Shares steady, yen up as markets unfazed by Japanese politics
SYDNEY/LONDON (Reuters)European shares held steady and the yen firmed on Monday, as markets shrugged off the Japanese ruling coalition's defeat in upper house weekend elections and turned to focus on this week's US tech earnings and European Central Bank policy meeting.Investors were also hoping for some progress in trade talks ahead of US President Donald Trump's August 1 tariff deadline, with US Commerce Secretary Howard Lutnick still confident a deal could be reached with the European Union.There were reports Trump and Chinese leader Xi Jinping were closer to arranging a meeting, though likely not until October at the earliest. European Commission President Ursula von der Leyen will meet Xi on Thursday.The pan-European benchmark STOXX 600 index was flat, while the UK's blue-chip FTSE 100 was up 0.1%. The euro was 0.1% higher at $1.163950.Market focus was on weekend news out of Japan, where the ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba's grip on power as a tariff deadline looms.Ishiba vowed to stay on, which along with a market holiday, limited the reaction. The yen was 0.5% firmer at 148.065 to the dollar and up 0.3% against the euro."The loss was within the range of expectations, and actually the outlook was even more pessimistic," said Nissay Research Institute chief economist Tsuyoshi Ueno."In terms of negotiations with the US, it is easy to doubt whether a government with such a weak foundation is reliable as a negotiating partner," he added. "For the Bank of Japan, if there is political instability, it will be difficult to raise interest rates, and pressure on the yen will continue."The BOJ still has a bias to raise rates further, but markets imply little chance of a move until late October.While the Nikkei was shut, futures traded at 39,885, up on the cash close of 39,819.
MEGA CAPS KICK OFF S&P 500 futures edged 0.2% higher, while Nasdaq futures were up 0.3%. U.S. indexes are already around record highs in anticipation of more solid quarterly earnings reports.Markets are gearing up for a host of big tech company results this week, including Google owner Alphabet, Tesla and IBM."They are going to be key for sentiment because frankly there's not a lot else to drive things," said Michael Brown, senior research strategist at Pepperstone."We saw the banks deliver decent results last week, so you'd certainly be looking for the big tech names to keep up with that to reinforce the bull case (for equities)," he said.Investors also expect upbeat news for defence groups RTX , Lockheed Martin and General Dynamics. Higher government spending around the globe has seen the S&P 500 aerospace and defence sector rise 30% this year, while defence stocks in Europe have also hit record highs.In tech news, Microsoft issued an alert about "active attacks" on server software used by government agencies and businesses, urging customers to download security updates.Elsewhere, euro zone government bond yields eased ahead of euro zone PMI data and the European Central Bank meeting later this week, at which it is expected to leave rates at 2% following a string of cuts.The euro dipped 0.5% last week, moving off a recent near-four-year top of $1.1830. The dollar index was a fraction lower at 98.306.US Treasury yields fell, leaving the yield on the benchmark 10-year note down 4.5 basis points at 4.286%. Bonds got a boost late last week after Federal Reserve Governor Christopher Waller repeated his call for a rate cut this month.Most of his colleagues, including Chair Jerome Powell, have argued a pause is warranted to judge the inflationary impact of tariffs and markets imply almost no chance of a move in July. A September cut is put at 61%, rising to 80% for October.Powell's reticence on rates has drawn the ire of Trump who threatened to fire the Fed chief, before backing down. The spectre of a potential political appointee who would seek to ease policy sharply has investors on edge.
In commodity markets, gold firmed 0.5% to $3,365 an ounce , with all the recent action in platinum, which last week hit its highest since August 2014.
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Gulf Today
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Less selection, More prices
With summer in full swing in the United States, retail executives are sweating a different season. It's less than 22 weeks before Christmas, a time when businesses that make and sell consumer goods usually nail down their holiday orders and prices. But President Donald Trump's vacillating trade policies have complicated those end-of-year plans. Balsam Hill, which sells artificial trees and other decorations online, expects to publish fewer and thinner holiday catalogs because the featured products keep changing with the tariff rates the president sets, postpones and revises. 'The uncertainty has led us to spend all our time trying to rejigger what we're ordering, where we're bringing it in, when it's going to get here,' Mac Harman, CEO of Balsam Hill parent company Balsam Brands, said. 'We don't know which items we're going to have to put in the catalog or not.' Months of confusion over which foreign countries' goods may become more expensive to import has left a question mark over the holiday shopping season. US retailers often begin planning for the winter holidays in January and typically finalize the bulk of their orders by the end of June. The seesawing tariffs already have factored into their calculations. The consequences for consumers? Stores may not have the specific gift items customers want come November and December. Some retail suppliers and buyers scaled back their holiday lines rather than risking a hefty tax bill or expensive imports going unsold. Businesses still are setting prices but say shoppers can expect many things to cost more, though by how much depends partly on whether Trump's latest round of 'reciprocal' tariffs kicks in next month. The lack of clarity has been especially disruptive for the US toy industry, which sources nearly 80% of its products from China. American toy makers usually ramp up production in April, a process delayed until late May this year after the president put a 145% tariff on Chinese goods, according to Greg Ahearn, president and CEO of the Toy Association, an industry trade group. The US tariff rate may have dropped significantly from its spring high - a truce in the US-China trade war is set to expire on Aug. 12 - but continues to shape the forthcoming holiday period. Manufacturing activity is way down from a year ago for small- and medium-sized US toy companies, Ahearn said. The late start to factory work in China means holiday toys are only now arriving at US warehouses, industry experts said. A big unknown is whether tariffs will keep stores from replenishing supplies of any breakout hit toys that emerge in September, said James Zahn, editor-in-chief of the trade publication Toy Book. In the retail world, planning for Christmas in July usually involves mapping out seasonal marketing and promotion strategies. Dean Smith, who co-owns independent toy stores JaZams in Princeton, New Jersey, and Lahaska, Pennsylvania, said he recently spent an hour and a half running through pricing scenarios with a Canadian distributor because the wholesale cost of some products increased by 20%. Increasing his own prices that much might turn off customers, Smith said, so he explored ways to 'maintain a reasonable margin without raising prices beyond what consumers would accept.' He ordered a lower cost Crazy Forts building set so he would have the toy on hand and left out the kids' edition of the Anomia card game because he didn't think customers would pay what he would have to charge. 'In the end, I had to eliminate half of the products that I normally buy,' Smith said. Hilary Key, owner of The Toy Chest in Nashville, Indiana, said she tries to get new games and toys in early most years to see which ones she should stock up on for the winter holidays. This year, she abandoned her product testing for fear any delayed orders would incur high import taxes. Meanwhile, vendors of toys made in China and elsewhere bombarded Key with price increase notices. For example, Schylling, which makes Needoh, Care Bear collectibles and modern versions of nostalgic toys like My Little Pony, increased prices on orders by 20%, according to Key. All the price hikes are subject to change if the tariff situation changes again. Key worries her store won't have as compelling a product assortment as she prides herself on carrying. 'My concern is not that I'll have nothing, because I can bring in more books. I can bring in more gifts, or I can bring in just things that are manufactured in other places,' she said. 'But that doesn't mean I'm going to have the best stock for every developmental age, for every special need.' The retail industry may have to keep taking a whack-a-mole approach to navigating the White House's latest tariff ultimatums and temporary reprieves. Last week, the president again reset the rates on imports from Brazil, the European Union, Mexico, and other major trading partners but said they would not take effect until Aug. 1. The brief pause should extend the window importers have to bring in seasonal merchandise at the current baseline tariff of 10%. The Port of Los Angeles had the busiest June in its 117-year history after companies raced to secure holiday shipments, and July imports look strong so far, according to Gene Seroka, the port's executive director. 'In my view, we're seeing a peak season push right now to bring in goods ahead of potentially higher tariffs later this summer,' Seroka said Monday. The pace of port activity so far this year reflects a 'tariff whipsaw effect' - imports slowing when tariffs kick in and rebounding when they're paused, he said. 'For us consumers, lower inventory levels, fewer selections and higher prices are likely as we head into the holidays.' Smith, who co-owns the two JaZams stores with his partner, Joanne Farrugia, said they started placing holiday orders two months earlier than usual for 'certain items that we felt were essential for us to have at particular pricing.' They doubled their warehouse space to store the stockpile. But some shoppers are trying to get ahead of higher prices just like businesses are, he said. He's noticed customers snapping up items that will likely be popular during the holidays, like Jellycat plush toys and large stuffed unicorns and dogs. Any sales are welcome, but Smith and Farrugia are wary of having to restock at a higher cost. 'We're just trying to be as friendly as we can to the consumer and still have a product portfolio or profile that is gonna meet the needs of all of our various customers, which is getting more and more challenging by the day,' Smith said. Balsam Brands' Harman said he's had to resign himself to not having as robust a selection of ornaments and frosted trees to sell as in years' past. Soon, it will be too late to import meaningful additions to his range of products. 'Our purpose as a company is to create joy together, and we're going to do our very best to do that this year,' Harman said. 'We're just not going to have a bunch of the items that consumers want this year, and that's not a position we want to be in.' Associated Press
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Netanyahu, Trump appear to abandon Gaza ceasefire negotiations with Hamas
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The remarks appeared to leave little to no room, at least in the short term, to resume negotiations for a break in the fighting, at a time when international concern is mounting over worsening hunger in war-shattered Gaza. French President Emmanuel Macron, responding to the deteriorating humanitarian situation, announced that Paris would become the first major Western power to recognise an independent Palestinian state. US President Donald Trump gestures while boarding Air Force One, as he departs for Scotland, at Joint Base Andrews, Maryland, US, on Friday. Reuters Britain and Germany said they were not yet ready to do so but later joined France in calling for an immediate ceasefire. British Prime Minister Keith Starmer said his government would recognise a Palestinian state only as part of a negotiated peace deal. Trump dismissed Macron's move. "What he says doesn't matter," he said. "He's a very good guy. I like him, but that statement doesn't carry weight." Israel and the United States withdrew their delegations on Thursday from the ceasefire talks in Qatar, hours after Hamas submitted its response to a truce proposal. Sources initially said on Thursday that the Israeli withdrawal was only for consultations and did not necessarily mean the talks had reached a crisis. But Netanyahu's remarks suggested Israel's position had hardened overnight. US envoy Steve Witkoff said Hamas was to blame for the impasse, and Netanyahu said Witkoff had got it right. Senior Hamas official Basem Naim said on Facebook that the talks had been constructive, and criticised Witkoff's remarks as aimed at exerting pressure on Israel's behalf. "What we have presented - with full awareness and understanding of the complexity of the situation - we believe could lead to a deal if the enemy had the will to reach one," he said. Mediators Qatar and Egypt said there had been some progress in the latest round of talks. They said suspensions were a normal part of the process and they were committed to continuing to try to reach a ceasefire in partnership with the US. A member of the Chilean Palestinian community takes part in a caravan in support of Palestinians, in Santiago, on Friday. AP The proposed ceasefire would suspend fighting for 60 days, allow more aid into Gaza, and free some of the 50 remaining hostages held by fighters in return for Palestinian prisoners jailed in Israel. It has been held up by disagreement over how far Israel should withdraw its troops and the future beyond the 60 days if no permanent agreement is reached. Itamar Ben-Gvir, the far-right national security minister in Netanyahu's coalition, welcomed Netanyahu's step, calling for a total halt of aid to Gaza and complete conquest of the enclave, adding in a post on X: "Total annihilation of Hamas, encourage emigration, (Jewish) settlement." 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AFP Gaza medical authorities said nine more Palestinians had died over the past 24 hours from malnutrition or starvation. Dozens have died in the past few weeks as hunger worsens. Israel says it has let enough food into Gaza and accuses the United Nations of failing to distribute it, in what the Israeli foreign ministry called on Friday "a deliberate ploy to defame Israel". The United Nations says it is operating as effectively as possible under Israeli restrictions. United Nations agencies said on Friday that supplies were running out in Gaza of specialised therapeutic food to save the lives of children suffering from severe acute malnutrition. United Nations aid chief Tom Fletcher also has demanded that Israel provide evidence for its accusations that staff with the UN Office for the Coordination of Humanitarian Affairs were affiliated with Hamas, according to a letter seen by Reuters. The ceasefire talks have been accompanied by continuing Israeli offensives. Palestinian health officials said Israeli airstrikes and gunfire had killed at least 21 people across the enclave on Friday, including five killed in a strike on a school sheltering displaced families in Gaza City. In the city, residents carried the body of journalist Adam Abu Harbid through the streets wrapped in a white shroud, his blue flak jacket marked PRESS draped across his body. He was killed overnight in a strike on tents housing displaced people. Mahmoud Awadia, another journalist attending the funeral, said the Israelis were deliberately trying to kill reporters. Israel denies intentionally targeting journalists. Israel launched its assault on Gaza after Hamas-led fighters stormed Israeli towns near the border, killing some 1,200 people and capturing 251 hostages on October 7, 2023. Reuters
Gulf Today
2 hours ago
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Recognising Palestinian state before it is established may be 'counterproductive,' says Italian PM Meloni
Italy's Prime Minister Giorgia Meloni said on Saturday that recognising the State of Palestine before it is established could be counterproductive. "I am very much in favour of the State of Palestine but I am not in favour of recognising it prior to establishing it," Meloni told Italian daily La Repubblica. "If something that doesn't exist is recognised on paper, the problem could appear to be solved when it isn't," Meloni added. France's decision to recognise a Palestinian state at the United Nations General Assembly in September drew condemnation from Israel and the United States, amid the war in Gaza between Israel and Palestinian militant group Hamas. Italian Prime Minister Giorgia Meloni speaks during the Italy-Algeria summit at Villa Doria Pamphilj in Rome, Italy. Reuters On Friday, Italy's foreign minister said recognition of a Palestinian state must occur simultaneously with recognition of Israel by the new Palestinian entity. A German government spokesperson said on Friday that Berlin was not planning to recognise a Palestinian state in the short term and said its priority now is to make "long-overdue progress" towards a two-state solution. Reuters
