Asian stocks slip as trade, geopolitical tensions weigh
Global stocks and the dollar have slipped as investors size up a benign US inflation report and the fragile trade truce between Washington and Beijing, while rising tensions in the Middle East and lingering tariff anxiety dent risk sentiment.
Attention in financial markets this week has been on the US-China trade talks that culminated in a framework agreement that would remove Chinese export restrictions on rare earth minerals and allow Chinese students access to US universities.
"We made a great deal with China. We're very happy with it," US President Donald Trump said.
Markets though were guarded in their response, awaiting fuller, concrete details of the agreement and remained wary of another flare up.
Trump also said the US would send out letters in one to two weeks outlining the terms of trade deals to dozens of other countries, which they could embrace or reject, adding yet another dose of uncertainty in the markets.
"The US China deal really just leaves the tariffs in place after they've been cut back following the Geneva meeting, so it doesn't really change things," said Shane Oliver, head of investment strategy and chief economist at AMP Capital.
"Ultimately the trade tension is yet to be resolved between the US and China."
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.3 per cent lower in early trading on Thursday after hitting a three year-high on Wednesday.
Japan's Nikkei slipped 0.7 per cent, while US and European stock futures fell.
China's blue-chip stock index fell 0.37 per cent, moving off the near three-week top it touched in the previous session. Hong Kong's Hang Seng index was down 0.74 per cent, also inching away from Wednesday's three-month high.
Trump's erratic tariff policies have roiled global markets this year, prompting hordes of investors to exit US assets, especially the dollar, as they worried about rising prices and slowing economic growth.
The euro, one of the beneficiaries of the dollar's decline, rose to a seven-week high and was last at $US1.1512.
The Japanese yen was 0.4 per cent firmer at 144.03 per dollar.
That pushed the dollar index, which measures the US currency against six other key rivals, to its lowest level since April 22.
The index is down nine per cent in 2025.
Data on Wednesday showed US consumer prices increased less than expected in May as cheaper petrol partially offset higher rents, but inflation is expected to accelerate in the coming months on the back of the Trump administration's import tariffs.
The soft inflation report led Trump to renew his call for the Federal Reserve to push through a major rate cut.
The president has been pressing for rate cuts for some time even as Fed officials have shrugged off his comments.
Traders are pricing in a 70 per cent chance of a quarter-point reduction in the Fed policy rate by September.
Policymakers are widely expected to keep rates unchanged next week.
In commodities, oil prices were pinned at two-month highs, close to $US70 a barrel, on worries of supply disruptions in the Middle East after Iran said it will strike US bases in the region if nuclear talks fail and conflict arises with Washington.
Gold prices also got a boost from safe-haven flows, with spot gold up 0.5 per cent at $US3,370.29.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
News.com.au
an hour ago
- News.com.au
Monsters of Rock: How far will Chinese steel production fall this year?
Indicators in China's steel market continue to look bearish But prices could remain propped above US$90/t Argonaut initiates on swag bag of rare earths stocks It's a germane question for Aussie investors and tax collectors. How far China's can steel sector continue at current levels with the mouldy stench of a downturned property market? There's pressure also in other sectors that have been picking up the slack. That's not to say steel production is about to fall off a cliff. But calls from quasi-independent state linked bodies like the China Iron and Steel Association suggest moves could be afoot to start clamping down on lossmaking steel and auto supply. Echoing statements from similar bodies in the vehicle sector, where competition has stirred a price war that has left most carmakers losing money, the CISA has called on steel and carmakers to resist "neijuan". It's a fun term since, according to MySteel, it's been newly-coined in the always lyrical Communist Chinese dictionary, defined as "describing hyper-competition and the relentless rat race". Relentless cost-cutting has seen carmakers request markdowns of up to 10% on their steel prices, CISA warns, with auto profit margins shrinking from 7.3% to just 3.8% from 2018-2024. The CISA forecasts steel production will decline 4% this year in China, the world's largest steel producer churning out around 1Btpa, and therefore the largest customer by the length of the straight for Aussie iron ore. That would be the largest decline in any calendar year since at least 1990, according to analysis this week from Commbank's mining expert Vivek Dhar. Last year Chinese steel output hit a five-year low after a 1.7% dive, but still crossed 1Bt for the fifth straight season at 1.005Bt. MySteel reports showed late May crude steel production was down 12.7% on the same period in 2024, while iron ore imports have declined 5.2% to 486.4Mt over the first five months of the year – that's despite miners in the Pilbara shipping lower grades. S&P's Platts division, the main provider of iron ore index pricing, this week announced plans to introduce 61% Fe pricing from January next year, following the launch of a similar index by Fastmarkets. That comes as new supply looms from Africa, notably the 120Mtpa Simandou project in Guinea. Upside potential Despite all that, Dhar remains confident iron ore will stay above US$90/t. "We think it will be challenging for iron ore prices to sustainably fall to $US90/t even if China's demand deteriorates given such a level would require China's steel output to contract 6â€'7%/yr," he said. "This is due to the highâ€'cost iron ore supply that would need to exit the market at $US90/t. For context, the most that China's steel output has contracted in any calendar year since at least 1990 is ~3%. "We see iron ore prices averaging $US95/t in H2 2025, with upside risks tied to the size and composition of Chinese stimulus." Amid trade uncertainty and concerns over the sustainability of the Chinese steel sector and broader economy, the big iron ore players have had a rough 2025. BHP (ASX:BHP) is down 4% YTD, Fortescue (ASX:FMG) with its volatile green energy business is off close to 17% and Rio Tinto (ASX:RIO) has shed 9%. High grade Canadian producer Champion Iron (ASX:CIA) has been hit even harder, down a testy 29%. Brazil's Vale, on the other hand, is an outlier, gaining 7.5%, with $211m capped Fenix Resources (ASX:FEX), a small Mid West producer with growth ambitions, up 7.7%. Mid-tiers Grange Resources (ASX:GRR) and Mount Gibson Iron (ASX:MGX) are both significantly in the red, though the focus of the latter is squarely on how it uses its cash pile from the waning Koolan Island mine to charter a move into a new operation or commodity via M&A. Singapore iron ore futures are down 0.62% to US$93.95/t on Friday. Rarer than hen's teeth A major move from Perth broker Argonaut this week, initiating coverage on a swag bag of rare earths stocks. One, of course, is Lynas (ASX:LYC), the largest producer outside China via its world class Mt Weld mine near Laverton in WA. "LYC boasts a strong strategic position as being a large ex-China rare earths producer and is benefitting from current trends in critical mineral supply security and potential market bifurcation. LYC is expanding, with its NdPr capacity lifting to 10.5ktpa, which could potentially grow to 12.0ktpa with the build of the US plant," Argonaut's Jon Scholtz said. He's started the firm with a hold and $7.50 price target, a negative return of 13% – too much of the strategic angle (market bifuraction, Trump v Xi, West v China etc.) is already priced into Lynas, with the implied NdPr price in its share of US$100/kg some 80% above spot. Scholtz is more bullish on Iluka Resources (ASX:ILU), opening coverage at a $5.50 PT (50% upside) with a buy rating. The logic is that only its longstanding mineral sands business is priced in, ahead of the construction of the Federal Government supported Eneabba rare earths refinery, while a 20% holding in royalty company Deterra Royalties (ASX:DRR) continues to support ILU's dividend. "The (refinery) positions ILU has a strong strategic player and could see it become a significant rare earth producer ex-China, benefitting from current trends in critical mineral supply security and potential market bifurcation," Scholtz says. Spec buy ratings have also been dropped by George Ross on Brazilian players Meteoric Resources (ASX:MEI) and Brazilian Rare Earths (ASX:BRE). MEI, the owner of the Caldeira ionic clay rare earths project in Minas Gerais, one of a handful of projects Ross says is likely profitable at current rare earths prices, has been initiated at a 22c price target (compared to 14c today), while BRE with its Rocha da Rocha REE and bauxite project has been initiated at a $4.20 PT. It's up 6.3% this morn, while MEI was up slightly after announcing its selection in a Brazilian Development Bank (BNDES) funding initiative. The ASX 300 Metals and Mining index fell 0.24% over the past week. Which ASX 300 Resources stocks have impressed and depressed? Making gains Chalice Mining (ASX:CHN) (PGEs) +19.8% Patriot Battery Metals (ASX:PMT) (lithium) +14.6% Develop Global (ASX:DVP) (copper/zinc/mining services) +9.2% Predictive Discovery (ASX:PDI) (gold) +6.3% Eating losses ioneer (ASX:INR) (lithium) -16.7% IperionX (ASX:IPX) (titanium) -16.4% Ora Banda (ASX:OBM) (gold) -15.2% West African Resources (ASX:WAF) (gold) -7.3% Chalice Mining rose close to 20% as platinum prices surged. Check out our rundown on what's going on in this week's Ten Bagger with John Forwood. A favourite in the beaten down lithium space of Argonaut Funds Management's David Franklyn, Patriot rose on testwork showing the presence of pollucite as the host mineral of its potential high-grade caesium by-product at the Shaakichiuwaanan lithium project in Canada's James Bay region.
Sky News AU
2 hours ago
- Sky News AU
NSW Premier Chris Minns confirms talks to save Australia's biggest aluminium producer Tomago amid crippling power bills
The NSW government is in discussions to stave off the potential collapse of the nation's largest aluminium smelter as it struggles with crippling power bills and poor availability of renewable energy. Rio Tinto-owned Tomago, located north of Newcastle, is reportedly seeking billions of dollars in public funds to prevent collapse. The producer uses about 10 per cent of NSW's power supply and makes about 37 per cent of Australia's primary aluminium. Its collapse could lead to more than 1,000 people losing their jobs, while 5,000 indirect workers could suffer. NSW Premier Chris Minns on Thursday stressed Tomago was a 'big employer in NSW, it's a dynamic part of the state, the Hunter and manufacturing is a big part of its future'. 'It's difficult for me to speculate about what the next steps are,' Mr Minns told reporters. 'In order for us to have an effective intervention, we need to have commercial discussions with the owners and operators of (Tomago). That's what we're doing.' Tomago executives have reportedly asked the NSW and federal governments for assistance amid crippling power prices and as cost-effective and consistent renewable alternatives remain largely unavailable. Rio Tinto's chief executive Jakob Stausholm earlier this year flagged concerns about the producer's electricity costs where he warned power price contracts beyond 2028 would render Tomago unviable. The Premier acknowledged there remains 'challenges when it comes to big industries in manufacturing like aluminium and steel'. He cited the soaring energy costs which hurt Australian manufacturers, but also noted the Trump Administration's decision to hit foreign-made steel and aluminium with a 50 per cent tariff. 'Part of it is energy costs, there's no doubt about it, part of it is also rapid and dramatic changes to the global trading system, particularly when it comes to (the United States') decision to slap initially a 50 per cent then 10 per cent hit on inbound steel and aluminium,' Mr Minns said. 'It may well be Australian aluminium and Australian steel is used domestically, or used in other markets across south-east Asia, South America and other places. 'The problem is that if Chinese steel and Chinese aluminium move to a third country and are dumped on another market, even if it's not Australia, it affects our trading partners. 'It's a complicated web, it's probably not going to be solved overnight. But we recognise it's an important employer, and we are having discussions with the owners.' Tomago's struggle with power bills comes as the Albanese government has vowed to make the nation a 'renewable energy superpower' with an energy mix of 82 per cent renewables by 2030 and green energy driving local manufacturing. Labor is looking to boost this through production tax credits for leading Australian aluminium smelters, including Tomago, and give $2 billion back to help with the energy transition. A federal government source told the AFR it was involved in discussions with Tomago over the details of the tax credit design as it looks to alleviate the impacts of soaring power costs. The Centre for Independent Studies' senior policy analyst Zoe Hilton said the government's energy policy was crippling the aluminium sector. 'With power prices in Australia rising higher and higher, it simply doesn't make financial sense to run a smelter here,' Ms Hilton told 'Tomago's current predicament is a direct result of state and federal government plans to shift our grid to mostly intermittent energy sources.'
West Australian
2 hours ago
- West Australian
Trade tensions aren't stopping Chinese companies from pushing into the US
Chinese companies are so intent on global expansion that even the biggest stock offering to date on Shanghai's tech-heavy STAR board counts the US as one of its biggest markets, on par with China. Shenzhen-based camera company Insta360, a rival to GoPro, raised 1.938 billion yuan ($417 million) in a Shanghai listing Wednesday under the name Arashi Vision. Shares soared by 274 per cent, giving the company a market value of 71 billion yuan ($15.3 billion). The US, Europe and mainland China each accounted for just over 23 per cent of revenue last year, according to Insta360, whose 360-degree cameras officially started Apple Store sales in 2018. The company sells a variety of cameras — priced at several hundred dollars — coupled with video-editing software. Co-founder Max Richter said in an interview Tuesday that he expects US demand to remain strong and dismissed concerns about geopolitical risks. 'We are staying ahead just by investing into user-centric research and development, and monitoring market trends that ultimately meet the consumer['s] needs,' he said ahead of the STAR board listing. China launched the Shanghai STAR Market in July 2019 just months after Chinese President Xi Jinping announced plans for the board. The Nasdaq-style tech board was established to support high-growth tech companies while raising requirements for the investor base to limit speculative activity. In 2019, only 12 per cent of companies on the STAR board said at least half of their revenue came from outside China, according to CNBC analysis of data accessed via Wind Information. In 2024, with hundreds more companies listed, that share had climbed to more than 14 per cent, the data showed. 'We are just seeing the tip of the iceberg. More and more capable Chinese firms are going global,' said King Leung, global head of financial services, fintech and sustainability at InvestHK. Leung pointed to the growing global business of Chinese companies such as battery giant CATL, which listed in Hong Kong last month. 'There are a lot of more tier-two and tier-three companies that are equally capable,' he said. InvestHK is a Hong Kong government department that promotes investment in the region. It has organised trips to help connect mainland Chinese businesses with overseas opportunities, including one to the Middle East last month. Roborock, a robotic vacuum cleaner company also listed on the STAR board, announced this month it plans to list in Hong Kong. More than half of the company's revenue last year came from overseas markets. At the Consumer Electronics Show in Las Vegas this year, Roborock showed off a vacuum with a robotic arm for automatically removing obstacles while cleaning floors. The device was subsequently launched in the US for $US2600 ($4020). Other consumer-focused Chinese companies also remain unfazed by heightened tensions between China and the US. In November, Chinese home appliance company Hisense said it aimed to become the top seller of television sets in the US in two years. And last month, China-based Bc Babycare announced its official expansion into the US and touted its global supply chain as a way to offset tariff risks. Chinese companies have been pushing overseas in the last several years, partly because growth at home has slowed. Consumer demand has remained lackluster since the COVID-19 pandemic. But the expansion trend is now evolving into a third stage in which the businesses look to build international brands on their own with offices in different regions hiring local employees, said Charlie Chen, managing director and head of Asia research at China Renaissance Securities. He said that's a change from the earliest years when Chinese companies primarily manufactured products for foreign brands to sell, and a subsequent phase in which Chinese companies had joint ventures with foreign companies. Insta360 primarily manufactures out of Shenzhen, but has offices in Berlin, Tokyo and Los Angeles, Richter said. He said the Los Angeles office focuses on services and marketing — the company held its first big offline product launch in New York's Grand Central Terminal in April. Chen also expects the next phase of Chinese companies going global will sell different kinds of products. He pointed out that those that had gone global primarily sold home appliances and electronics, but are now likely to expand significantly into toys. Already, Beijing-based Pop Mart has become a global toy player, with its Labubu figurine series gaining popularity worldwide. Pop Mart's total sales, primarily domestic, were 4.49 billion yuan in 2021. In 2024, overseas sales alone surpassed that to hit 5.1 billion yuan, up 373 per cent from a year ago, while mainland China sales climbed to 7.97 billion yuan. 'It established another Pop Mart versus domestic sales in 2021,' said Chris Gao, head of China discretionary consumer at CLSA. The Hong Kong-listed retailer doesn't publicly share much about its global store expansion plans or existing locations, but an independent blogger compiled a list of at least 17 US store locations as of mid-May, most of which opened in the last two years. The toy company has been 'very good' at developing or acquiring the rights to characters, Gao said. She expects its global growth to continue as Pop Mart plans to open more stores worldwide, and as consumers turn more to such character-driven products during times of stress and macroeconomic uncertainty. CNBC
