers about the possibility of building factories in Europe. If investments in sustainable structures are made here as part of fair competition, this is definitely an option."While Brehm did not identify any of the suppliers, some of the biggest include JL MAG Rare-Earth, Ningbo Yunsheng and Baotou Tianhe Magnetics Technology.Siemens Gamesa, which is trying to emerge from a quality crisis that has caused major losses in recent years, was working hard on its goal to break even in 2026, Brehm said.Asked about whether the onshore wind division, which was the source of the issues, was up for sale, Siemens Energy's finance chief Maria Ferraro said the portfolio was staying together with the expectation that double-digit margins would be generated in the future."The team is rallying around ensuring the stability in that business. It's not easy. But what's important is that it's performing in line with our expectations," Ferraro said.(Reuters)
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Transocean Encourage Rig Up for Norwegian Sea Drilling Job
The Norwegian Offshore Directorate (NOD) has granted Equinor a drilling permit for a wildcat well in the Norwegian Sea, to be drilled with Transocean’s Transocean Encourage rig.The drilling permit is for the wellbore 6506/12-PB-3 H in production license 094, operated by Equinor with 40.95% working interest.Its partners in the license include Vår Energi with 34.3% stake, and Petoro and TotalEnergies, holding 14.95% and 9.80% shares, respectively.Transocean Encourage, a CAT D semi-submersible rig, owned and operated by Transocean, will be used for the drilling operation.The 2016-built offshore drilling unit is a 6th generation fully winterized, harsh environment semisubmersible rig with automated drilling control specially designed for operations on the Norwegian continental shelf.
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Investors watch US inflation data as gold prices fall for a second consecutive week
The price of gold fell on Friday as the market weighed down by the slight increase in the dollar, the Israel-Iran ceasefire, and the recent truce between the two countries. Markets are now awaiting the U.S. inflation figures to get a better idea about the Federal Reserve’s interest rate policy. As of 0234 GMT, spot gold was down 0.4%, at $3,313.23 an ounce. Bullion fell 1.7% in the last week. U.S. Gold Futures dropped 0.7% to $3325.70. Dollar-priced gold is now more expensive to overseas buyers because the dollar has risen by 0.2%. The Israel-Iran Peace Deal is responsible for the recent dip in prices, according to Brian Lan, Singapore's managing director of GoldSilver Central. Prices are currently consolidating, with a slight downtrend, and will likely remain at current levels. After 12 days of intense fighting between the two enemies, and the ceasefire that went into effect on Tuesday, Iranians and Israelis are trying to return to normal. Investors await the U.S. personal consumption expenditures data, due at 1230 GMT. According to analysts polled, the Fed will be revealing its monetary policy outlook by releasing the data. They expect a 0.1% increase monthly and a 2.6% rise annually. The markets are pricing in a rate cut of 63 basis points this year starting in September. Donald Trump, the U.S. president, says the Fed's policy rate should be reduced due to tame inflation. However, only two Fed policymakers have expressed support for a possible rate cut during the July meeting of the central bank. Edward Meir, Marex analyst, said: "I believe that what is happening is some length is moving from gold to other precious metals like platinum and palladium. So maybe there is some speculative movement at work." The spot price of silver held steady at 36.63 cents per ounce. Platinum fell 1.8%, to $1.391.28, having reached its highest level for nearly 11 years. Palladium rose 1.4%, to reach its highest value since October 2024, $1,147.78. (Reporting and editing by Alan Barona, Rashmi aich and Anmol choubey from Bengaluru)
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Copper prices set to rise on the back of a weaker dollar and tariff concerns
London and Shanghai copper were set to post weekly gains on Friday. This was largely due to a declining U.S. Dollar and the persistent concern over potential U.S. Tariffs on Copper Imports. As of 0101 GMT the London Metal Exchange (LME), three-month copper fell 0.19%, to $9,881 per ton, after reaching $9,913.5 at its highest level since March 27. It was up by 2.58% over the past week. After reaching 79.900 yuan or its highest level since April 1, the Shanghai Futures Exchange copper price rose by 1.32%, to 79.780 yuan. The copper price rose by 2.03% over the past week. Copper prices are being driven higher by topics that everyone is interested in, such as a weaker US dollar, the continued flow of copper from the LME to the U.S. on the possibility of a U.S. import tariff on copper, and concerns about supply shortages elsewhere. The dollar fluctuated on Friday and hovered near its lowest levels in 3-1/2 year against the euro, sterling, and other currencies, as traders bet on further U.S. interest rate cuts, while waiting for trade agreements ahead of President Donald Trump’s July tariff deadline. The greenback is less expensive to buyers of other currencies. The LME Cash Copper Contract Premium over the Three-Month Contract The price of copper on the Comex rose to $1.403 per ton or its highest level since April 25, and the premium between Comex and LME copper also increased. LME nickel dropped 0.26%, to $15,170 per ton. Zinc fell 0.18%, to $2,763. SHFE tin increased 1.52% to 270670 yuan per ton. Aluminium gained 1.32% at 20,650 yuan. Zinc was up 1.26% at 22,435 Yuan. Lead rose 0.23% to 17245 Yuan. Click or to see the latest news in metals, and other related stories. Final June 1230 US Consumption, Adjusted MM May 1230 US Core PCE Price Index YY MM May 1400 U Mich Sentiment Final ($1 = 7.1707 Chinese yuan) (Reporting by Hongmei Li; Editing by Harikrishnan Nair) Final June 1230 US Core PCE Price Index, YY,MM May 1230 US Core PCE Price Index, MM,YY May 1400 US U. Mich Sentiment Final ($1=7.1707 Chinese Yuan) (Reporting and Editing by Harikrishnan Nair).
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US reserves will not be fully stocked until the end of the year
According to the Department of Energy, scheduled crude oil deliveries into the Strategic Petroleum Reserve will be delayed until the end of this year because of maintenance. This is up to seven months behind schedule. From January to May, the administration of former President Joe Biden planned deliveries of 15.8 million barrels to the SPR. Only 8.8 million barrels of this total have been delivered so far in the current year. A spokesperson for the Energy Department said that due to maintenance on site, SPR rescheduled all crude oil from previous solicitations as well as any exchanges through December 2025. Biden sold 180 million barrels of oil in 2022 - the biggest ever sale - in order to try and control the rising gasoline prices following the Russian invasion of Ukraine. On his first day as president in January, Donald Trump promised to fill up the SPR to "the top" in order to support the domestic petroleum industry. But it takes time. Chris Wright, the Energy Secretary, estimated that it would take 20 billion dollars and many years to replenish the reserve back to its level before the sales. Trump's tax and spending bill allots $1.5 billion to purchase SPRs and maintain them. Wright also criticised Biden for his large-scale sale of the reserve. He said it had caused damages of hundreds of millions. When asked for a breakdown of those damages, his department said the 180 million barrel sale resulted in $2 million in emergency repairs, $35 million in costs to move the oil and $243 million in costs from delays to congressionally-directed maintenance. Biden's DOE said at the time that it bought back 59,000,000 barrels of oil for the SPR at an average price less than $76 per barrel. This was a significant discount to the $95 per barrel it sold in 2022. Biden's DOE reported at the time that this resulted in an estimated $3.5 billion profit. (Reporting and editing by Muralikumar Anantharaman, Jamie Freed and Timothy Gardner in New York)
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Dollar weakens but shares rise as Fed's independence is threatened
Asia shares reached their highest level in over three years on Friday, as they followed a Wall Street rally. However, the dollar suffered on fears about the Federal Reserve’s independence and on expectations of early rate cuts. The stock indexes around the world are expected to close the week in a positive manner, as worries over tensions in the Middle East along with uncertainty about tariffs and trade agreements have been put on hold for the time being. Early in the session, MSCI's broadest Asia-Pacific share index outside Japan reached its highest level since November 20, 21. It was last trading 0.2% higher, and it is expected to post a 3% weekly gain. Japan's Nikkei rose 1.5%, and the index surpassed 40,000 for the first time since five months. The news that Washington and Beijing had reached an agreement on how to expedite the shipment of rare earths to the United States was one reason for the positive mood. U.S. Treasury secretary Scott Bessent said also on Thursday that after Washington reached an accord with the Group of Seven industrialized countries, he had asked Republicans to remove Section 899 of their tax and spending bills. When that provision was adopted by the House, it made some investors nervous, particularly foreign investors. If that provision is removed, it will ease one of the fears of foreign investors, said Khoon Gh, head Asia research at ANZ. The positive market sentiment we are experiencing is a result of the accumulation of all these... positive developments. The European futures market also saw gains, with the EUROSTOXX50 futures and DAX Futures both rising by 0.6%. The FTSE Futures rose by 0.16%. U.S. Stock Futures are little changed even though Wall Street closed at record highs on Thursday, supported further by the expectation of imminent Fed rate reductions. FED CUTS COMING The Wall Street Journal reported on Tuesday that U.S. president Donald Trump had toyed with the notion of appointing and announcing the replacement for Fed Chair Jerome Powell by September or Oct. The dollar was further weakened as traders worried about the erosion of Fed's independence, and began to price in additional rate cuts for this year. The dollar was near its lowest level in three-and-a half years on Friday, and it was heading for a weekly loss of 1.4%. This would be the largest drop since over a month. The greenback has already fallen more than 10% for the year. If it continues to fall in the coming days, this will be the biggest half-year drop since the beginning of the free-floating currency era in the early 1970s. The euro, against a weaker US dollar, was at its highest level in more than three years. It stood at $1.1688. The pound rose by 0.03%, to $1.3730. "Trump's wish to'shadow,' the Fed by using a designated successor for Chair Jay Powell, isn't a great way to promote perceptions of autonomy and integrity in U.S. Policymaking, and, by extension that of reserve currency status for the U.S. Dollar," said Thierry Witzman, global FX rates strategist at Macquarie Group. The Fed's bet on a Fed cut has increased due to a series of economic data that were weaker than expected. Attention is now focused on the release of Friday's core PCE Price Index, the U.S. Central Bank's preferred inflation measure. The yields on U.S. Treasury bonds were unchanged in Asia, after falling in the previous session. The two-year yield was at 3.7418%, and the benchmark 10-year rate at 4.2554%. Oil prices are set to decline by a week's end, as the ceasefire between Israel and Iran continues. This has eased concerns about Middle East supply. Brent crude futures rose 0.41% to $68.01 per barrel, while U.S. oil rose 0.46% at $65.53 a barrel on Friday. However, both crudes are headed for a drop of more than 10% in the coming week. Spot gold dropped 0.23%, to $3320.25 per ounce.
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Weekly oil loss due to fading Mideast supply risk
The price of oil is expected to drop this week as the Iran-Israel ceasefire holds and eases concerns about Middle East supply risk. However, prices increased on Friday due to the summer driving season in the United States. Brent crude futures were up 34 cents or 0.5% to $68.07 per barrel at 0111 GMT. U.S. West Texas Intermediate Crude gained 33 cents or 0.51% to $65.57 per barrel. The benchmarks had been set to drop about 12% in a week. Tuesday, oil futures fell to their lowest level in over a week after U.S. president Donald Trump announced that a ceasefire agreement had been reached between Iran and Israel. The price of oil rose slightly on Thursday as U.S. government figures showed that crude oil and fuel stocks fell last week and demand and refining activity increased. The market is beginning to realize that crude oil stocks are extremely low, said Phil Flynn. Senior analyst at Price Futures Group. The dollar index also fell to its lowest level in three years on the back of a report that Donald Trump planned to select the next Federal Reserve Chief early. This fueled new bets about interest rate reductions in the United States. Oil becomes cheaper for holders of currencies other than the dollar, which increases demand and supports prices. Benjamin Netanyahu, the Prime Minister, said that before the oil prices settled on Thursday he was confident his country would not miss out on peace opportunities. He also mentioned that there were still supply risks. (Reporting and editing by Tom Hogue; Nicole Jao)
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US announces it has reached an understanding with China to accelerate rare earth exports
A White House official announced on Thursday that the United States and China have reached an agreement on how to expedite the shipment of rare earths to the United States. This comes amid efforts to resolve a trade dispute between the two world's largest economies. China agreed to remove non-tariff measures imposed on the United States from April 2 during talks in Geneva in May, although it is unclear how certain of these countermeasures would be removed. China has added rare earths as part of its response to the U.S. tariffs announced recently by President Donald Trump. A White House official announced on Thursday that "the administration and China have agreed to an additional agreement for a framework in order to implement the Geneva Agreement". Officials said that the understanding was "about how to expedite rare earth shipments into the U.S. once again". Bloomberg quoted U.S. Commerce Sec. Howard Lutnick as saying: "They will deliver rare earths" and "we will take down our countermeasures" once they have done that. The Chinese embassy in Washington has not responded to a comment request immediately. Reporting by Nandita BOSE and Steve Holland, writing by Costas PITAS; editing by Chris Reese
McGeever: A hawkish Fed can cause the biggest "pain trades" on markets.
Financial markets are in limbo as the first half of this year ends. They're waiting to see if the global trade deal kaleidoscope will come together - or not - after July 9 when Washington's "reciprocal" tariffs expire. Which trades are most at risk if investors get caught off guard?
Today's market is in a state of suspended animation. This is an incredibly bullish situation. The U.S. forecasts for growth are increasing, S&P earnings growth estimates are running at 14% next year, and corporate deal-making has picked up. World stocks are also at record highs.
It seems that the uncertainty following President Donald Trump’s "Liberation Day", April 2, tariffs is a distant past. The relief rally raged for almost three months and only took a short pause during the 12-day conflict between Israel & Iran.
Some might even say it's too rosy. What will be the "pain trades", if we see a decline?
Unsurprisingly, the major pressure points occur in asset classes and on markets where sentiment and positioning are heavily skewed in one direction. A sudden price change can cause too many traders to rush out of the market at once.
Bank of America's global fund manager monthly survey is a good way to identify positions that are overloaded. According to the Bank of America's June survey, long gold is the most popular trade right now (according 41% of respondents), followed by long "Magnificent Seven Tech Stocks" (23%), and then short U.S. Dollar (20%).
These three trades are popular because they have proven to be highly profitable.
The "Mag 7", a basket of Nvidia shares, Microsoft, Meta, Apple and Alphabet, as well as Amazon and Alphabet, accounted for more than half of S&P 500’s 58% return over two years in 2023-2024. The Roundhill "Mag 7" ETF, which is equal-weighted, has risen 40% in the past year. This week, the Nasdaq 100, a market index that includes these seven companies, reached a new high.
Gold prices have nearly doubled over the past two and a half years. They reached a record-breaking $3,500 per ounce in April. The dollar has fallen 10% in this year and is on course for its worst half-year since the establishment of the free-floating rate system more than 50 year ago.
Slash and... BURN?
These three positions are a derivative of a fundamental bet. The belief that the Federal Reserve is likely to cut U.S. rates substantially over the next 18-month period, which would turn all of these positions into moneymakers.
Rates futures markets are increasing their bets for lower rates despite the Fed's revised projections of economic growth last week being notable for their hawkish tone. This is largely because several Fed officials have made dovish remarks and oil prices have fallen sharply. The traders now predict 125 basis point rate cuts before the end of next.
Morgan Stanley's economists are even more pessimistic, predicting no change in the forecast for this year and 175 basis point cuts for next year. This would bring the Fed funds rate down to between 2.5% and 2.75%.
A reduction in borrowing costs is especially beneficial for companies with high growth potential, such as Big Tech. In theory, low rates would also be good for gold as it is a non-interest bearing asset.
On the other hand, it is difficult to imagine a scenario where the economy continues to grow, boosting equity performance, and the Fed also cuts rates by 175 basis points.
A Fed that eases at this speed and scale would almost certainly be trying to quell a raging fire in the economy, which is most likely a recession or severe slowdown. Risk assets may not necessarily crash in this environment, but overextended positions will be exposed.
This isn't a first for investors to have bet on Fed cutbacks in the last three years. However, we haven't seen a major crash as a consequence. The markets have fared better than most observers predicted, and reached new highs.
If "pain trading" does emerge in the second part of the year, this will be due to one particular sore spot: A hawkish Fed.
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(source: Reuters)