2025-06-27 05:34

S&P 500 and Nasdaq reach record closing highs European shares rise on easing US-China trade tension Dollar holds near lowest levels in more than three years Oil prices settle up, gold slips NEW YORK/PARIS, June 27 (Reuters) - Global shares reached a record high on Friday, helped by market optimism over signs of progress in U.S.-China trade talks, while the dollar held close to its lowest levels in more than three years. The benchmark S&P 500 index and Nasdaq hit all-time highs, lifted partly by gains in megacap growth stocks including Nvidia (NVDA.O) , opens new tab, Alphabet (GOOGL.O) , opens new tab and Amazon (AMZN.O) , opens new tab. Sign up here. The S&P 500 index and Nasdaq notched a weekly gain and are up about 5% this year, following a volatile first half of the year, dominated by U.S. President Donald Trump's tariff announcement on April 2, which sent stocks plunging. The Dow Jones Industrial Average (.DJI) , opens new tab rose 1% to 43,819.27, the S&P 500 (.SPX) , opens new tab rose 0.52% to 6,173.07 and the Nasdaq Composite (.IXIC) , opens new tab rose 0.52% to 20,273.46. The pan-European STOXX 600 index finished up 1.1% (.STOXX) , opens new tab and reached a weekly gain of 1.32%. The MSCI World Equity index (.MIWD00000PUS) , opens new tab touched a record high of 916.39 and reached a weekly gain of 3.3%, making it the biggest weekly increase since mid-May. London's FTSE 100 rose 0.72% (.FTSE) , opens new tab. Asian shares (.MIAPJ0000PUS) , opens new tab hit their highest in more than three years in early trading but finished down 0.10%. "It's a continuation of this monster rally since early April," said James St. Aubin, chief investment officer at Ocean Park Asset Management in Santa Monica, California. "It's been quite an improbable comeback and it continues, assuming that the tariff controversy is no longer a major issue in the psyche of the market." Investors saw a trade agreement between the United States and China on Thursday on how to expedite rare earth shipments to the United States as a positive sign, amid efforts to end the tariff war between the world's two biggest economies. Trump has set July 9 as the deadline for the European Union and other countries to reach a deal to reduce tariffs. "We're starting to see earnings estimates for the next 12 months on the rise again after taking a little bit of a dip and that's what the market is buying into," St. Aubin added. Traders took confidence too from a ceasefire between Iran and Israel and markets stepped up bets for U.S. rate cuts amid the possibility of Trump announcing a new, more dovish Federal Reserve chair ahead of the expiration of Jerome Powell's term next year. Data showed U.S. consumer spending unexpectedly fell by 0.1% in May for the second time this year, while monthly inflation maintained a moderate pace of increase. "What we're really witnessing this week is sort of the removal of some of the stumbling blocks that have been placed in the middle of the road," said Mark Malek, chief investment officer at SiebertNXT. "We've had all these trade issues that are still up in the air and we had this the big overhang of what was going on in the Middle East." DOLLAR DIPS The dollar traded at multiyear lows, hovering near its lowest level in 3-1/2 years against the euro and sterling. The dollar weakened 0.08% to 0.799 against the Swiss franc but was up 0.21% at 144.68 against the Japanese yen . The euro rose 0.07% to $1.1707 , getting a lift after data showed French consumer prices rose more than expected in June. The dollar index was down 0.03% on the day at 97.34 , holding near its lowest level in more than three years. The dollar is having its worst start to a year since the era of free-floating currencies began in the early 1970s. The yield on benchmark U.S. 10-year notes rose 2.4 basis points to 4.277%. German long-dated government bond yields were on track for their biggest weekly increase in nearly four months after rising this week on expectations of increased borrowing by Germany's government. The yield on the benchmark German 10-year Bunds fell 1 basis point to 2.587% but notched a 3.3% weekly increase - the highest since early March. Oil prices, meanwhile, rose but were set for their steepest weekly decline since March 2023, as the absence of significant supply disruption from the Iran-Israel conflict saw any risk premium evaporate. Brent crude futures settled up 0.1% to $67.77 a barrel while U.S. West Texas Intermediate crude was up by 0.4% to $65.52 . Spot gold fell 1.68% to $3,271.80. https://www.reuters.com/world/china/global-markets-wrapup-1-2025-06-27/

2025-06-27 05:09

LONDON, June 27 (Reuters) - The Democratic Republic of Congo has extended its ban on exports of cobalt by three months as the world's dominant producer of the battery metal tries to convert its supply power into pricing power. After rallying sharply in February, when the market was caught out by news of the original ban, the price reaction this time has been more muted. Sign up here. Some sort of extension was widely expected. Moreover, it has become clear the physical supply chain has so much accumulated inventory, Congo's muscle-flexing has yet to faze buyers. Neither are investors buying into an imminent turnaround in the market. Cobalt Holdings, which planned to list a physical cobalt investment vehicle, pulled its initial public offering on the London Stock Exchange earlier this month. Congo's cobalt dilemma is how to restrict supply of a metal that is mined as a by-product of copper, an even bigger revenue earner for the resource-rich country. It might do better to focus on its own role in the supply chain. INVENTORY CUSHION It takes around 90 days to ship Congo's intermediate cobalt product to China for refining, meaning the full impact of the February export ban is delayed. China's imports of Congolese cobalt remained robust at over 50,000 metric tons in both March and April. Moreover, the Chinese supply chain is still bloated from consecutive years of market surplus. Consultancy Benchmark Mineral Intelligence estimates stocks of cobalt outside Congo amounted to 8-10 months of global consumption in the second quarter of this year. Even with extended export controls by the world's largest producer, BMI reckons cobalt hydroxide stocks in China will only become physically low towards the end of next year. The shift by Chinese electric vehicle manufacturers away from cobalt chemistry is compounding over-supply. The country's consumption of cobalt sulphate by the battery cathode sector fell last year, according to analysis by Shanghai Metal Market compiled for the Cobalt Institute. And since DRC has only stopped exports not production, stocks of intermediate cobalt are also piling up in Congo. BY-PRODUCT BLUES Cobalt's by-product status means Congo cannot easily follow the lead of Indonesia, which has started using mine quotas to limit production of nickel, another battery metal with bombed-out pricing. Any mining restrictions on Congo's cobalt producers would inevitably impact production of copper, which is currently in hot demand. The London Metal Exchange copper price is riding high at close to $9,900 per ton given tight markets for the raw material and refined metal. Chinese operators in Congo, such as CMOC Group (603993.SS) , opens new tab, have every incentive to keep digging as much copper out of the ground as possible. The cobalt comes free with it. Congo is the world's largest cobalt-producing country and CMOC is the largest producing company. NO GOOD OPTIONS? With limited leeway to force companies such as CMOC or Glencore (GLEN.L) , opens new tab to produce less cobalt without forfeiting copper revenues, the government has been considering an export quota system. Enforcing export quotas rather than the current blanket ban, however, would be operationally tricky and would not tackle the inventory accumulating in the country. The potential for a renewed flood of Congolese supply in the event of a policy change would weigh heavily on the cobalt price. The Congolese government looks set a long stand-off with the cobalt market and it is not even clear what price level it is targeting. If it aims too high, there is a risk it will accelerate cobalt's loss of market-share in the battery sector. INDONESIAN LESSON Congo is finding out that controlling supply and controlling market price are two very different things, particularly when the other end of the cobalt supply chain is thousands of miles away in China. It could do worse than look at another Indonesian tactic, which is to link exports to commitments to build downstream processing capacity. Indonesia has successfully used this linkage in both the nickel and copper sectors, where two new smelters are firing up this year as a result of ever tighter controls over exports of copper concentrate. While Congo is likely to struggle to exert lasting control over the cobalt price, it can use its dominant supply position to determine where it sits in the supply chain. In itself, that will not solve the problem of over-production of what is a copper by-product, but it would mean more revenue for each pound of metal dug out of the country's rich resource base. The opinions expressed here are those of the author, a columnist for Reuters. https://www.reuters.com/markets/commodities/congos-cobalt-dilemma-unresolved-by-extended-export-ban-2025-06-27/

2025-06-27 05:08

June 27 (Reuters) - British Gas owner Centrica (CNA.L) , opens new tab is set to take a 15% stake in the country's Sizewell C nuclear project in southeast England, the Financial Times reported on Friday, citing people familiar with the discussions. All sides are keen to reach a final investment decision on the project before the British parliament's recess on July 21, the report said. Sign up here. Reuters could not immediately confirm the report. The government said earlier in June that it will invest a further 14.2 billion pounds ($19.25 billion) to build the Sizewell C nuclear plant, taking its total commitment to the project to 17.8 billion pounds. Britain is looking to build new nuclear plants to replace its ageing fleet to boost its energy security, reach its climate targets and create new jobs. Canada's Brookfield Asset Management (BAM.TO) , opens new tab is still in talks about an investment in Sizewell C and could be prepared to take a larger stake than Centrica, the Financial Times report said. Sizewell C was originally being developed by France's EDF and China's General Nuclear Power Group but the government bought out the Chinese firm's stake in 2022 amid security concerns. The UK government's stake was 83.8% and EDF's stake was 16.2% at the end of December, EDF's financial results showed in February. EDF's stake is expected to decrease following Britain's investment earlier this month. Centrica, Sizewell C and Brookfield Asset Management did not immediately respond to a request for comment outside regular business hours. ($1 = 0.7281 pounds) https://www.reuters.com/business/energy/britains-centrica-set-take-15-stake-sizewell-c-nuclear-project-ft-reports-2025-06-27/

2025-06-27 04:38

A look at the day ahead in European and global markets from Rae Wee Asian shares climbed to their highest in more than three years on Friday and Europe looked set to join the rally, as markets turned optimistic after weathering a few weeks of heightened Middle East tensions and uncertainties over tariffs. Sign up here. Wall Street set the pace overnight when investors latched onto the latest upbeat developments: The fragile ceasefire between Israel and Iran continued to hold, and China-U.S. trade tensions showed tentative signs of further easing. Expectations were also rising for more rate cuts by the Fed, with the prospect of a more dovish Fed chair on the horizon and continued weak U.S. economic data. On the trade front, a White House official said on Thursday the United States had reached an agreement with China on how to expedite rare earths shipments to the U.S. Adding to tailwinds for investors, U.S. Treasury Secretary Scott Bessent asked Republicans in Congress to remove from their sweeping budget legislation a "retaliatory tax" proposal that targets foreign investors. The next key for markets on Friday will be the release of the core PCE price index in the U.S., which could offer additional clues on the Federal Reserve's rate trajectory. There have been few signs thus far that President Donald Trump's tariffs are causing the huge spike in domestic consumer prices that many investors had feared, although Fed officials have said it is still too early to tell. Any downside surprise in Friday's PCE numbers could fuel bets on more easing by the Fed this year. The Fed's rate outlook and Chair Jerome Powell's future at the central bank have been front and centre for markets over the past two sessions, after the Wall Street Journal reported that Trump has toyed with the idea of announcing Powell's replacement by September or October. That would leave Powell with a "shadow" looming over him for the last six meetings of his tenure. These developments have triggered a wave of heavy dollar selling as investors fret about the Fed's independence and bet that Powell will be replaced by somebody more inclined towards rate cuts. The dollar languished near a 3-1/2-year low on Friday and was set for its worst week in more than a month. The dollar is already down more than 10% for the year thus far and, if the latest losses hold until the end of the month, it will mark its biggest fall for the first half of the year since the start of the era of free-floating currencies in the early 1970s. Key developments that could influence markets on Friday: - France preliminary inflation (June) - U.S. PCE price index (May) Trying to keep up with the latest tariff news? Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here. https://www.reuters.com/world/europe/global-markets-view-europe-2025-06-27/

2025-06-27 04:13

BOJ says 'underlying' inflation still below target Soft underlying inflation used by BOJ to justify slow rate hikes Gap between headline, underlying inflation complicates messaging Food, fuel price hikes may challenge BOJ's dovish communication TOKYO, June 27 (Reuters) - The Bank of Japan's increasing caution around raising interest rates further relies heavily on a relatively obscure inflation reading, which policy doves argue suggests weak consumer demand but critics say messes with the bank's messaging. Underlying inflation in Japan, which focuses on the strength of domestic demand and wages rather than volatile food and fuel, has been tracking below the Bank of Japan's 2% target. Sign up here. That contrasts starkly with headline inflation numbers that are above the target at multi-year highs, riling the public and until recently providing strong arguments for further interest rates. Analysts say the BOJ's fresh concerns about local consumption and the global economy have muddled its efforts to manage inflation expectations in a country that spent decades mired in deflation. "The unprecedented nature of what the BOJ is doing, and a lack of track record anchoring inflation expectations, are reasons why the BOJ is using the fuzzy concept of underlying inflation," said former BOJ official Nobuyasu Atago, who is currently chief economist at Rakuten Securities Economic Research Institute. "That's complicating its communication and making it difficult to understand what exactly they are trying to do." From a policy perspective, BOJ Governor Kazuo Ueda has already acknowledged the challenges of both resetting inflation expectations and trying to precisely measure underlying inflation. "We have managed to de-anchor expectations from zero, but have yet to re-anchor them at 2%," he said in a speech last month. "This is why we are still maintaining an accommodative policy stance." GUIDANCE MISMATCH On the face of it, Japan has an inflation problem, which is why its central bank is one of the few in the world that has raised rates in recent years as others cut. Headline consumer inflation hit 3.6% in April, well above 2.3% in the U.S. and the second highest among G7 advanced nations following 4.1% in the UK, according to OECD data. Other consumer price measurements, such as the core index stripping away volatile fresh food and the "core-core" - which also excludes fuel costs - have also stayed above the BOJ's 2% target for about three years. While there is no single indicator that gauges "underlying inflation", the BOJ looks at its own recalibrated measures such as the weighted median and the "mode", both of which are currently below the bank's 2% target. Other proxies the BOJ says it monitors include medium- and long-term inflation expectations, which it estimates as moving above 1.5% but slightly below 2.0%. A chart attached to recent BOJ speech texts also includes services price inflation as a key measurement of underlying inflation which, at 1.4% in May, also remains below 2%. Those trends coupled with worries about the economic hit from higher U.S. tariffs partly explain why the BOJ has signaled a pause in interest rate hikes after lifting them to 0.5% in January. However, there is still ambiguity around just what exactly vexes the BOJ. "For the average household, what matters is the price of food and grocery, not fuzzy concepts like underlying inflation," said a source familiar with the BOJ's thinking. "Even when looking at various indicators, underlying inflation is already pretty close to 2%," the source said, a view echoed by another source. To be sure, the BOJ expects the gap between headline and underlying inflation to narrow if the rise in food prices moderates and prospects of steady wage hikes underpin consumption. The central bank has also said it will keep raising rates if there is enough conviction that underlying inflation will hit 2% - a call the board makes looking not just at price moves but the economic outlook and its risks. A slight majority of economists in a Reuters poll expected the BOJ's next 25-basis-point increase to come in early 2026. A key challenge for now remains in how it communicates its cautious position, especially if domestic food inflation and the Middle East conflict persist and lead to an upgrade in its price forecasts at the board's next review on July 30-31. That question is also creating divisions within the BOJ board. Critics warn such dovish guidance could leave the bank behind the curve in addressing inflation risks. "I personally believe focus should be placed on inflation expectations of firms and households, who are the actual drivers of economic activity. I take these expectations to have already reached around 2%," Naoki Tamura, a BOJ board member known for his advocacy of further rate hikes, said this week. "If upward inflation risks heighten, the BOJ may need to act decisively as a guardian of price stability." https://www.reuters.com/business/dovish-tilt-boj-zooms-obscure-underlying-inflation-trends-2025-06-27/

2025-06-27 03:42

June 26 (Reuters) - Ratings agencies S&P and Moody's downgraded Colombia's debt rating by one notch on Thursday, with both citing weaker fiscal performance. S&P lowered the rating to "BB", two notches below investment grade, and Moody's to "Baa3", its lowest investment-grade rating, with a stable outlook. Sign up here. S&P, however, assigned a negative outlook on Colombia's rating, indicating the risk of a further downgrade over the next 18 months. Latin America's fourth-largest economy is facing deteriorating fiscal accounts amid lower tax revenues, high public debt and difficulties in reducing spending. The Colombian government last week suspended compliance with its so-called fiscal rule, to allow it to increase its deficit target for 2025 to 7.1% of gross domestic product from 5.1% of GDP. It said the goal was to boost the economy, especially agriculture and manufacturing. "Colombia's fiscal dynamics have worsened more than we expected," Moody's said in a release. "The overestimation of revenue for the 2024 and 2025 budgets has raised fiscal pressures that have not been compensated by spending measures." S&P said the combination of large fiscal deficits and weak economic performance had worsened Colombia's public finances and increased its vulnerability to external shocks. "Fiscal policy has also become less predictable, as highlighted by the government’s recent decision to suspend the country’s fiscal rule for three years," the agency said. S&P warned that steady fiscal deterioration could persist over several years, along with the country's heightened security challenges, further worsening its credit profile. Colombia is weighing boosting its external and domestic debt by several billion dollars this year to cover a deepening fiscal deficit, Reuters reported earlier this month, citing three market sources with knowledge of the matter. https://www.reuters.com/world/americas/sp-cuts-colombias-debt-rating-bb-over-declining-fiscal-results-2025-06-27/