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Oil drops the most since years, and gold, yen are also falling.
Brent oil is on course for its biggest?quarterly decline since 2020 as traders keep tabs on the fragile ceasefire between Iran and the United States. The U.S. Dollar was expected to increase against a basket for the fourth consecutive quarter on the last day?the?second quarter. This pushed the yen down to its lowest level in 40 years as the expectations of interest rate increases in the U.S. changed dramatically. The greenback gained more than 1% against the currencies of emerging markets as a group throughout the second quarter. The Strait of Hormuz reopened slowly and randomly on the energy market as the hostilities between Iran and the U.S. dwindled into a fragile truce, causing Brent oil to drop by almost 40% this quarter. The equities rally continued for the third quarter as a seemingly unstoppable boom of artificial intelligence stocks kept it going. South Korea's KOSPI was up 68%, and Taiwan's benchmark index?was up 45%. The Nasdaq composite added more than 20 percent. The MSCI All-World Index has gained more than 14% and reached a new record high in the first month of this year. This is its best performance quarterly since 2020. Emerging Markets stocks are up by 23% for the period. The STOXX 600 index in Europe, which has not had as many AI beneficiaries, as other Asian or U.S. indices, still rose nearly 10% during the third quarter. It's been rising every month since march. David Morrison is a senior market analyst with Trade Nation. He said that investors cannot see the end of this bull run. "Whenever there is a little selloff, you seem to get a new impetus to purchase." The Dow Jones Industrial Average rose by 126.78 points or 0.25 percent to 52,309.52. The S&P 500 gained 28.81 points or 0.39% to 7,469.63, and the Nasdaq Composite gained 207.36 or 0.81% to 26,029.22. The MSCI index of stocks around the world rose by 5.31 points or 0.48% to 1,117.36. The pan-European STOXX 600 rose by 0.78%. Europe's FTSEurofirst 300 rose by 20.66 points or 0.81%. Emerging market stocks increased 16.86 points or 0.99% to 1,723.79. Nikkei 225.36 points or 0.99% rose to 70,062.31. THE WINNING DOLLAR The dollar was the biggest winner among developed currencies this quarter, rising 1.4% versus a basket. Emerging market currencies, however, have gained 1.3% against the dollar this quarter. Investors are accumulating bullish positions in record numbers thanks to an astonishing re-pricing the U.S. rate outlook. The interest rate outlook has changed from cuts to increases due to the strength and persistence of inflationary pressures outside of energy prices. The Federal Reserve is expected to hike rates at least once by the end of this year. Earlier expectations were for rate cuts. Kevin Warsh will address the European Central Bank annual meeting in Sintra, Portugal this week. The new Federal Reserve chair is expected to speak on Wednesday. Gold's 14% drop in a quarter, the largest in over a decade, was partly due to the dollar's increase. The yen, on Tuesday, reached its lowest point in more than 40 years, trading at 162,38 to the dollar. The yen was at its weakest point in 40 years, trading around 162.38 per dollar on Tuesday. Finance Minister Satsuki Catayama issued another warning. Katayama’s comments "avoided verbal escalation which often precedes an effort to buy, and instead reiterating authorities stand ready at any time," Karl Schamotta said, Chief Market Strategist at Corpay. Schamotta noted that "the non-farm payrolls data on Thursday and the Independence Day holiday on Friday -- when U.S. liquidity will?thin drastically -- could offer attractive opportunities to wrong-foot speculative positions." Brent crude futures for August, which expires on Tuesday, were unchanged on the day. The contract is on course for a third consecutive monthly decline. It has fallen about 20% in June so far and?38% over the last quarter. The September contract, which is more actively traded, was also flat. The U.S. crude oil price is on course to drop 30% in the next quarter. The UBS analyst Giovanni Staunovo stated that "I would not say the market has priced in a risk premium but previously stranded vessels have become available due to the increase of ships leaving the Gulf. This creates a temporary new wave of supply." Morgan Stanley has said that it models a global oil surplus of 4.8 millions barrels per day by 2027.
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Brent crude oil cargoes are not expected to be loaded in August. This is a world first.
As production is'steadily declining,' traders said on Tuesday that no cargoes of North Sea Brent crude oil will be?loaded in August. This marks a landmark for the global Dated Brent benchmark oil, which currently prices more than 60% of world oil. Brent crude, a North Sea crude oil, is the name of the global Dated Brent standard. It is used to price physical cargoes as well as Brent crude futures contracts and derivative contracts. Over time, Platts (formerly S&P Global Energy), which manages the benchmark has added other crudes in order to increase liquidity. According to a loading schedule seen by LSEG and a data set dating back to 2007, August is 'the first month where no Brent cargo was initially scheduled to ship. According to data from LSEG and a loading plan dating back to 2007, August is the first month in which no Brent cargo is initially scheduled to be shipped. Adi Imsirovic is a Brent specialist and veteran oil trader. He said, "What's left of Brent?is a brand name?of the world's most important crude oil contracts." "Brent crude will eventually disappear, but it is likely that the contract will remain in place for many years." Brent is now one of five North Sea grades, including Forties, Oseberg and Troll, that form the Brent Complex. Platts has also?added U.S. WTI Midland crude in 2023 as a way to boost liquidity. Brent's inclusion in Dated Brent has been questioned due to the drop in volumes. Platts stated on?Tuesday that the benchmark remained healthy. S&P Global Energy's spokesperson stated that the inclusion of Forties and Oseberg as well as Ekofisk Troll, Troll, Troll, and WTI Midland ensures that the benchmark will continue to function effectively. The benchmark is robust even when a particular grade does not have any scheduled loadings for a month. Neither Shell nor Brent Pipeline System Operator?TAQA responded to a request for comment regarding production levels. According to LSEG, Brent loadings in 2026 have been around 23,000 barrels a day, or around one cargo a month, which is less than a quarter the volume a decade ago. The combined loadings of the five North Sea grades in August will average 474,000 barrels per day. This number increases significantly when WTI Midland and other grades are included. (Reporting from London by Robert Harvey, edited by Alex Lawler & Diti Pujara).
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The hope of finding survivors of the Venezuela earthquakes has faded
Rescue teams in Venezuela lost hope Tuesday that they would find more survivors after hours of exhausting search for victims under the rubble of collapsed building. Rescue teams from Ecuador, the United States and Canada are working together to help victims of the recent earthquakes. After more than 40-hours of work, rescue teams from Ecuador and the?U.S. halted their operations in Macuto in La Guaira, the state hardest hit by the earthquakes on June 24, when they stopped hearing back from a trapped mother and three children under a nine story building. Major Jorge Montanero is the leader of the EQ11 Team from Guayaquil on Ecuador's Pacific Coast. He said, "Unfortunately things have not developed favorably," as he stood in the rubble of the building after cutting through the concrete slabs to try and locate the trapped four victims. Andrea Montilla sat on a plastic chair in the makeshift morgue set up by the state's main port. She waited for family members to arrive at the port and identify the remains of her cousin, who was also his grandmother. Montilla stated that the 14-year old was found overnight in the rubbles of an apartment block and his family took the remains straight to the port. She said that her cousin's mother was still missing. An official who wasn't authorized to speak with the media said that staff at the morgue led families through a personal identification process. The official said that families can get death certificates and cremation authorizations after this. The official who stated that?they were from La Guaira, and they had lost several family members to the earthquakes,' had no idea of the number bodies handed over or those awaiting identification. SURVEYING?THE?DAMAGE NASA estimates that 59,000 buildings have been damaged or destroyed as a result of the twin earthquakes. The earthquakes struck seconds apart and had magnitudes of 7.4 and 7.2. From space, the devastation is visible. According to residents and survivors from different areas, not all collapsed buildings had professional rescue teams present. Instead, relatives and neighbors worked to remove debris in order to extract survivors or bodies. "There's no doubt that the number is higher than previously reported." I can give an estimate. We are acquiring -- and this was agreed with the local authorities -- 10,000 bagged bodies," Gianluca RAMPOLLA, United Nations resident coordinator in Venezuela said Monday from his Caracas offices. According to the government of Delcy Rodriguez, at least 1,750 deaths and thousands of injuries have occurred as a result of these earthquakes. Around 16,000 people have been left homeless. According to a website created by the opposition party, the number of missing people is estimated at 43,000. In a press release, Venezuela's PDVSA state-run energy firm and Domegas private gas distributor said they were inspecting the gas lines of some 600,000.000 Caracas consumers to detect and fix?leaks. They said that specialized equipment for detecting leaks had arrived in the country. UN WARNS OF HUNGER AND DISEASE LOOMING United Nations agencies warned survivors that they would be at risk from 'hunger and diseases' in the wake of the twin earthquakes. World Food Programme has appealed for $50 million in order to provide emergency assistance to up 500,000 people within the next three month period. The agency also stated that it is able to feed 1 million people, if enough funding is obtained. The WFP distributed rations of one month's food to 1,200 people in La Guaira, including dry beans, lentils and cereals. It also established temporary feeding centers throughout the state. The World Health Organization had warned earlier on Tuesday that Venezuela's health care system was severely under strain. At least three of the country's hospitals were damaged, and six more were damaged or only partially functional. WHO spokesperson Christian Lindmeier said that thousands of people who were displaced as a result of the earthquakes are also at risk for disease outbreaks such as yellow fever and dengue. This is especially true given the low vaccination coverage. Washington has sent 89 metric tonnes of essential supplies to Venezuela. The U.S. Embassy in Caracas announced this in a Facebook post. The embassy stated that "our team in Venezuela works intensively to set up the field emergency hospital." We will soon be able provide emergency medical treatment to those in need.
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UK auto lobby group warns that post-Brexit regulations will cost PS1.4 billion
The main British car lobby estimated that British electric vehicle manufacturers will be forced to pay PS1.4billion ($1.85billion) in tariffs, if the European Union and the United Kingdom cannot reach an agreement on the local content requirement. The Society of Motor Manufacturers and Traders said that the post-Brexit regulations on sourcing parts, which were delayed in 2023 and are now 'due to come into effect from January', will trigger a tariff of 10% on 70% of all battery electric?and hybrid plug-in models traded with EU. A potential enforcement could have a negative impact on the British-EU trade in battery?electric vehicles and plug-in-hybrids, estimated at PS16.4 billion. The SMMT claims that this would make "many of these important models less affordable and competitive". The warning comes also amid 'political unrest after the resignation of Prime Minister Keir Starmer, since it is not yet clear whether his likely replacement, former Greater Manchester Mayor Andy Burnham, would maintain his approach towards EU relations. The government didn't immediately reply to a question about the SMMT statement. At a press briefing in London, SMMT CEO Mike Hawes said: "With global competitiveness (more) fierce, we don't need any additional?costs for that trade. We need a collaborative solution." Both Brussels?and London have set targets to 'phase out' combustion engine models by the 2030s. The EU has already backtracked from a 2035 ban of petrol and diesel cars because EV sales are not as high as originally expected. The previous extension was made after several carmakers threatened to shut down their factories in Britain. Hawes stated that the 'Made in EU"?proposal of the European Commission would "effectively exclude" UK-assembled cars from most European markets. He added: "It is not only a UK issue... It will harm the UK, and also Europe itself." Reporting by Muvija and Nick Carey, Editing by Thomas Derpinghaus & Raju Gopalakrishnan
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Vedanta's CopperTech Metals delays US IPO citing volatility
CopperTech Metals announced a delay in its U.S. initial public offering on Tuesday. The company cited volatility in the global copper equity sector. Postponement is despite a resurgence in investor appetite for new listings. This has been bolstered by buoyant equity market and several blockbuster initial public offerings. Copper prices are volatile due to the expectations of new U.S. Tariffs, and the supply restrictions that will be imposed in response to the surge in AI-related demand. After a review, U.S. commerce secretary Howard Lutnick will?update the president on the refined copper?market and domestic refining capacity on Tuesday. Global X Copper Miners ETF is a fund that tracks the 'global copper mining industry. It has lost more than 12% this month. Vedanta, CopperTech and other companies have decided to delay the planned IPO. This decision was made after careful consideration of the current market conditions. The company had planned to price its offering on?Tuesday, and make its debut at the NYSE on a Wednesday. CopperTech planned to raise up to $423.5m in its IPO by offering between 23.5 and 18.5 million shares at a price of $16 to $18 each. The company aimed to?achieve a valuaiton of $3.57billion. Vedanta Resources owned by Indian billionaire Anil Aggarwal launched CopperTech Metals last year, which owns the Konkola Copper Mines in Zambia. Vedanta has owned Konkola's majority since 2004. The Zambian government under Edgar Lungu seized the asset in 2019. The company has invested more than $3 billion in Konkola. (Reporting by Utkarsh Shetti in Bengaluru and Olivia Kumwenda; Editing by Shinjini Ganguli)
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A funeral home in France is overwhelmed by the rising death toll from France's heatwave
Undertaker Zouhaier Hertelli has received frantic?calls? from families, retirement communities, and the police, all desperate to find space in a refrigerated morgue for those who have died due to the heatwave that is sweeping France. France's Public Health Agency said that there were at least 1,000 extra deaths between last Wednesday and Sunday. The numbers are not final, however, as they will likely increase. Hertelli’s funeral home, located in Orly near Paris, can store 32 bodies. All are currently occupied. Hertelli pointed to the compartments with labels indicating the name of deceased, date of arrival at the funeral home, and temperature of storage. He said, "We are completely full." The rush started Wednesday, Thursday, and all weekend long. "I received 150 calls over the weekend and had to turn down 150 bodies." Meteo-France, the national weather forecaster, said that although temperatures have started to fall from record-highs, they remain around 30 degrees Celsius across the country and are expected to rise again at the weekend. Families, nursing homes, police stations, and municipalities all call us. Hertelli stated that all of her colleagues in the funeral industry are contacting us. 'STATE COMPLETE PANIC They're completely in panic, at the end of their wits. Imagine that your father or mother has started to decompose, and you are unable to care for it. We have no solution. Hertelli asked local authorities for permission to use a refrigerator trailer to store additional bodies. The company warned that the increased number of deaths meant that burying and cremating bodies was often delayed. This means that some bodies may have to remain in cold storage units longer than normal. He said that the mere waiting time is pushing back appointments to July 10. France's public health authority and doctors have noted an increase in deaths of elderly people in their homes as well as in nursing homes. The public health authority and doctors in France have pointed out an increase in deaths of elderly people at home, as well as those who are living in nursing homes. Sebastien Chopin, a doctor with SOS Medecins, said he was concerned about the possible impact of another heatwave on those who are already "weakened" by recent high temperatures. In the heatwave of last week, he and his colleagues signed eight death certificates at people's houses in Melun south of Paris. This is four times more than they did in the same period last year. (Writing and editing by Ingrid Melander)
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Nigeria's biggest refinery imports UAE crude for first time, traders say
Nigeria's 650,000-barrel-per-day Dangote refinery has imported ?2 million barrels of crude ?from ADNOC of the United Arab Emirates, ?traders told , ?marking its first ?such purchases ?of crude from the Middle Eastern producer. As demand in Asia has weakened and global crude markets have weakened dramatically, the purchases are being made at a time when the Middle East crude market is able to supply more Middle Eastern crude due to the 'U.S. Iran ceasefire' earlier this month. Three sources have confirmed that Dangote imported a cargo of Umm Lulu oil and another?of Das or Murban in June. The Dangote refinery refused to comment while ADNOC didn't immediately respond to an inquiry for comment. The refinery receives five to seven crude carloads a week from NNPC (Nigeria’s state-owned oil company), benefitting from lower shipping rates. However, it has stated that they require 'about 13 to fifteen cargoes a week. According to Kpler data, the Dangote refinery, which has become a major supplier of middle distillates into Europe because of fuel shortages caused by disruptions in shipping through the Strait, also imported up to 65,000 barrels per day (bpd)?of Libyan oil in 'May. Isaac Anyaogu and Seher Dareen in Lagos, Robert Harvey in London. (Editing by Alex Lawler, Mark Potter and Mark Potter).
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Heatwave tests Ukraine soldiers' Soviet-era tanks
The searing heat of a record-breaking European heatwave, which spilled over into Ukraine, slammed down on soldiers trapped inside a massive steel tank from the Soviet era. The scorching temperatures across Europe have caused power outages, infrastructure damage and overwhelmed healthcare systems. The heat of the battle in Ukraine has created its own challenges. The vehicle becomes very hot when it has completed its mission. The temperature inside can get really hot, said the chief sergeant for the 65th Separate Mechanized Brigade's tank battalion using "Sympatiaha" as his call sign on Sunday. This tank does not have air conditioning, unlike the Western-supplied?Abrams?, Challenger? and Leopard? tanks. Under the summer sun, Soviet-era T-72 battle tanks that weigh between 41-45 tons can become heat traps. Sympatiaha and her fellow soldiers sat on top of their tank in a leafy area, trying to cool off by splashing water onto their faces from a bottle. The temperatures in the area hovered around 30 degrees Celsius over the weekend. They are expected to reach 36 C by Tuesday. The crew remained committed despite the scorching heat to stopping Russian troops from moving forward. "Despite the harsh conditions of the weather - scorching temperatures now, freezing temperature and mud in winter – we are still holding on," he said. "We continue to fight against the Russian forces. We're trying to stop them from advancing, and?push? them out?of?here." Ukrainians in other parts of the country were preparing for a return to hourly power outages as temperatures rose, driving up electricity usage - largely because air conditioners are more popular. (Writing and editing by Ros Russell; Anna Pruchnicka)
ROI-Global trade in rude health? McGeever: Yes, with a catch
Global trade doesn't cool in the shadow of tariffs, wars on trade, real wars, and energy shocks. It's heating. How durable is it when the price, and not volume, is what's stoking up the flames?
Recent trade data, from the U.S., China and other major economies, shows that cross-border commerce has grown at a faster rate than economists expected.
In many cases the price increases were the primary cause of increased activity and surprising export figures. This reflects the spike in inflation caused by the Iran War, particularly on the oil and energy markets.
This was especially true in the U.S. where exports reached a record of $327 billion last month, driven by shipments from a wide range of products.
In fact, the goods surplus shrank to its lowest level since 2020. This is good news for the U.S. economic system, since the declining deficit could contribute to the growth of the economy in the second quarter.
This could have been primarily due to the high prices of oil, fuel, and other energy products. This raises the issue of how durable this improvement is.
It's clear that it isn't just the price that does all the work. The physical export volumes of Canada have returned to their previous levels before Donald Trump was elected to the White House by the U.S. in November 2024. This has sparked trade tensions with the neighboring countries. According to CIBC, the exports of April were only second to those in February last year when companies were preparing for Trump's looming duties.
Base effects are another factor that may be affecting headline trade figures. The slowdown in trade during the first half of the year as Trump's tariff wars began is now used to compare year-over-year figures.
This suggests that it's too early to predict a?trade revival.
HAPPY CHIPS DAY!
The price is also an important factor in Asia's trade boom. However, the soaring demand for AI is also fueling the sizzling numbers.
China, the largest exporter in the world, saw its total exports rise 19.4% in May. Pantheon Macroeconomics says that sales of high-tech goods accounted for 12 percent of this. While the value of integrated-circuit exports has more than doubled in the last year, export volumes have only increased by 2%. This suggests that the headline figure is inflated because the price was high.
The same thing is happening in other sectors. However, Beijing policymakers and critics will continue to focus on headline dollar figures, particularly the large one, China's total 12-month rolling trade surplus of more than $1 trillion.
Taiwan's AI export surge was even more impressive. Exports rose in May more than expected to the second highest level by value ever, up almost 52% compared to a year ago. Price was again a major factor.
TSMC, the world's largest manufacturer of advanced chips that power AI applications and a major global supplier to Nvidia and Apple, is located in Taiwan. Chips, computer equipment and software, as well as other high-tech products, have seen a surge in price over the last year, largely due to an explosion in demand.
Goldman Sachs Global Institute estimates that AI-related investments will reach $7,6 trillion by 2031.
SURPRISING RESILIENCE
Global trade has shown a remarkable resilience, which few observers could have imagined possible in the face of volatile market conditions. Trump's "Liberation Day tariffs" triggered a global trade war, which may have ended decades of internationalization. Geopolitical rifts also threaten trade flows, notably in Middle East.
The 'AI frenzy' is largely responsible for the booming global trade. The demand for these applications has been increasing, a large part of trade in AI products is cross-border and many have been exempted from tariffs.
The question is, can this continue? Could the rise in AI compute costs curb demand eventually? Could major powers seek to reduce AI supply chains in order to minimize national security risks?
The AI boom is unlikely to fade away, which suggests that trade activity may remain resilient, despite tariffs, protectionism and deglobalization. Everything seems to be dependent on the outcome of this tech story, just as it is with other parts of the global economic system.
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(source: Reuters)