China urges Germany not to undermine cooperation in name of 'de-risking'
BEIJING, May 19 (Reuters) - China and Germany should prevent undermining their normal bilateral cooperation in the name of "de-risking", Chinese Foreign Minister Wang Yi told German Foreign Minister Johann Wadephul in a phone call on Monday.
The two countries should jointly oppose unilateralism and protectionism, a Chinese foreign ministry statement quoted Wang as saying in the call.
European nations have moved to reduce their dependence on trade with China, which they have labelled as "de-risking".
Wang also called on the European Union to work together to resolve their disputes over the bloc's tariffs on Chinese electric vehicles as soon as possible.
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The Sun
24 minutes ago
- The Sun
Russia using horror AI kamikaze drone that ‘chooses its own target' as Ukraine now faces blitz of over ‘500 every night'
VLADIMIR Putin has begun deploying kamikaze drones that select their own targets using AI in a fresh assault on Ukraine. The country now faces over 500 attacks every night, just days after Kharkiv was rocked overnight by a downpour of missiles. 5 5 5 Reports said the UAV-V2U is being used to close in on the northeastern city of Sumy, while Putin ramps up drone production and builds new launch sites. Some 70 units a day are now being made compared to just 21 last year, according to Ukraine's military intelligence. This is largely thanks to help from China, the agency has said, as the UAV is "mostly assembled from Chinese-manufactured components." Beijing has repeatedly denied supplying drones or weapon components to Russia, whilst Trump and Biden have both hit China with sanctions to stop it getting access to computer chips. Marking a new escalation in the war, the drones use camera images to navigate and AI to independently locate targets. The Defence Intelligence of Ukraine said: "The key feature of the drone is its ability to autonomously search for and select targets using artificial intelligence. "Its computing system is based on the Chinese Leetop A203 minicomputer, with a high-speed processor assembly built on the NVIDIA Jetson Orin module." This comes just hours after drones and missiles were launched at Kyiv as Russian Tu-22M3 strategic bombers were reportedly unleashed to rain hell on the infamous Snake Island in the Black Sea. Moscow launched a massive strike on Rivne using its Tu-22M3 and Tu-95MS strategic bombers to hit Dubny airbase. Squadrons of these fighter jets were targeted and destroyed last week in Kyiv's daring Operation Spiderweb. Russia bombs Kyiv killing 4 in blitz as Putin plots revenge for Op Spiderweb Another key Ukrainian military airport - Hostomel - was also attacked as Putin sought revenge for the humiliating attack. Polish armed forces command said Nato fighter jets were patrolling due to 'intensive air attack by the Russian Federation on Ukrainian territory'. Just days ago, Kharkiv was rocked overnight as 48 kamikaze drones, along with missiles and guided bombs, slammed into residential areas, according to the city's mayor. 'We have a lot of damage,' Ihor Terekhov said. More than 50 explosions rocked Kharkiv, with the mayor adding it was 'the most powerful attack' on the city of the 39-month war. In the latest terror strikes on civilians, 18 multi-story buildings and 13 private houses were hit and damaged. In Kyiv, a dramatic tower block video filmed by a resident showed the terror of another Putin strike on civilians as flames from the exploding drone shot some 80ft up the building. Three were killed and at least 21 wounded, including a six-weeks-old baby, and a 14-year-old girl. A woman, 26, trapped under a slab of concrete was eventually freed three hours after the strike, and was seen being stretchered to an ambulance. Ukraine's foreign minister Andrii Sybiha described how hundreds of drones and missiles "rained down" on his country overnight. He wrote in a social media post: "Kharkiv had a particularly terrible night. "People were injured and killed, and the energy infrastructure was also damaged." Sybiha added there were further strikes in the Donetsk, Dnipro, Ternopil and Odesa regions. 5 5
Reuters
37 minutes ago
- Reuters
Russia could send "little green men" to test NATO's resolve, German intelligence boss warns
BERLIN, June 9 (Reuters) - Russia is determined to test the resolve of the NATO alliance, including by extending its confrontation with the West beyond the borders of Ukraine, the Germany's foreign intelligence chief told the Table Media news organization. Bruno Kahl, head of the Federal Intelligence Service, said his agency had clear intelligence indications that Russian officials believed the collective defence obligations enshrined in the NATO treaty no longer had practical force. "We are quite certain, and we have intelligence showing it, that Ukraine is only a step on the journey westward," Kahl told Table Media in a podcast interview. "That doesn't mean we expect tank armies to roll westwards," he added. "But we see that NATO's collective defence promise is to be tested." Germany, already the second-largest provider of armaments and financial support for Ukraine in its war with Russia, has pledged to step up its support further under the new government of Chancellor Friedrich Merz, promising to help Ukraine develop new missiles that could strike deep into Russian territory. Without detailing the nature of his intelligence sources, Kahl said Russian officials were envisaging confrontations that fell short of a full military engagement that would test whether the U.S. would really live up to its mutual aid obligations under Article 5 of the North Atlantic Treaty. "They don't need to dispatch armies of tanks for that," he said. "It's enough to send little green men to Estonia to protect supposedly oppressed Russian minorities." Russia's 2014 annexation of Crimea involved occupation of buildings and offices by Russian soldiers in unmarked uniforms and civilian clothes, who came to be known as the "little green men" when Moscow initially denied their identity. Kahl did not specify which officials in Moscow were thinking along these lines. Merz, who visited Donald Trump in Washington last week, pushed back against the U.S. president's assertion that Ukraine and Russia were like two infants fighting, telling Trump that where Ukraine targeted Moscow's military, Russia bombed Ukraine's cities. Kahl said his contacts with U.S. counterparts had left him convinced they took the Russian threat seriously. "They take it as seriously as us, thank God," he said.
Reuters
an hour ago
- Reuters
TRADING DAY London calling, stocks crawling higher
ORLANDO, Florida, June 9 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. Trade tensions, policy uncertainty and shaky economic data continue to cloud the near-term outlook for world growth, but they remain on the back burner for now as investors kick off the week by pushing global stock markets higher. In my column today I look at why the dollar has depreciated significantly this year regardless of how U.S. stocks and bonds have performed. The main reason? Hedging. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves London calling, stocks crawling higher It was a fairly quiet start to the week across global markets on Monday, with strong equity gains in Asia followed by a grind higher on Wall Street which lifted the MSCI World index to a fresh record high. The main areas of focus for investors were China's economic 'data dump' for May, then the high-level U.S.-China trade talks in London. The two are connected - the U.S. is a less important market for China than it used to be, underscored in May's trade figures from Beijing and reflected in the lack of concrete progress from the negotiations in London. China's total exports rose 4.8% in May from a year earlier but this masks a huge split between the U.S. and the rest of the world. Exports to the U.S. plunged 34.4% year-on-year in value terms, the sharpest drop since February 2020 just before the pandemic, while exports to the rest of the world rose 11.4%. Monthly data are volatile, of course, and May's figures were also distorted by tariffs. Still, U.S.-bound shipments worth $28.8 billion last month were just 9% of the total $316 billion. Economist Phil Suttle notes that is less than half the average share in the decade leading up to President Donald Trump's first trade war. The London talks are expected to continue on Tuesday. But as was the case following Trump's telephone call with Chinese leader Xi Jinping on Thursday, there is little indication of a significant breakthrough, far less China bending to U.S. demands. "U.S. Treasury Secretaries who live in unbalanced economies might not want to throw barbs such as the 'most unbalanced in modern history' at China without first looking at some data," Suttle wrote on Monday. "The choice to fight an opponent should be conditioned on a clear-headed view of its strengths and weaknesses. The U.S. has done a marvelous job of (once again) deluding itself on this front," Suttle added. Still, divisions between the two countries and the threat to global supply chains are proving no barrier to rising stock markets. Japan's Nikkei and the MSCI emerging and Asia ex-Japan indexes rose around 1%, Hong Kong-listed tech stocks rose nearly 3%, and Wall Street closed in the green. Meanwhile, the dollar's trend this year of declining despite U.S. stocks and bonds rising was on full display on Monday. Wall Street closed slightly higher and Treasury yields fell as much as 5 basis points at the short end of the curve, yet the dollar slipped. Many analysts say one of the main reasons for this is non-U.S. investor hedging - more on that below. Dollar floored as investors seek that extra hedge All three major U.S. asset classes – stocks, bonds and the currency – have had a turbulent 2025 thus far, but only one has failed to weather the storm: the dollar. Hedging may be a major reason why. Wall Street's three main indices and the ICE BofA U.S. Treasury index are all slightly higher for the year to date, despite the post-'Liberation Day' volatility, while the dollar has steadily ground lower, losing around 10% of its value against a basket of major currencies and breaking long-standing correlations along the way. The dollar was perhaps primed for a fall. It's easy to forget, but only a few months ago the 'U.S. exceptionalism' narrative was alive and well, and the dollar scaling heights rarely seen in the past two decades. But that narrative has evaporated, as U.S. President Donald Trump's controversial economic policies and isolationist posture on the global stage have made investors reconsider their exposure to U.S. assets. But why is the dollar feeling the burn more than stocks or bonds? Non-U.S. investors often protect themselves against sharp currency fluctuations via the forward, futures or options markets. The difference now is that the risk premium being built into U.S. assets is pushing them – especially equity holders – to hedge their dollar exposure more than they have in the past. Foreign investors have long hedged their bond exposure, with dollar hedge ratios traditionally around 70% to 100%, according to Morgan Stanley, as currency moves can easily wipe out modest bond returns. But non-U.S. equity investors have been much more loath to pay for protection, with dollar hedge ratios averaging between 10% and 30%. This is partly because the dollar was traditionally seen as a 'natural' hedge against stock market exposure, as it would typically rise in 'risk off' periods when stocks fell. The dollar would also normally appreciate when the U.S. economy and markets were thriving – the so-called 'Dollar Smile' – giving an additional boost to U.S. equity returns in good times. A good barometer of global 'real money' investors' view on the dollar is how willing foreign pension and insurance funds are to hedge their dollar-denominated assets. Recent data on Danish funds' currency hedging is revealing. Danish funds' U.S. asset hedge ratio surged to around 75% from around 65% between February and April. According to Deutsche Bank analysts, that 10 percentage point rise is the largest two-month increase in over a decade. Anecdotal evidence suggests similar shifts are taking place across Scandinavia, the euro zone and Canada, regions where dollar exposure is also high. The $266 billion Ontario Teachers' Pension Plan reported a $6.9 billion foreign currency gain last year, mainly due to the stronger dollar. Unless the fund has increased its hedging ratio this year, it will be sitting on huge foreign currency losses. "Investors had embraced U.S. exceptionalism and were overweight U.S. assets. But now, investors are increasing their hedging," says Sophia Drossos, economist and strategist at the hedge fund Point72. And there is a lot of dollar exposure to hedge. At the end of March foreign investors held $33 trillion of U.S. securities, with $18.4 trillion in equities and $14.6 trillion in debt instruments. The dollar's malaise has upended its traditional relationships with stocks and bonds. Its generally negative correlation with stocks has reversed, as has the usually positive correlation with bonds. The divergence with Treasuries has gained more attention, with the dollar diving as yields have risen. But as Deutsche Bank's George Saravelos notes, the correlation breakdown with stocks is "very unusual". When Wall Street has fallen this year the dollar has fallen too, but at a much faster pace. And when Wall Street has risen the dollar has also bounced, but only slightly. This has led to the strongest positive correlation between the dollar and S&P 500 in years, though that's a bit deceptive, as the dollar is sharply down on the year while stocks are mildly stronger. Of course, what we could be seeing is simply a rebalancing. Saravelos estimates that global fixed income and equity managers' dollar exposure was at near record-high levels in the run-up to the recent trade war. This was a "cyclical" phenomenon over the last couple of years rather than a deep-rooted structural one based on fundamentals, meaning it could be reversed relatively quickly. But, regardless, the dollar's hedging headwind seems likely to persist. "Given the size of foreign holdings of both stocks and bonds, even a modest uptick in hedge ratios could prove a considerable FX flow," Morgan Stanley's FX strategy team wrote last month. "As long as uncertainty and volatility persist, we think that hedge ratios are likely to rise as investors ride out the storm." What could move markets tomorrow? Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
