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Investors weigh Iran talks and Nvidia earnings as they consider the stock market's rise
Investors pondered a few'signs of progress' in the Iran peace talks on Thursday, as they weighed up possible?signs?. Nvidia shares fell despite its earnings exceeding expectations. The STOXX 600 Index in Europe was up by 0.2% after falling earlier in the day. The S&P 500 futures and the Nasdaq tech-focused futures were little changed. After three days of losses, the S&P 500 gained 1.1% after oil prices dropped after U.S. president Donald Trump announced that Iran talks are in their final stages. However, he also said he may restart attacks. Overnight, the rally continued in Asia with MSCI's broadest Asia-Pacific index outside Japan rising 2.6%. Samsung shares rose 8.5% after the union of the electronics giant announced it would suspend its industrial action. This prevented a strike which threatened global chip supplies. Investors in America and Europe were left with mixed messages on Iran from Trump Thursday. On Wednesday, the U.S. President said he would wait for "the answers" from Tehran but was willing to continue strikes against Iran. Pakistan is stepping up its diplomatic efforts to keep the U.S. and Iran peace talks on track. Officials in Tehran are reviewing Washington's most recent responses. Francesco Pesole is a currency strategist with ING. He said that the level of conviction was lower this time. "Both sides continue to use belligerent rhetoric, and the markets are less willing to chase positive headlines following earlier disappointments." NVIDIA UNDERWHELMS IN HEAT AI MARKET Nvidia shares, the largest company in the world by market capitalisation fell 0.4% during pre-market trading, despite the fact that the firm exceeded Wall Street expectations. Nvidia announced a $80 billion share buyback program and forecasted second-quarter earnings of $91 billion on Wednesday. Dan Coatsworth is the head of markets for AJ Bell. The shares of the company fell in pre-market trade despite the fact that it had once again beaten consensus estimates for quarterly sales and earnings. This was due to concerns about the sustainability of the rapid growth. The massive increase in U.S. stock prices, up over 8% so far this year, has not been impacted by questions about the longevity of the AI rally. The index tracking the U.S. Dollar, which was a haven of safety for investors throughout the war, was flat, at 99.15. On Wednesday, it fell from its six-week peak of 99.47 in hopes of peace talks progressing. The euro remained flat at $1.16 on Thursday, barely above its six-week low. Meanwhile, 10-year ?U.S. Treasury yields, the benchmark for borrowing costs around the globe, rose 1 basis point to 4.58%. On Tuesday, they reached a 16-month peak of 4,687% as traders continued to abandon their previous bets about Federal Reserve rate reductions.
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Danantara Indonesia will honor commodity export contracts but will review prices
Danantara, the Indonesian sovereign fund, will honor existing export contracts while reviewing them to ensure prices are not below market rates. This was said by its chief executive on Thursday. The fund is preparing to "take control" of the top commodity shipments in the country. The fund's unit will be the sole exporter for palm oil, ferroalloys, and coal as soon as September, announced President Prabowo on Wednesday. His government is seeking to tighten control over the tax revenue and foreign exchange earned from commodities. Danantara CEO Rosan Roeslani stated that the sovereign wealth fund may negotiate prices that are below benchmarks when it has visibility of pricing. "We will honor all existing contracts." We see that, even though these are long-term agreements, the price is determined when the contract runs. Rosan said that if "we see a price below the world index at a later date, we will review this contract," she told reporters. He said: "If there is any indication that a contract has been under-billed, we will certainly re-evaluate it." Exporters have a transition period of three months from June 1 that could be extended up to six. During this time, they must report to Danantara Sumber Daya Indonesia the value, volume and price points of their goods. Indonesia is the largest exporter in the world of thermal coal,?nickel and palm oil. Last year, its exports?of these three commodities totaled $65 billion. S&P MOODY'S WARNING OF RISKS Prabowo’s plan is designed to address concerns over under-invoicing, and how exporters are able to account for transfer prices. However, it has caused financial markets concern this week. The main Jakarta stock index dropped to its lowest point in over a year on Thursday. Meanwhile, the rupiah currency fell 0.4%, trading near a new record low. Rating agency S&P Global Ratings warned the plan could hurt Indonesia's exports and squeeze government revenues, as well as the balance of payment. In a press release, it stated that "These factors create greater 'downside uncertainty' to our ratings for Indonesia". It added that investments could be affected by the changes if they lowered confidence in business and investment sentiment. S&P remains the only major agency to have not yet announced its annual review of Indonesia. Moody's, Fitch and the other two agencies have all cut their credit ratings outlook from stable to negative this year. Moody's stated that while the export plans may support foreign exchange inflows they could also raise the risk of market distortions and weigh on investor sentiment. The industry wants to see details The authorities will brief businesses and business groups on the new export mechanism in the afternoon of Thursday. Implementing regulations are expected to be released by the Trade Ministry soon, said Budi Santoso. Eddy Martono is the chairman of GAPKI which represents palm oil companies. He said that his industry faces many questions. For example, what happens when buyers request certain specifications for a shipment. Exporters have their own markets. He said that poor management could lead to the loss of these markets. Gita Mahyarani, executive director of the Indonesian Coal Mining Association, said that they were concerned about long-term agreements, specifications for coal quality, finance and other obligations. The Indonesian Nickel Industry Forum said that it would wait for the regulations documents and additional explanations before making an impact assessment. (Reporting and writing by Bernadette Cristina and Fransiska Nanangoy; editing by John Mair).
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Russia announces it will support Cuba, as the U.S. tightens its 'noose.'
Russia announced?on Thursday it would provide active support to Cuba, despite efforts by the United States to 'intimidate' and tighten "sanctions" around the Communist island nation. The United States announced a murder charge against former president Raul Castro, Wednesday. This is a major escalation of Washington's war against Cuba. Maria Zakharova, spokeswoman for the Russian Foreign Ministry, told reporters that "we will continue to provide the most active support to a fraternal Cuban population during this extremely challenging period." "We reaffirm that we are fully united with Cuba. We condemn any attempts to grossly interfere in the internal affairs a sovereign state, as well as intimidation and the use of illegal unilateral restrictions, threats and blackmail." Zakharova did not give any details about the'support' that Russia would offer, but said the United States showed their "intolerance toward any dissent or?a cynical embodiment of the revived Monroe Doctrine." Reporting by Dmitry Antonov; Writing by Felix Light, Editing by Vladimir Soldatkin/Guy Faulconbridge
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China sent a small amount of fuel to Southeast Asia but the curbs are still in place
China exported small amounts of gasoline, diesel, and 'jet fuel to Southeast Asia, and other regions, in April. Fuel exports dropped to their lowest level in the past decade, due to Beijing's restrictions to protect against the disruptions in the energy market caused by the war in Iran. China is Asia's largest fuel exporter. Its restrictions have further restricted supplies, as regional refiners reduced output due to high prices and a lack of Middle East crude. Reports in late March stated that Beijing has granted a limited waiver to Bangladesh and other South Asian nations such as Myanmar, Vietnam, and Sri Lanka. The data, released by the Customs on Wednesday, showed that small quantities of refined fuel were exported to a number of these countries in April despite a drop in overall exports. Hong Kong and Macau were not affected by the export restrictions, as levels remained constant, nor was the refuelling of international planes and ships. China's gas exports fell to an all-time low of?23.409 metric tonnes in April. The only recipient outside Hong Kong or Macau, Myanmar, received only 3,000 metric tonne (25.350 barrels), a 65% drop from March. The export of diesel fell by 69% from March to 231,542 tonnes (1.725 millions barrels) in April. The Philippines was the largest recipient of diesel, with 39.468 tons, despite a volume drop of 82% since March. Bangladesh, at 10,000 tons (down?75%), was the second-largest recipient. Singapore was not a destination for diesel exports. Customs data revealed that Myanmar received 5,900 tonnes in April, which is a 73% reduction from March. Exports of biodiesel accounted for 34% in China's total diesel exports during April. The Netherlands and Belgium, two of the largest importers, saw a steady increase in exports. Biodiesel is primarily made from used cooking oils. It's unclear whether Beijing's export bans cover it. Jet fuel exports, excluding Hong Kong, fell by 54% to 489,000 tonnes. Chinese jet fuel exports include both aircraft refueling as well as cargo exports. Vietnam was the biggest recipient, with more than 68,000 tonnes. After Canberra's lobbying, Australia expects to receive more than 100 millions liters or 80,000 tonnes of jet fuel by early June. (1 ton=7.45 barrels for diesel) (1 ton=8.45 barrels for gasoline)
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US official: US and Philippines will reach agreement on economic security zones'sooner than later'
A senior U.S. Official said that the United States will likely reach an agreement with the Philippines on a long-term framework for an economic zone "sooner than later". Washington is aggressively expanding?its supply chain alliance for technology?known by the name "Pax Silica". The official, Jacob Helberg, said both countries had a 2-year window in which to finalize the arrangements as per a pact signed last month. Helberg, U.S. Undersecretary of State for Economic Affairs, said in an interview that both parties would also set sectoral priorities for industrial activities in the area. He said that "there's a lot of momentum behind it." The Philippines became the 13th nation to join Pax Silica last month, a program that seeks to protect the entire technology supply chain from critical minerals to advanced manufacturing, to computing and data infrastructure. Helberg stated that the alliance has grown quickly to 15 members from seven founding members last September. He added, "We're likely to be at 16 members by the end next month because we will probably add one or two over the next four-week period." Bloomberg reported on Monday that while Washington has pushed ahead with the framework and requested diplomatic immunity for the area, the Philippines had not yet agreed to the request. Helberg was joined on Monday by representatives of over a dozen U.S. firms, including 8VC, Agility, Joby Aviation, and Valar Atomics. A photo posted on?X revealed that Young Liu was part of the delegation. He is the chairman of Foxconn, the largest contract electronics manufacturer in the world. Helberg said that, while it was still early, the level of interest from both companies who attended and other U.S.-based firms had been high. He spoke at the 'ATX summit' in Singapore where he met digital ministers from the 11 member regional grouping, Association of Southeast Asian Nations. Helberg told reporters that he spoke to Singaporeans, as well as "a few others," about opportunities in minerals and logistic. Reporting by Fanny Potkin and Jun Yuan Yong; editing by Clarence Fernandez
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Japan's Nikkei rallies on fresh optimism over AI, Iran peace talks
Japan's Nikkei stock average rose by the most in two weeks Thursday, thanks to renewed interest?in technology stocks?and the easing of geopolitical tensions?related?to the Iran War. The Nikkei Index benchmark rose by 3.14%, closing at 61.684.14, the highest one-day gain since May 7. The Topix index, which is a broader measure of the Nikkei 225 Index, rose 1.64% to 3,5853.81. The Nikkei mirrors Wall Street gains ahead of earnings forecast by AI powerhouse Nvidia. The oil prices fell sharply overnight, after U.S. president Donald Trump said that negotiations to end war in Iran are in their final stages. This eased supply concerns. Investors also received a boost from the averted 'labour strike' at Samsung Electronics which could have disrupted South Korea’s economy and global supply of chips, as well as reports that OpenAI was preparing to become public. SoftBank Group, a major shareholder in the company, and other AI ventures, surged up to its daily maximum. "The market is being led by AI and semiconductor-related shares ?following developments including the avoidance of a strike ?at Samsung ?Electronics and Nvidia's earnings," said Wataru Akiyama, an equities strategist at Nomura Securities. The drop in crude oil has led to?gains for a variety of?sectors." The Nikkei Index saw 140 advancers and 85 decliners. SoftBank Group was the largest gainer, with a 19.9% increase, followed by Socionext at 19% and Ibiden at 14.3%.
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Danantara Indonesia will honor commodity export contracts but will review prices
Danantara, the Indonesian sovereign fund, will honor existing export contracts while reviewing them to ensure that prices do not fall below market levels. This was announced by its chief executive on Thursday. The fund is preparing to take over the top commodity shipments of the country. The fund's chief executive said that a unit will be the sole exporter of ferroalloys, coal, and palm oil as soon as September 1. This is because the government wants to tighten control over the tax revenue and foreign exchange earned from commodities. Danantara CEO Rosan Roeslani stated that the sovereign wealth fund may negotiate prices that are below benchmarks when it has visibility of pricing. "We ?will respect all existing contracts. We see that, even though these are long-term agreements, the price is not set at the time of the contract, but rather when it is in effect. Rosan said that if we find a contract with a price below the?world index', we would review it. He said: "If there is any indication that a contract has been under-invoiced, we will certainly re-evaluate it." Exporters have a transition period of three months from June 1 that could be extended to six months. During this time, they must report the value, volume and price points for their goods. Last year, Indonesia exported $65 billion worth of thermal coal, nickel and palm oil. Prabowo’s plan is designed to address concerns over under-invoicing, and how exporters are able to account for transfer prices. However, it has caused financial markets concern this week. The rupiah currency fell 0.4% on?Thursday to trade close to a record low established?on Wednesday. The Trade Ministry will soon issue implementing regulations. Eddy Martono is the chairman of GAPKI, an association of palm oil companies. He said that his industry faces many questions. For example, what happens when buyers request specific specifications for a shipment. Exporters have usually their own markets. He said that we must not lose these markets because of poor management. Gita Mahyarani, executive director of the Indonesian coal mining association, said that they were concerned about long-term agreements, specifications on coal quality, and financing obligations. The Indonesian Nickel Industry Forum said that it would wait for the regulations documents and additional explanations before making an impact assessment. (Reporting and writing by Bernadette Cristina and Fransiska Nanangoy; editing by John Mair).
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Sources say that RPT-oil refining in central Russia has been halted after drone strikes by Ukraine.
According to official sources, almost all of the major oil refineries in central Russia have been forced to reduce or halt their fuel production due to recent drone attacks by Ukraine. Moscow has already banned gasoline exports from April to the end of July. Refineries which have stopped operations or are partially stopped, together, produce more than 83 million tons of?product per year. This is approximately 238,000 tons a day. According to anonymous sources and data, this represents around a quarter of Russia's entire refining capacity. Over 30% of Russia's gasoline is produced by refineries, and around 25% by diesel. The?Russian?energy minister did not respond to a comment request. According to Russian officials, Ukraine has intensified drone attacks against Russia's energy infrastructure. The number of oil refineries that have been targeted by Ukraine since the beginning of the year has doubled. The strikes have affected pipelines, storage facilities and Russia's oil production, the third largest in the world after the U.S. Kirishi, a refinery in western Russia, the Moscow refinery, as well as the plants in Ryazan, Yaroslavl, Nizhny Novgorod, on the Volga River, are all included in the list of oil refineries that have been targeted. According to sources, Kirishi with a capacity of 20 millions metric tons per annum, is now completely closed. Another major refinery, Nizhegorodnefteorgsintez (NORSI), with ?annual capacity of 17 million tons, was attacked on May 20. NORSI's ability to continue partial operations is still unclear. (Reporting and editing by Guy Faulconbridge, Bernadettebaum)
Japanese auto exports to Middle East plummet in April due to war disruptions
The government reported on Thursday that Japanese car exports to the Middle East had almost been wiped out, as the U.S./Israeli war against Iran disrupted shipping into a region of importance for global automakers such as?Toyota? and?Nissan?
According to the collapse, shipments of used Japanese cars and trucks to the region have virtually stopped following the closure of the Strait of Hormuz.
The Ministry of Finance released data on Thursday showing that motor vehicle exports into the Middle East fell by more than 90%, both in value and volume, from the previous year. This highlights the auto industry's vulnerability to disruptions of shipping caused by the?Iran war.
Government figures show that by 2025, the region will account for approximately 14% of Japan’s global motor vehicle imports.
Toshihiro Mibie, vice-chairman of Japan's automobile lobby, told reporters on Thursday that the war is affecting the auto industry through the disruptions in transportation.
Mibe stated that the biggest impact on the Middle East is the closing of the Strait of Hormuz. This has caused some manufacturers to reduce their production of vehicles bound for this region.
He said that the Japan Automobile Manufacturers Association expected the impact to be limited to shipping. The association would monitor the situation, and the government had assured them of ample supplies other than naphtha or lubricants.
Analysts said that the war could push automakers to change their supply chains in the long term as they try to reduce the risks associated with the conflict and closure of the Strait.
Sanshiro fukao, executive fellow of the Itochu Research Institute (the think tank part of the trading house Itochu), said that supply and transportation disruptions due to the war would not be resolved in the near future.
He said that as more companies consider Middle East risks, the flow of products could change.
In India, a SHIFT to the West
Fukao stated that the war could accelerate automakers' efforts to increase their presence in India within three to five year and to boost production and exports. They are looking to reduce risks and costs associated with shipping.
Toyota announced this month that it will build a factory in India with a yearly?production capacity of 100,000 cars?
The automaker announced that it would export cars produced at the plant to other countries. Production is scheduled to begin in the first half 2029.
Analysts say the Middle East is particularly important to Japanese automakers, as it's a lucrative market that has a strong demand for high margin models such as?Toyota Land Cruiser sport utility vehicle.
Julie Boote is an auto analyst with?Pelham Smithers Associates. She said that Toyota was the most exposed in terms of absolute sales because it is the best-selling automaker for the region.
"However," says the Toyota spokesperson, "because it is well-?diversified regionally, and Middle East sales account for about 6%?of?its total?sales, it will be able to absorb this blow better than other companies."
Automakers are likely to be able divert vehicles that were originally intended for the Middle East, but they will not be able offset the volume lost.
Next week, Toyota, Nissan and others automakers will release their April sales and production data.
(source: Reuters)