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Gold prices near record highs amid US tariff concerns
The gold price rose on Tuesday as the lingering U.S. inflation and tariff concerns increased demand for safe haven assets. Key jobs data are due this week. Gold spot was up 0.3% at $2,820.69 an ounce as of 0252 GMT after reaching a record-high $2,830.49 during the previous session. U.S. Gold Futures dropped 0.2% to $2.852.70. On Monday, U.S. president Donald Trump suspended tariffs against Mexico and Canada. He agreed to a 30 day pause as a result of concessions made by the two countries on border enforcement and criminal justice. Meanwhile, levies will be imposed on Chinese products later that day. Markets perceive Trump's policies on tariffs as inflationary. The gold price may remain supported in the current dynamic environment where policy changes and market volatility are likely to be dominant, according to IG's market strategist Yeap Jun Rong. "With a near-term target price of $2,874, followed by the psychological level $3,000." Bullion has traditionally been considered to be a hedge both against inflation and geopolitical unrest. Global bullion banks, such as those in Dubai and Hong Kong that cater to Asian consumers are now flying gold to the United States to take advantage of the high premium on U.S. Gold Futures over the spot price. Investors will also be watching a number of U.S. employment data this week, including the U.S. Job Openings Data due later that day, ADP Employment Report on Wednesday, and Payrolls Report on Friday. Silver spot edged up 0.2%, to $31.61 an ounce. Platinum rose 0.7%, to $970.80. Palladium rose 1%, to $1,019.31. The top gold-consuming markets in China were closed on Tuesday for the Lunar New Year and will resume trading on Wednesday. (Reporting from Rahul Paswan, Bengaluru; Ashitha Shivaprasad added reporting and editing by Subhranshu and Rashmi Sahu)
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Japan's food exports in 2024 will reach a record high despite China’s seafood import bans
Japan's agricultural, forest and fishery exports rose by 3.7% in 2024 to reach a new record, despite China banning seafood imports after the Fukushima nuclear plant water discharge. The Ministry of Agriculture, Forestry and Fisheries said that exports in 2018 totaled 1.507 trillion yen, up from 1.454 billion yen by 2023. Kazuyoshi Nakasugi, deputy head of MAFF’s export policy planning department, noted that it was the 12th consecutive year of growth and a new record. He also pointed out that exports from China and Hong Kong were down, but exports in other parts of Asia and the United States increased. Nakasugi stated that the increase in foreign tourists to Japan and the increasing popularity of Japanese food, fueled by an increased number of Japanese restaurants, contributed to the growth. Tepco began to release treated radioactive waters from the Fukushima Daiichi Nuclear Power Plant wreckage in August 2023. This prompted China to ban all imports of seafood of Japanese origin. Exports of agricultural, forestry and fisheries products to China fell by 29.1% in 2024 to 168.1 billion dollars, while exports to the United States grew 17.8% to 242.9 million dollars, making it the top destination for Japan's exports for the first 20-year period. Exports to Vietnam, Thailand, South Korea, and Europe increased between 11-20%, largely due to the strong demand for green tea and seasonings. MAFF's Nakasugi stated that Japan's scallop exports have been among the hardest hit by China's trade ban. However, increased sales to the U.S.A., Taiwan, and Vietnam have helped offset this impact. By developing commercial channels in Asia and the U.S., the government is promoting diversification in export destinations for scallops. Nakasugi stated that "we will continue to encourage China's seafood imports to resume as soon as possible, while supporting efforts to increase sales channels for Japanese foods worldwide."
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As US tariffs are paused, stocks jump and the dollar is on a rollercoaster.
Hong Kong shares reached a two-month high, U.S. equities rose and currencies fluctuated in large ranges. Investors scrambled in order to keep pace with sudden changes to U.S. Trade Policy. S&P futures rose 0.4% on February 2, and the dollar reversed gains against the Mexican peso and Canadian dollar after President Donald Trump, who had promised to improve border enforcement, suspended imminent tariffs. The euro took a wild ride up to $1.0125 before rocketing back down to $1.0320 within 24 hours, as Trump's deals seemed to show that anything was negotiable. Hong Kong's Hang Seng rose 2.5% despite an additional 10% tariff that was to be imposed on Chinese goods at 0501 GMT. Electric vehicle makers led the way. Li Auto, the largest gainer in Hong Kong with an 8% increase in shares, was followed by semiconductor maker SMIC which rose over 7% and reached a new record high. Steven Leung is the institutional trading manager at UOB-Kay Hian, based in Hong Kong. He said: "It makes us feel like it's still not a firm policy." "There's no need to worry." European equity futures increased by a cautious 0.2%. Oil prices, which had previously risen, have now fallen and Brent crude futures at $75.46 are near a month-low. Bitcoin, which was trading at around $102,000 a day before it had fallen to close to $91,000. Ross Mayfield is an investment strategy analyst with Baird, based in Louisville, Kentucky. He said, "I believe you can see the rollercoaster ride of public negotiations around tariffs and policy." The Australian and Japanese stock markets both rose by 0.4%, but the gains were less than Monday's losses due to trade war fears. Trump's Press Secretary said he would speak with Chinese president Xi Jinping within the next few days. Chinese markets are closed for Lunar New Year, but the offshore yuan is back up to 7,3112 per US dollar after falling as low as 7,3765. The Australian dollar was $0.6206, after falling as low as $0.608 on Monday. The yen, a currency seen as a haven of safety, fell 0.3% to $155 per yen. On Monday, gold reached record highs as investors sought safety amid fears of a global trade war. On Tuesday, it traded at $2,813 per ounce, close to the previous record high. Markets were divided over whether or not there would be two rate cuts in the United States this year. Michael Feroli, J.P. Morgan’s U.S. chief economist, said that the increase in policy uncertainties will be difficult to reverse. The weekend's events will probably reinforce the Fed's tendency to stay on the sidelines, and to be as low-profile as possible.
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LME copper recovers after Trump pauses tariffs
LME copper prices rose on Tuesday after recovering from the four-week low reached in the previous session. This was due to President Donald Trump delaying tariffs against Canada and Mexico by a month. This eased concerns about a possible trade war. As of 0201 GMT, the benchmark copper price was up 0.6% to $9,155 per metric tonne. On Monday, the metal fell to its lowest level since January 6. Trump has backed down from his threat of imposing steep tariffs for a whole month on Mexico and Canada, but U.S. Tariffs on China - the biggest consumer of industrial metals - were still set to go into effect in a few hours. He is expected to speak with Chinese President Xi Jinping this week. This will set up a major exchange of diplomatic information as the two world's largest economies try to reach a deal which could avert a wider trade war. The dollar index dropped 0.3% on Monday. The dollar is weaker, which makes commodities priced in greenbacks cheaper for those who hold other currencies. If they need to avoid tariffs in the future, U.S. firms will turn to the Middle East and India to get more aluminium and Chile and Peru to get copper. Data released on Monday revealed that China's manufacturing activity increased at a slower rate in January. Caixin/S&P Global Manufacturing PMI fell to 50.1 from 50.5 in January. Aluminium for the three-month period rose by 0.2% to $2628.5. LME zinc rose 0.5% to a ton of $2,812.5, tin increased 0.1% to $29,950 and lead climbed by 0.2% at $1,949.5. Nickel fell 0.2% to $14,175. Shanghai Futures Exchange will be closed on February 5th for Lunar New Year. The markets will resume trading on Wednesday, February 5.
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Financial Times - Feb. 4
These are the most popular stories from the Financial Times. These stories have not been verified and we cannot vouch for the accuracy of these reports. Headlines – Starmer urges EU leaders to re-engage the UK at their meeting. – Thames Water faces new opposition to its emergency fundraising plan. – Anglo American Chief warns Trump tariffs to push up mining costs for years. Activist Elliott bought stakes in Smiths Group before announcement of breakup. – UK plans possible retaliation should Trump impose tariffs on British products. – Swiss watchdog begins enforcement action against Julius Baer. Overview - British PM Keir starmer has urged European Union leaders to reengage with the UK five years after Brexit. He also said that Britain does not choose between the United States and the EU. Thames Water, Britain's largest water provider, faced opposition from its creditors when it requested an English court approve a debt-lifeline of up to 3 billion pounds ($3.7billion) at the start of a 4-day hearing. It hopes this will prevent nationalisation. Duncan Wanblad, CEO of Anglo American Mining Group, has warned that new tariffs introduced by U.S. president Donald Trump will increase mining production costs in the future. Elliott Management, an activist investor, acquired a stake in the london-listed Smiths Group worth more than 300 million pounds (372.54 millions) just before it announced last week that the conglomerate was planning to split up. Even though Trump believes that Britain can avoid tariffs, the UK is preparing for possible retaliation in case Trump imposes them on its exports. Swiss financial market regulator FINMA opened enforcement proceedings against Julius Baer after the Signa losses that led to major management changes.
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Oil drops as Trump agrees pause tariffs against Mexico and Canada
Tuesday, oil prices fell after U.S. president Donald Trump agreed not to impose steep tariffs against Mexico and Canada, two of the United States' largest foreign oil suppliers, for one month. Brent futures dropped 41 cents or 0.5% to $75.55 per barrel at 1:49 GMT. U.S. West Texas Intermediate crude fell 75 cents or 1% to trade at $72.41. Justin Trudeau, the Canadian prime minister, and Claudia Sheinbaum, president of Mexico's government said that they agreed to increase border enforcement in response to Trump’s demands to crackdown on illegal immigration and drug trafficking. This would stop for 30 days the 25% tariffs on imports of energy from Canada. A 10% tariff was also to be imposed on these imports. Despite the agreement to pause tariffs ING analysts stated that Canada would still be vulnerable to trade conflicts unless it expanded export options outside the U.S. by adding more pipelines to transport oil from fields to ports. ING stated that it would take several years for this infrastructure to be built, but would give Canadian oil producers more flexibility as well as the possibility of more destinations for Canadian crude. The White House announced that Trump will speak to Chinese President Xi Jinping this week. A 10% tariff on all China-made goods is due to go into effect on Tuesday. Three Federal Reserve officials said on Monday that the Trump administration's plans to impose trade tariffs could lead to inflation. One of them argued that the uncertainty surrounding future prices would require a slower rate cut. Low rates usually spur economic growth as well as oil demand. The Organization of the Petroleum Exporting Countries (OPEC+) and its allies discussed Trump's call to increase production on Monday, but decided to continue with its policy of increasing oil output gradually from April. Investors will be watching for data on the weekly U.S. stockpiles for the week ending January 31. The analysts polled expected that crude inventories would rise, but gasoline and distillate stocks were likely to fall. The American Petroleum Institute's industry group is due to submit its inventory report at 4:30 pm. The U.S. Energy Information Administration will release its inventory report at 10:30 am (1530 GMT), Wednesday, and the American Petroleum Institute industry group by Tuesday (2130 GMT). (Reporting and editing by Lincoln Feast, Sonali Paul, and Katya Glubkova from Tokyo)
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US Judge extends pause to Trump's plan of freezing federal grants and loans
A U.S. Judge on Monday extended the pause on Trump's plan to freeze federal grants, loans and other financial aid, stating that it could have "run roughshod over" Congress's constitutional power over government spending. U.S. district judge Loren AliKhan wrote in Washington that the funding freeze described in a memo last week from the White House Budget Office would be "potentially disastrous" for organizations who rely on federal funds to carry out their mission and provide services to public. In her ruling, which was issued on the request of several advocacy organizations, the policy now faces two temporary restraining order. On Friday, a federal judge in Rhode Island issued an order similar to the one that was requested by Democratic Attorneys General from 22 states as well as the District of Columbia. AliKhan ordered last week a brief administrative pause to prevent the Office of Management and Budget from moving forward with their policy, while she assessed whether or not to issue a longer temporary restraining. In its memo, OMB said that the funding freeze was needed to ensure that funding complied President Donald Trump's Executive Orders on Immigration, Climate Change, Diversity and other issues. OMB retracted its memo completely on Wednesday after first attempting to clarify the funding suspension. The Republican administration argued that the withdrawal would have ended the AliKhan lawsuit brought by a coalition of advocacy groups. The judge, appointed by Trump's Democratic predecessor Joe Biden said that a temporary restraining was still needed because funding issues remained, and there was nothing to stop OMB from issuing the policy again. She stated that "the president's wishes can't be an open check to OMB for it to do whatever it wants." She said that the OMB memo could have involved as much as $3.5 trillion in financial aid, which is "a staggering amount of money to be suspended practically overnight." Judge said that the policy seemed arbitrary, and could have violated the U.S. Constitution's authority to control government spending. AliKhan wrote: "It didn't indicate when the freeze would end, if at all." "And it tried to take the purse power away from the only government branch entitled to use it." Her order will be in effect while she decides whether or not to issue a longer preliminary injunction. The U.S. Department of Justice declined to comment on the case. Diane Yentel of the National Council of Nonprofits praised AliKhan's ruling. She and several other nonprofit groups had sued AliKhan last week to stop what they called a "reckless effort to halt funding." A lawyer for advocacy groups said that some recipients of federal grant funding were still having difficulty accessing funding, despite the withdrawal of the memo and the Friday order by the Rhode Island Judge. Kevin Friedl told AliKhan, an attorney for the advocacy group Democracy Forward (a liberal-leaning organization), at the hearing, "We know that the policy is still in place." Daniel Schwei, an attorney with the Justice Department argued that Trump retained the right to determine funding priorities through executive orders, which were not challenged in court. Schwei said to the judge that "the president is permitted to direct subordinate organizations and supervise their activity." Reporting by Andrew Goudsward, Washington; editing by Nia William, Alexi Garamfalvi, and Sonali Paul
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US Interior Department begins to implement Trump's energy agenda
The U.S. The U.S. The agency released a statement stating that former North Dakota Governor Doug Burgum signed six orders during his first day of office as Interior Secretary. These orders are a result of a series of executive orders Trump released in his first few days as president. These actions instructed agencies to accelerate the permitting of energy projects, and undo environmental protections his administration considers burdensome. Burgum's actions signal a radical shift in Interior Department policy. The former president Joe Biden’s administration tried for four years, as part of its strategy to combat global warming, to slow down new fossil fuel developments on public lands. Burgum, in a press release, said that today marks the start of an exciting new chapter for the Department of the Interior. We are committed to working together to unlock America's potential in energy dominance, economic development and making life more affordable for all American families. Burgum's order directed staff at the agency to identify emergency and legal authorities in order to speed up project development and permits in accordance with Trump's declaration of energy emergency and to eliminate burdensome regulation in part by reviewing funding under laws from Biden's Inflation Reduction Act and Infrastructure Investment and Jobs Act. In a statement, the agency said it would eliminate 10 new regulations for each one that is introduced. One order revoked Biden’s withdrawal of large portions of federal waters for new offshore oil and natural gas development while another seeks a boost in resource development on federal lands and state lands of Alaska. Interior Department leases parcels of land and waters from the Arctic to Gulf of Mexico for drilling operations, which produce about a quarter of U.S. gas and oil output. (Reporting and editing by Leslie Adler, Jamie Freed and Nichola Groom)
Toyota to report second consecutive profit decline as sales growth slows
Toyota Motor, Japan's largest automaker, is expected to report its third quarter earnings on Wednesday. Sales growth has slowed after a long run of strong sales driven by hybrid cars.
The U.S. market's shift from petrol to hybrids, which are relatively higher-margin vehicles, is expected to benefit the world's top-selling automaker.
Toyota's sales and production volumes are down, but they still indicate a slight slowdown. Analysts believe that this could mean a somewhat weak quarterly result, despite the favorable exchange rate.
James Hong, Macquarie's head of mobility and research, stated that this was "the common narrative" in the results of a number Japanese auto suppliers last week.
According to the average of nine analysts surveyed by LSEG, Toyota will report a 16% drop in operating profit for the quarter October-December. The figure is estimated to be 1.419 trillion yen (9.1 billion dollars).
The expected decline comes after a 20% drop in profit in the previous three months, which marked a departure from the record earnings Toyota had enjoyed in the preceding months, supported by the strong hybrid sales, and the yen’s fall against the U.S. Dollar.
Toyota announced last week that its group global unit sales would reach 10.8 million cars in 2024. This means it will remain the top automaker on earth for a 5th consecutive year.
The company also revealed that global sales for its Lexus and namesake brands in October-December were virtually unchanged from the same period a year ago, with a drop of less than 1%. Meanwhile, production dropped by 4%.
Hong stated that Toyota's production has normalized in the last few months and management is likely to provide constructive guidance for its final quarter. But the third quarter could be a little soft.
Toyota faces fierce competition from Chinese brands including BYD in Europe, South America and Southeast Asia, as well as China, which is the world's largest auto market. Electric vehicle demand continues to be strong.
Late October, the automaker was able to overcome a four-month stoppage in production of Grand Highlander SUVs and Lexus TX models.
Analysts and investors are particularly interested in Toyota's outlook, which extends until the end of March.
After U.S. president Donald Trump imposed heavy tariffs on Mexican imports and the majority of Canadian imports only to reverse them days later, they will want to know about Toyota's strategy for managing North America operations. Toyota has auto factories in Canada and Mexico.
Toyota will also focus on its future electrification plans, and how it hopes to increase its hybrid car sales which accounted for 43% of the unit sales in its previous quarter.
Toyota's stock price, which peaked in March last year, has since fallen 25%. The company's shares have fallen 8% this year.
(source: Reuters)