India, U.S. mini trade deal unlikely before Aug 1, CNBC-TV18 reports
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Reuters
35 minutes ago
- Reuters
Sika first half results hit by dollar weakness
ZURICH July 29 (Reuters) - Sika (SIKA.S), opens new tab gave a more cautious full-year sales guidance on Tuesday after a weaker dollar weighed on the Swiss construction chemical maker's first-half sales and profit. The company, which makes products used to strengthen and waterproof walls and floors, became the latest firm to flag the dollar's impact on results, following Nordic industrial companies earlier this month. The dollar lost value during the first half of the year on concerns about U.S. debt and President Donald Trump's unpredictable trade policies, creating problems for companies such as Sika, which counts the United States as its biggest market. "The weaker U.S. dollar, which lost 10% against the Swiss franc in the second quarter, as well as ongoing uncertainties in global markets, had an impact on the results," Sika said. The company, whose additives were used in projects including the Gordie Howe International Bridge between the United States and Canada, now expects only a "modest" sales increase in local currencies. Previously, Sika had guided for an increase of 3-6%. During the first six months of 2025, Sika suffered a foreign currency effect of minus 4.3%, which turned local currency growth of 1.6% into a 2.7% decline when converted back into Swiss francs, the company's reporting currency. Total sales of 5.68 billion Swiss francs ($7.1 billion) in the six months to June 30 fell short of analyst forecasts of 5.72 billion francs, according to a consensus compiled by Vara. The company's core operating profit (EBITDA) fell to 1.07 billion Swiss francs, missing analysts' forecast of 1.09 billion francs. Its shares were indicated 3.4% lower in premarket activity in Zurich. Sika's results offer insight into the health of the broader construction industry, with its chemical additives being used in infrastructure projects such as the Daimer Basha dam in Pakistan. Its local currency growth of 1.6% was better than the 1.5% decline in the market overall, with Sika saying it expects to continue to grow faster than the market in 2025. "In a challenging market environment, we once again outpaced the industry trend and continued to gain market share," Chief Executive Thomas Hasler said. The company also kept its full-year profit guidance to increase core operating profit faster than local sales growth and achieve a profit margin of 19.5% to 19.8%. ($1 = 0.8026 Swiss francs)
Reuters
35 minutes ago
- Reuters
Dollar shedding its tariff risk premium
LONDON, July 29 (Reuters) - The dollar's surge since the U.S.-European Union trade deal seems a little counterintuitive at first glance, but the rally suggests the greenback may be shedding its elevated trade risk premium - whether Washington wants that or not. The weekend's U.S.-EU agreement averted a likely protracted trade war by halving threatened U.S. import tariffs on European goods in return for market access and investment commitments. It mirrored a similar deal made with Japan last week, though it covers four times as much U.S. trade. But, curiously, news of the Japan deal last Tuesday pushed the yen higher, initially at least. There was no such boon for the euro on Monday - as it tumbled over 1% through the day against a resurgent dollar. Some people pointed to disquiet within Europe about whether the bloc rolled over too easily, only to end up with tariffs some 14 percentage points higher than they were at the start of the year anyway. Others focused on the impact of likely exaggerated European investment and spending pledges. But something else seemed to be stirring in a broader worldwide dollar rally that went way beyond the euro, a possible unwinding of the risk premium that had been built into the currency since April to account for Washington's seemingly chaotic tariff swipes and possible reactions. With EU, Japan and UK deals in the bag and intense talks under way with China, Canada and Mexico, Washington has essentially defused tensions surrounding the looming August 1 trade deal deadline. And the agreements completed now cover a combined 60% of all U.S. trade. The China standoff will likely rumble on but negotiations are under way in Stockholm and standing pacts will likely be extended, with Beijing's hand weakened by trade deals elsewhere. What's more, the Trump administration appears to have successfully managed all this with a minimum of retaliation and limited economic damage to date. The effective U.S. tariff rate is set to end somewhere between 15% and 20%. That may be a possible drag on growth at home and abroad, but tariff income is flattering U.S. government revenues at a relatively low cost. Any U.S. consumer inflation fallout coming down the pike will keep the Federal Reserve cautious for longer about interest rate cuts - but that too may be a lift for the dollar if it's more responsive to the rates picture again. "In terms of domestic political dynamics, Donald Trump is winning the trade war," AXA Group Chief Economist Gilles Moec wrote on Monday. Assuming this is the beginning of the end of the year's big tariff shock, businesses and markets may finally have some degree of certainty about the months ahead and allow a lot of paused planning and activity to resume - even if at measurably higher costs. Fading recession risks further on that, the dollar should again start to revert to more normal behavior tracking relative interest rates and economic signals rather than Truth Social posts. Uncertainty is always hard to quantify, but there are a few ways investors have been capturing it. A closely followed trade component of the Economic Policy Uncertainty Index series - the Baker-Bloom-Davis model - skyrocketed to unprecedented levels in April. But it has since subsided to its lowest point since January and is less than a quarter of April's peak. U.S. stocks have clearly bounced back from the April shock, hitting record highs once again, as recession signs have failed to appear and the artificial intelligence theme has charged forward. Treasury yields, however, do remain elevated by the debt-raising fiscal bill and stubborn Fed stance. But volatility gauges for both equities (.VIX), opens new tab and Treasuries (.MOVE), opens new tab are back near their respective lows for the year. And the dollar, the one clear loser all year, is clawing back ground. Crucially, its recent separation from transatlantic yield trends is slowly being re-established. After April 2, the 2-year yield gap boomed about 40 basis points wider in favor of U.S. Treasuries and remains more than 20 bp wider since that day. But rather than follow that gap in lockstep as usual, the dollar went the other way and lost over 6% - a critical reflection of a building risk premium amid foreign investor concern, hedging and capital switching. Selling has petered out in recent weeks, and Monday's 1% dollar index surge was another indication of a more positive bias that could persist with the big yield premium so large. Whether a recovering dollar is what Trump actually wants is a different question. The running assumption all year has been that Trump favored a weaker dollar as a way of narrowing U.S. deficits and boosting exports, and Trump addressed the issue on Friday. "It doesn't sound good, but you make a hell of a lot more money with a weaker dollar - not a weak dollar but a weaker dollar - than you do with a strong dollar," he said. If the dollar now shows signs of bouncing back sharply, political pressure on the Fed to counter it with much lower interest rates will remain intense. The opinions expressed here are those of the author, a columnist for Reuters -- Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. Follow ROI on LinkedIn. Plus, sign up for my weekday newsletter, Morning Bid U.S.
Reuters
35 minutes ago
- Reuters
China's soymeal glut raises demand doubts ahead of US soybean export season
BEIJING/SINGAPORE, July 29 (Reuters) - China's appetite for soybeans is likely to weaken during the peak U.S. marketing season later this year, as record imports earlier in 2025 and tepid demand from animal feed producers have pushed up soymeal inventories at home, trade sources said. The world's biggest soybean importer has yet to book U.S. cargoes for the fourth quarter, with traders closely monitoring talks in Stockholm aimed at resolving longstanding economic disputes at the centre of the U.S.-China trade war. A slowdown in Chinese demand could pressure Chicago soybean futures , which are already down for a second consecutive week on expectations of a bumper U.S. harvest. China's soymeal futures fell for a fourth straight session on Tuesday amid ample supplies. In the physical market, spot soymeal in north China was quoted at 2,925 yuan ($408) per metric ton, down 6.5% from 3,130 yuan a year ago, said Wang Wenshen, an analyst at Shandong province-based consultancy Sublime China Information. "If third-quarter prices stay weak and crushers face losses, fourth-quarter soybean purchases may fall short of expectations," Wang said. The last quarter of the year is typically the main U.S. soybean marketing season. China's overall soybean imports hit a record high in May and their second-highest level in June, boosting oilseed processing and leading to a buildup in soymeal inventories, traders said. The surplus is straining China's crushing plants, with some already shutting down due to storage constraints. "Small-scale shutdowns have already begun at crushing plants in regions like south China primarily because soybean meal has accumulated with no room for more stock," said a Shanghai-based trader, adding that a broader suspension was "highly likely". Crush margins in Rizhao , China's main processing hub, have been negative since mid-May. The glut has been worsened by weak demand from animal feed producers amid sluggish meat consumption in the world's top pork market. Crushers will face "huge soymeal stock pressure" over the next one to two months, said Cheang Kang Wei, vice president at StoneX in Singapore. Authorities have pledged to cut breeding sow numbers, curb new capacity, and reduce soymeal use in feed to stabilise meat prices after steep declines this year, measures analysts say will further limit soymeal consumption. China's purchases of Argentine soymeal, amid high tariffs of U.S. beans, in the last few weeks are likely to add to the glut. "Even with such big supply of soymeal in the local market, it is profitable to import meal from Argentina," said a Singapore-based trader at an international trading company. "This will only add to the stocks of soymeal." A trade deal with Washington could shift buying patterns. "If a trade deal is reached, Chinese buyers could resume U.S. purchases for the fourth quarter, as prices are favourable without tariffs," said Johnny Xiang, founder of Beijing-based AgRadar Consulting. ($1 = 7.1767 Chinese yuan)
