Stocks, forex set for weekly gains on signs of China-US tariff reprieve
A gauge for emerging market stocks was headed for a second straight week of gains on Friday as investors found solace in hints of a thaw in the U.S.-China trade standoff.
The MSCI Emerging Markets Index climbed 0.4% on the day and was on course for a 2.7% gain for the week, marking its second week of advances.
China exempted certain U.S. imports from its towering 125% tariffs and invited businesses to propose more goods they want to receive relief, according to businesses notified.
In Washington, the White House is contemplating measures to ease the tension, with U.S. President Donald Trump affirming on Thursday that trade negotiations are in progress.
"It remains to be seen how the current trade restrictions will be eased, whether through talks or a unilateral realisation that these tariffs are hurting themselves more than the other side," Volkmar Baur, foreign exchange analyst at Commerzbank said in a note.
"This would certainly be welcomed by the financial markets."
South Korea's Kospi index closed 0.9% higher, fuelled by the United States and Seoul's pledge to forge a trade package aimed at dismantling new U.S. tariffs, following discussions in Washington.
Across Asia, nations are dispatching delegations, hopeful that the hefty U.S. tariffs, currently paused for 90 days, might be softened.
Meanwhile, a currencies gauge held steady, signalling some caution prevailed as investors navigated a maze of mixed signals from the White House. It was poised, however, for a modest 0.1% uptick for the week.
In South Asia, Indian benchmark indexes suffered a decline of over 0.6% each, as geopolitical tensions simmered after a deadly militant attack in Kashmir escalated frictions with neighbouring Pakistan.
Islamabad's local bourse saw a decline of 0.3%, while hard-currency bonds were steady after a sharp drop on Thursday.
Markets also monitored a report of a meeting between U.S. envoy Steve Witkoff and Russian President Vladimir Putin, at a time when Moscow pressed its attack on Ukraine and an imminent ceasefire appeared unlikely.
Ukraine's international bonds inched up about one cent each, while Russia's rouble rose 0.5% ahead of a central bank monetary policy decision, with economists anticipating no change.
Poland's zloty and the local stocks index were little changed.
The government has sent a proposed judicial reform to European Union legal experts for approval in a new attempt to undo changes by its predecessor that prompted the EU to fine Poland and withhold funding for undermining judicial independence.
South Africa's rand was muted as investors awaited clarity on a disputed national budget which has spewed uncertainty about the outlook of the factitious coalition government.
Turkey's lira dipped 0.3%, with global ratings agency S&P set to review its credit rating against the backdrop of political turmoil that prompted central bank intervention to stabilize the currency.
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Middle East Eye
4 hours ago
- Middle East Eye
How Turkey and Qatar are playing an outsized role in Trump's new Middle East
Turkey and Qatar are making themselves crucial to US President Donald Trump's reshaping of the Middle East. Look no further than in Syria, where Qatari gas and cash, along with Turkish military might, are helping war-ravaged Syria back on its feet while Trump tries to fulfil his promise to pull the plug on western interventionists and 'nation builders'. The two countries' rising stock is not going unnoticed among Arab officials. 'Trump has too much on his plate; China, Iran talks, the war in Ukraine. He doesn't want to intervene. In Syria, he has these two local allies who don't mind getting involved in the nitty-gritty details of Syria's reconstruction. He is going to lean on them,' one senior Arab official told Middle East Eye. Qatar and Saudi Arabia are paying the salaries of Syrian government employees. In March, Qatar began supplying gas to Syria via Jordan. Meanwhile, Turkey's government is in talks with Damascus on a defence pact amid Israeli air strikes in Syria. New MEE newsletter: Jerusalem Dispatch Sign up to get the latest insights and analysis on Israel-Palestine, alongside Turkey Unpacked and other MEE newsletters That Turkey and Qatar are the regional powers most active in Syria should not come as a surprise. Turkey shares a long border with Syria and was the last true backer of rebels who fought to oust Bashar al-Assad after most Gulf monarchies gave up on their cause. Qatar was the exception. It was the sole Gulf state to recognise and host Syria's opposition. Conversely, the UAE made a big bet on rehabilitating Assad. MEE revealed that the UAE was negotiating a grand bargain to lift US sanctions on Assad in return for reducing Iran's influence. The talks continued up until the last minute. Assad was toppled in an offensive led by Hay'at Tahrir al-Sham, whose commander, Ahmed al-Sharaa, is Syria's new president. The biggest deal Turkey and Qatar have made in Syria so far was in May. US ambassador to Turkey Tom Barrack assumes Syria envoy post Read More » Along with the US, they signed a $7bn energy agreement that envisions the three countries building four gas power plants in Syria and one solar plant to boost the war-ravaged country's meagre energy supplies. Qatar's UCC construction and energy company, owned by the prominent al-Khayyat family, is set to lead the project. Speaking in Damascus at the signing ceremony, US envoy to Syria Thomas Barrack took the opportunity to praise the 'alignment of these amazing countries". 'A young and prosperous Qatar, one of the most incredible and ancient civilisations in Syria; [and] one of the most dominant empires that ever existed in the Ottoman Empire and the succession of Türkiye.' Barrack framed Syria as the poster child for Trump's vision of a Middle East, where the US was empowering local countries to redress the wrong of Sykes-Picot, the agreement that colonial Britain and France used to divide Syria during WWI. 'That mistake cost generations. We will not make it again,' he wrote on X. 'Need to address the PKK' If there is any doubt about whose voice the US will give the most credence to in Syria, look to Ankara, where Barrack also serves as Trump's ambassador to Turkey. 'The Trump administration understands the Turks have a vital national security interest in Syria. He respects that in a way others in Washington haven't,' Robert Ford, the last US ambassador to Syria, told MEE. 'The US has to work with the Turks otherwise, there will be another war' - Bassam Barabandi, former Syrian diplomat and opposition activist During the Biden administration, Syria was a sore point in US-Turkey ties. US troops first entered Syria in 2014 to fight the Islamic State militant (IS) group. They partnered with the Kurdish-led Syrian Democratic Forces (SDF). Turkey views the SDF as an extension of the outlawed Kurdistan Workers' Party (PKK). The PKK has waged a decades-long guerrilla war in southern Turkey and is labelled a terrorist organisation by the US and the European Union. 'You can't have a stable Syria without addressing the PKK. The US has to work with the Turks, otherwise there will be another war,' Bassam Barabandi, a former Syrian diplomat and opposition activist, told MEE. During his first term in office, Trump tried to withdraw US troops from Syria. His own officials hamstrung him, and his former defence secretary, Jim Mattis, resigned over a partial troop withdrawal. Although US troops were ostensibly in Syria to fight IS, they came to be seen as a force denying territory to Iran. With Tehran's ally Assad gone, that rationale no longer exists. Trump himself says Turkey has 'taken over Syria', alluding to its close ties to Sharaa. He appears to sense this as his chance to withdraw troops, despite pleas from Israel and the SDF to keep them there. Barrack told Turkish media in June that the US planned to downsize from eight bases to one in northeastern Syria. How Trump's allies view Turkey and Qatar Turkey and Qatar have long been seen as close partners. In a sense, they complement each other. Turkey has the second largest army in Nato, but is cash poor. Qatar is one of the world's top exporters of Liquefied Natural Gas, but has just 300,000 nationals. Turkey has a military base in Qatar. Doha made tens of billions of dollars in investments in Turkey during its inflation crisis, providing Turkish President Recep Tayyip Erdogan with an economic lifeline. The two countries' alignment was solidified during the 2011 Arab Spring, when they backed popular protests against rulers like Assad in Syria and Hosni Mubarak in Egypt. Saudi Arabia and the UAE accused them of supporting political Islamists who Abu Dhabi and Riyadh feared would unsettle their monarchies. The rift got nasty in 2017, when a Saudi-led blockade was imposed on Qatar. That Trump should welcome Qatar and Turkish investment in Syria now shows how rapidly the region has reorganised itself. In 2017, he gave a White House speech throwing his weight behind the blockade. Until recently, Trump's Middle East director at the National Security Council was Eric Trager, who has been critical of Qatar. 'You certainly have those in the administration, not the Witkoffs or Barracks, who still believe in a Muslim Brotherhood boogyman. This is deep-seated. So it's interesting to see Trump's really close cohort move beyond this,' Natasha Hall, a Syria expert at the Center for Strategic and International Studies (CSIS, )said, referring to US Middle East envoy, Steve Witkoff. Both of Trump's close advisors enjoy good relations with Qatar, Saudi Arabia and the UAE. The UAE's hotspot troubles The Arab Spring descended into a slew of conflicts, of which Syria was just one. After the Nato-led removal of Muammar Gaddafi in Libya, Turkey backed a government in Tripoli while Saudi Arabia and the UAE threw their support behind a rogue general and one-time CIA asset, Khalifa Haftar. The UAE also backed Egyptian President Abdel Fattah el-Sisi, the general who overthrew the democratically elected president, Mohammed Morsi, whom Erdogan backed. Turkey and Qatar's growing clout in the Middle East vis-a-vis Syria contrasts with mounting troubles for the UAE in some of these hotspots. UAE lobbying Trump administration to reject Arab League Gaza plan, officials say Read More » Ties between Egypt and the UAE are becoming seriously frayed, although both sides are trying to downplay it, Arab officials tell MEE. Sisi's economy is in crisis, but he has failed to push through the reforms that the UAE, his top backer, wants. The Emiratis have lobbied against Cairo in Washington, MEE revealed. The UAE's ambassador to the US publicly backed a plan floated by Trump to forcibly displace Palestinians from Gaza - a thought that unnerves Egyptian generals. Libya remains divided. Haftar's bid to conquer Tripoli failed in 2020. His son and likely successor, Saddam, has even courted Turkey and Qatar as their power rises. He visited Doha and Ankara this year. The parliament in Eastern Libya controlled by him is weighing whether to agree to a contentious maritime deal that Turkey favours. As Turkey and Qatar sign energy deals in Damascus under US auspices, the UAE is bogged down in a brutal civil war in Sudan. There it is backing the paramilitary Rapid Support Forces (RSF) against the Sudanese army, which is backed by Turkey, Egypt and Iran. Litmus test Syria is going to be a test case as the first post-Arab Spring country to be rebuilt after the 2021 al-Ula agreement, in which the Gulf states agreed to put their differences behind them and mend fences. Qatar and Saudi Arabia have patched up ties, but the Qataris and Emiratis still have a chilly relationship. The same goes for the Turks. 'Syria's greatest benefit is that Assad was ousted after al-Ula,' a Syria analyst in the UAE told MEE, speaking on condition of anonymity. Trump announced in Saudi Arabia that he was lifting all US sanctions on Syria, and he credited both Erdogan and Crown Prince Mohammed bin Salman with convincing him to do so. 'The Saudis have been just as instrumental as the Turks and Qataris, if not more, in convincing Trump to drop sanctions on Syria. They want a stable Syria in order to focus on their own economic development at home,' Anna Jacobs, a non-resident fellow at the Arab Gulf States Institute, told MEE. 'The new Saudi looks for interest, not emotion or ideology,' Barabandi told MEE. 'They are with Turkey and Qatar on Syria. The US's goal is to facilitate the flow of GCC money into Syria. That's it.' Even the UAE is stepping in and trying to gain influence. In May, state-owned Dubai Ports World signed a pledge to invest $800m to modernise the port of Tartus. The analyst in the UAE said Sharaa's government welcomed the UAE's investment in Tartus because it needed a country that was seen as agreeable to Russia, which still has a military base there. France's CMA CGM shipping inked a 30-year deal to operate Latakia port in Syria. 'Sharaa couldn't have Turkey or a European state come in. Russia would have complained about that. The UAE is a friend of Russia,' the analyst said. The UAE's Al Habtoor group, a massive conglomerate that spans real estate to the automotive industry, is set to send a delegation to Syria this week. Ford said that Turkey, Qatar, the UAE, and Saudi Arabia all have a convergence of interests in Syria to ensure its transition is stable, and Iran, Assad's old patron, stays out. 'I'm not saying Abu Dhabi is comfortable with a conservative Islamist in power, but they all want to see Sharaa reduce Iran's influence,' he said. No nation-building The UAE, which has the closest ties to Israel among Gulf states, also brokered secret talks between Syria and Israel, Reuters reported in May. Israel pummelled Syria after Assad's removal and has sent troops to occupy a swath of the southeast, south of Damascus. MEE previously reported that the US lobbied Turkey and Israel into deconfliction talks. 'I think the Emiratis, and other Gulf states' number one concern is that there not be an outbreak of violence between the Turks and Israelis in Syria or the Iranians and Israelis,' Ford said. Syria after Assad: Sharaa's delicate balancing act with Israel Read More » He said while Turkey and Qatar have stepped up in Syria, it's a leap to say the US is recognising it as a sphere of their influence. 'That is too nineteenth century,' he said. 'The Trump people don't object to Turkey and Qatar getting involved in Syria. But they don't object to the Saudis and Emiratis getting involved either. Ultimately, the goal is for commerce between Israel and Syria.' Still, regional officials say Sharaa's ascent to power has bolstered Turkey and Qatar's power in the Levant. 'Sharaa will take Emirati money, but he won't trust them with security,' the Arab official told MEE. 'The UAE is on their back foot.' However, the real change is that Syria is not talking about elections. 'Sharaa has gone out of his way to prove that he won't be part of any political Islamist movement beyond Syria's borders,' the UAE-based analyst said. 'And he isn't mentioning democracy.'
Gulf Today
4 hours ago
- Gulf Today
Oil prices climb to 2-month high on US, China trade agreement
Oil prices rose 2% on Wednesday, to their highest in more than two months, as President Donald Trump said the US had a trade deal with China, feeding hopes for the outlook for energy demand in the world's two largest economies. Brent crude futures rose $1.32, or 1.97%, to $68.19 a barrel at 11:35 a.m. EDT (1535 GMT). US West Texas Intermediate crude was up $1.51, or 2.32%, to $66.49. Both Brent and WTI reached their highest in more than two months. Trump said Beijing would supply magnets and rare earth minerals and the US will allow Chinese students in its colleges and universities. Trump added the deal is subject to final approval by him and President Xi Jinping. The trade-related downside risk in oil has been temporarily removed, although the market reaction has been tepid as it is not clear how economic growth and global oil demand will be affected, PVM analyst Tamas Varga said. Trump said he was less confident that Iran would agree to stop uranium enrichment in a nuclear deal with Washington, according to an interview released on Wednesday. In the US, crude inventories fell by 3.6 million barrels to 432.4 million barrels last week, the Energy Information Administration said on Wednesday. Analysts polled by Reuters had expected a draw of 2 million barrels. "It's a bullish report," said Bob Yawger, director of energy futures at Mizuho, adding that the demand for motor gasoline began to strengthen. Product supplied for motor gasoline, a proxy for demand, rose by about 907,000 barrels per day last week, to 9.17 million bpd. US consumer prices increased less than expected in May, deepening the conviction in financial markets that the Federal Reserve will start cutting interest rates by September. Lower interest rates can spur economic growth and demand for oil. Wall Street stocks gained and the dollar and US Treasury yields dipped on Wednesday after President Donald Trump said a U.S.-China trade deal was done and a fresh report on US consumer prices in May showed only a marginal increase. A White House official said the agreement with China allows the US to charge a 55% tariff on imported Chinese goods, including a 10% baseline "reciprocal" tariff, a 20% tariff for fentanyl trafficking and a 25% tariff reflecting pre-existing tariffs. China would charge a 10% tariff on US imports, the official said. Trump also said that Beijing would supply magnets and rare earth minerals while the US will allow Chinese students in its colleges and universities. Separately, the Consumer Price Index (CPI) increased 0.1% in May amid cheaper gasoline after rising 0.2% in April, the US labour Department said on Wednesday, but inflation is expected to accelerate in the coming months on the back of the Trump administration's import tariffs. Chris Zaccarelli, chief investment officer for Northlight Asset Management in Charlotte, said the likely US China trade deal and consumer price data should support markets. "The narrative around tariff-induced inflation should subside," he wrote in an email. "We are still cautious, but many of the risks that were present in early April appear to be receding." The Dow Jones Industrial Average gained 0.4%, the S&P 500 advanced 0.3%, and the Nasdaq Composite rose 0.4%. Tesla shares added about 2% after Elon Musk also said he regretted some of the posts he made last week about Trump, opening the way to a healing of an abrupt rift that has roiled Washington and hurt shares in the electric carmaker. Asian shares were slightly more positive, with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.65%, while the STOXX benchmark for major European shares were little changed. AUCTION ANGST: The reaction in currency markets was muted, with the dollar weakening slightly against the Japanese yen to trade at 144.83 . The euro edged up 0.46% to $1.147, nudging the dollar index down 0.24% to 98.72. Ten-year Treasury yields fell 3.4 basis points to 4.44%, but bond investors also waited for an auction of $39 billion in 10-year notes later in the day, anxious to see if foreign buyers turn up. Concerns about huge US budget deficits and debt have combined with unease over the White House's shifting policies to make investors demand a higher term premium for holding Treasuries. Following the consumer pricing data, traders of short-term interest-rate futures priced in a 70% chance of a quarter-point reduction in the Fed policy rate by September, compared with 57% earlier. Policymakers are widely expected to keep rates unchanged next week.. "Another month goes by with little evidence of tariffs, but the longer-term inflation challenge they pose remains," Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, wrote in an email. "Given the Fed likely shares that outlook, no one should be looking for rate cuts in the near future." In commodity markets, gold gained 0.5% to $3,337 an ounce . Oil prices rose to a seven-week high as markets assessed the outcome of the U.S.-China trade talks. US crude rose 2% to $66.30 a barrel and Brent rose to $68.04 per barrel, up 1.75% on the day. Agencies
The National
5 hours ago
- The National
Oil prices jump 4% on rising Middle East tension
Oil prices rose more than 4 per cent on Wednesday as the US was preparing to evacuate non-essential staff from its embassy in Baghdad amid rising regional tension. Brent crude futures rose $1.96, or 3.02 per cent, to $66.82 per barrel. West Texas Intermediate crude gained $2.93, or 4.51 per cent, to $67.90 per barrel at 4pm ET. 'It's so fragile. If you see any aberration like that, it doesn't surprise me at all you see volatility in oil prices,' said Peter Andersen, founder of Andersen Capital Management in Boston. The US State Department said it was preparing to evacuate non-essential staff in its embassy in Iraq, Opec's second-largest producer of crude oil behind Saudi Arabia. Non-essential staff members and family members were also authorised to leave Bahrain and Kuwait, according to reports. Tension in the region flared up on Wednesday as efforts between the US and Iran to reach a nuclear deal appeared to stall. In an interview with the New York Post published on Wednesday, President Donald Trump said he was getting 'less confident' about the prospects of a deal being reached. Mr Trump had previously expressed hope that the two sides could reach a deal, and a sixth round of talks were scheduled to take place in Oman on Thursday. 'Something happened to them, but I am much less confident of a deal being made,' he told the Post. Mr Trump added Tehran will not have a 'new nuclear weapon' regardless if a deal is reached. Matthew Bey, a senior global analyst at the Rane Network in Austin, said Mr Trump's comments are 'only reinforcing fears that nuclear talks may soon fall apart'. 'The likelihood of a US-Iran nuclear deal, even a temporary one, has declined in recent days as the White House has hardened its demand on Iran having to give up the right to enrich uranium and Iran has demonstrated little willingness to do so,' Mr Bey told The National in an email. Iran's Minister of Defence Aziz Nasirzadeh had also said on Wednesday that Tehran will strike US bases in the Middle East if nuclear talks fail and conflict arises. Major indexes on Wall Street wavered aftedr developments in the region, as investors continued to assess the prospects of a US-China trade truce and tame inflation data. The Dow Jones Industrial Average was virtually flat, losing 1.1 points at the closing bell. The S&P 500 and Nasdaq Composite both closed 0.27 and 0.50 per cent lower, respectively. 'Given such uncertainty in the markets right now we tend to defer being negative when we can't understand this stuff. There's a handshake deal, but it's a long way off from an actual deal,' Mr Andersen said.
