Chinese shares end lower over tariff uncertainty
Asian stocks ended mostly lower on Friday due to uncertainty surrounding a court battle about U.S. President Donald Trump's tariffs and rising concerns about U.S. economic stability.
Gold headed for a weekly loss in Asian trade as the dollar ticked higher ahead of a key U.S. inflation reading that may provide further insight into the Federal Reserve's policy trajectory.
Oil prices were set for a second weekly decline, weighed down by expectations of another OPEC+ output hike in July.
China's Shanghai Composite index dropped 0.47 percent to 3,347.49, with Apple suppliers leading losses after U.S. Treasury Secretary Scott Bessent said U.S.-China trade talks are "a bit stalled," and getting a deal over the finish line may need the direct involvement of President Donald Trump and Chinese President Xi Jinping.
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Business Standard
26 minutes ago
- Business Standard
No immediate impact from China's export curbs on magnets: Maruti Suzuki
Maruti Suzuki, India's top-selling carmaker, said on Monday there is no immediate production impact from China's export curbs on rare earth magnets, a key component, and that it is in talks with the government on the matter. Auto industry manufacturers told government officials last week that production could stall within days due to the curbs, Reuters reported. They are worried by the complexity of a new import process requiring approval from Indian and Chinese officials as well as documents including end-use certificates stating the magnets are not for military purposes. When asked how many weeks of inventory Maruti has before production is impacted, the automaker said it has submitted an import application and that it would be difficult to comment or give "very specific details" until it receives a response. "It is not a restriction. It is an endorsement of end use. In case there is an issue, we will ... inform all our stakeholders, including the stock exchange," Rahul Bharti, senior executive director, corporate affairs, told reporters. China controls over 90 per cent of global processing capacity for the magnets, which are used in fields as varied as automobiles, home appliances and clean energy. It enacted measures in April requiring companies to obtain import permits. In a meeting with commerce ministry officials last month, the Society of Indian Automobile Manufacturers said inventories at parts makers are likely to run out by the end of May. "Starting end May or early June, auto industry production is expected to come to a grinding halt," the body said in the document presented during a May meeting attended by executives including from Maruti. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Indian Express
29 minutes ago
- Indian Express
Maruti Suzuki sees no immediate impact of Chinese magnet curbs, says govt ‘receptive & supportive'
Maruti Suzuki, the country's largest carmaker, said that there was no immediate impact of China's restrictions on rare earth magnets, and that the industry was in discussion with the government on the matter, which has been 'receptive' and 'supportive'. The Indian Express had earlier reported that automakers, particularly electric vehicle makers, were staring at potential shortages as China placed export curbs on rare earth magnets and related materials, as a direct response to US imposing tariffs that kicked in from April 4. 'The industry is in discussion with the government and the government is quite receptive and supportive,' Rahul Bharti, senior executive director, corporate affairs, told reporters Monday. 'It is not a restriction, it is an endorsement of end use, and until the time we have any response to our applications, it is difficult to say anything,' Bharti added. Asked whether companies were looking at sourcing rare earth magnets from alternate regions, Bharti said: 'That's a larger question that will need more deliberation and more studies. Where are other sources available?' While the Chinese government has not imposed an outright ban on the export of rare earth magnets—a crucial element in making EVs—the process has been made very difficult causing protracted delays and posing shortage risks. Rare earth magnets, especially neodymium-iron-boron (NdFeB) magnets, are crucial for EV manufacturing, particularly in electric motors. They provide the strong magnetic fields needed for efficient and powerful electric motors, including traction motors that drive EVs. These magnets also play a major role in other EV components like power steering systems, wiper motors, and braking systems. China has a near monopoly over these rare earth magnets. Importers are now required to give their Chinese suppliers an undertaking that the rare earth magnets procured from that country would only be used in vehicles and not for defence or military applications. 'What's making the process more cumbersome is that the Chinese side is also insisting that local governments issue an endorsement for their importers. In our case, that would be the Director General of Foreign Trade (DGFT), which will have to endorse each importer separately. A separate authorisation must also be sought from the Chinese Embassy,' a senior industry executive had said earlier. 'We are talking to the government about how the process can be made better, because it is clear that the industry would need their help.' Over the past month or so, Indian carmakers are learnt to have used up inventories and the shortage is likely going forward. Worrying still is a fresh insistence from Beijing that instead of sourcing magnets separately, carmakers buy entire electric motor assemblies from Chinese companies, or simply wait for the Chinese authorities to issue export permits to local rare earth magnet producers, as has been done, according to Reuters, for at least four magnet producers that include suppliers to Volkswagen – the first granted since Beijing restricted shipments last month. The German carmaker is said to have lobbied hard with Beijing to get this done. The problem with sourcing entire motors, as against just the magnets in them, is that carmakers would have to redesign their cars to accommodate the entire motor assembly, which comes in standard sizes. The ability to import magnets meant that manufacturers could calibrate the motor sizes to the design of their vehicles. While the availability of rare earth metals is not limited to China, it is in the efficient processing of these critical elements where Beijing has a substantial lead, which was once enjoyed by the US and Japan. In recent years, Japan has been able to restart some of its minerals' processing industry owing to government policies, but countries like the US and India are heavily dependent on Chinese exports of these metals. In response to the US administration's reciprocal tariff heat, China restricted exports of seven heavy rare earth metals including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, as well as rare earth magnets, Earlier, it had also banned exports to the US of gallium, germanium, antimony, and other key high-tech materials with potential military applications. Soumyarendra Barik is Special Correspondent with The Indian Express and reports on the intersection of technology, policy and society. With over five years of newsroom experience, he has reported on issues of gig workers' rights, privacy, India's prevalent digital divide and a range of other policy interventions that impact big tech companies. He once also tailed a food delivery worker for over 12 hours to quantify the amount of money they make, and the pain they go through while doing so. In his free time, he likes to nerd about watches, Formula 1 and football. ... Read More
Mint
34 minutes ago
- Mint
Weak dollar reprises its role as carry trade funder
Trump's presidency boosts dollar-funded carry trades Goldman Sachs sees carry trades as a major theme Rupee, rupiah and real among top picks for their carry MUMBAI, June 2 (Reuters) - The U.S. dollar's weakness since the start of Donald Trump's presidency has made it the preferred funding currency for popular "carry" trades, fuelling heavy flows into higher-yielding emerging market currencies. Dollar-funded carry trades in the Indonesian rupiah, Indian rupee, Brazilian real, Turkish lira among other currencies, are back in vogue, fund managers said. In a typical currency carry trade, investors use cheap-to-borrow currencies to fund investments in those with better yields. Returns are boosted if the borrowed currency weakens. The dollar, traditionally less favoured than the Japanese yen or Swiss franc for such trades, has become the funding currency of choice as Trump's trade war stokes recession worries and an investor retreat from U.S. Treasuries. Carl Vermassen, a portfolio manager at Zurich-based asset manager Vontobel, has added to carry trades on the rupee and rupiah. "Emerging market local currency was basically shunned for the simple reason: to avoid local currency risk at a time of an almighty dollar," he said. "But, given most investors deem U.S. exceptionalism to have ended, things are changing." Claudia Calich, head of emerging market debt at M&G Investments, also expects dollar weakness to persist and support carry trades. The London-headquartered fund oversees more than 312 billion pounds ($423.5 billion) and favours the rupee and Philippine peso for carry positions within Asia and the Brazilian real and Mexican peso in Latin America. The more investors rush back into dollar carry trades, the deeper the dollar's losses are likely to be, analysts said. The dollar index has fallen 8.5% so far this year, dropping below the critical 100 mark in mid-April for the first time in nearly two years. It was last seen at 99.30. That means investors are finding good carry not just in the likes of the rupee and rupiah, whose yields are above those in the United States, but even those with low interest rates such as the South Korean won. The won has led gains in Asian currencies this year with a 6.7% rally against the dollar. The yield advantage over dollars, or the "carry", measured by the three-month tenure is 2% on the Indian rupee and 1.2% for Indonesia's rupiah. Brazil's real gives a much higher carry at 9% but is far more volatile, meaning the trade could go horribly wrong if the currency depreciates, instead of appreciating. The future expected 3-month volatility, also called implied volatility, for the real is 8.1% compared with 4.7% for the rupee. Goldman Sachs said carry trades were "a big theme" in recent meetings with its New York clients, with interest growing in Latin American and European markets. "If volatility settles some more, we will start to hear more about dollar-funded carry trades," ING Bank said. "This could be a story for this summer." Since "FX carry trades" typically involve investments in bond or money markets in these destinations, analysts expect to see heavy flows into emerging markets. Data for April shows investors bought bonds worth $8.92 billion, the highest for any month since last August, in South Korea, India, Indonesia, Thailand and Malaysia. While some of those flows could have been straight real-money investments into these markets, analysts say carry trades also boomed. In South Korea, foreign investors bought $7.91 billion in bonds, the most since May 2023. Tom Nakamura, vice-president and head of fixed income & currencies at Canadian fund AGF Investments, finds carry trades in Turkey attractive since the central bank's adoption of more orthodox monetary policy. Turkey's benchmark rates are at 46%. (Reporting by Nimesh Vora; Additional reporting by Jaspreet Singh Kalra in Mumbai and Johann Cherian in Bengaluru; Editing by Vidya Ranganathan and Jacqueline Wong)
