Bloomberg
“Trade War Sends Commodities to Biggest Drop in 5 Months.”
The brewing trade war between China and the U.S. is claiming commodity markets as one of its first victims.
The Bloomberg Commodities Index, a measure of 26 raw materials, lost 3 percent this week, the most since February. The losses stand out in a week when other risk assets, like emerging-market stocks, were in the green.
Soybeans have been hardest hit, with pricing falling to the lowest in a decade as China’s duties on U.S. supplies took effect. Metal and energy markets were also caught by fears that the trade spat will set off a global economic slowdown. Copper prices sank to a one-year low and oil is on track for the worst week in five months.
China, the biggest consumer of everything from copper to coal, has warned the proliferation of tariffs could cause a global recession.
Traders are also closely studying data from China for evidence of a slowdown. On Friday, reports showed weaker-than-expected growth in imports, and indicators of investment, factory output and retail sales growth all slowed in May.
Oil futures in New York plunged 5 percent to $70.07 a barrel this week. Short-term bearish signals for oil prices on the supply side include Libya restarting a key oil field that had been shut since February, tempering the International Energy Agency’s warning that spare capacity may be stretched to the limit.
Often regarded as an economic bellwether, copper has taken a beating in the past month. Since June 7, prices have tumbled 16 percent, marking one of the fastest and deepest selloffs in years.
Reuters
“China’s trade surplus with U.S. hits record as exporters rush to beat tariffs.”
China’s trade surplus with the United States swelled to a record in June as its overall exports grew at a solid pace, a result that could further inflame a bitter trade dispute with Washington.
But signs exporters were rushing shipments before tariffs went into effect in the first week of July suggest the spike in the surplus was a one-off, with analysts expecting a less favorable trade balance for China in coming months as duties on exports start to bite.
The data came after the administration of U.S. President Donald Trump raised the stakes in its trade row with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items.
China’s trade surplus with the United States, which is at the center of the tariff tussle, widened to a record monthly high of $28.97 billion, up from $24.58 billion in May, according to Reuters calculations based on official data going back to 2008.
Trump, who has demanded Beijing cut the trade surplus, could use the latest result to further ratchet up pressure on China after both sides last week imposed tit-for-tat tariffs on $34 billion of each other’s goods. Washington has warned it may ultimately impose tariffs on more than $500 billion worth of Chinese goods – nearly the total amount of U.S. imports from China last year.
China’s June exports rose 11.3 percent from a year earlier, China General Administration of Customs reported, beating forecasts for a 10 percent increase according to the latest Reuters poll of 39 analysts, and down from a 12.6 percent gain in May.
BBC News
“Donald Trump: US-UK relationship is ‘highest level of special’.”
Donald Trump has insisted the US-UK relationship is «the highest level of special», hours after he told the Sun Theresa May’s Brexit plan would kill a trade deal between the countries.
Speaking alongside the PM, Mr Trump said Brexit was an «incredible opportunity» and «whatever» the UK did after it left the EU was «OK with me». Mrs May said they had discussed plans for an «ambitious» trade agreement. Thousands of people are protesting in central London against his visit.
A large balloon, portraying the president as a baby, has been floated in Parliament Square as part of the demonstrations. Other protests are due to take place across the UK on Friday and Saturday.
At a news conference following talks at the prime minister’s country residence, Chequers, Mr Trump said: «The relationship between our two nations is indispensable to the cause of liberty,jjustice, and peace.» Mr Trump described Brexit as a «very tough situation… between the borders and the entries into the countries and all of the things», saying: «The only thing I ask is that she work it out so that we can have very even trade».
Mrs May said the US was «keen» to do a deal with the UK, adding: «We will do a trade deal with them and with others around the rest of the world». She maintained the government’s Brexit agreement «delivers» on the referendum vote.
Bloomberg
“Donald Trump: US-UK relationship is ‘highest level of special’.”
Investors in Turkish assets will be glad the week is coming to an end. The Turkish lira, which touched a record low against the dollar Thursday, headed for its biggest weekly slump in almost a decade, and was the worst-performing global currency. The benchmark Borsa Istanbul 100 Index fell the most since a foiled coup in 2016, with the selloff dragging price-to-estimated earnings valuations to the lowest in more than nine years. The 10-year government bond yield surged almost 100 basis points this week.
Turkish assets came under pressure this week after Turkish President Recep Tayyip Erdogan appointed his son-in-law Berat Albayrak as the country’s economy chief. Erdogan replaced market-friendly names, stoking unease among investors and leading to an erosion in confidence in the country’s ability to avoid a potential hard landing in the economy.
The speculation over the central bank’s independence and decision-making mechanism was “unacceptable,” Turkey’s new Treasury and Finance Minister Albayrak said on Thursday, state-run Anadolu Agency reported. The policy maker would do whatever market conditions require, he was cited as saying.
While Albayrak made constructive comments aimed at reassuring investors, “confidence among investors is still low due to prevailing concerns about unorthodox economic policies,” said Piotr Matys, an emerging-market strategist at Rabobank. “Should Mr Albayrak deliver on his fiscal pledges and the pace of economic reforms accelerates, his credibility among foreign investors will increase accordingly.”
Turkey’s lira was little changed at 4.855 per dollar as of 11:58 a.m. in Istanbul. The currency has weakened almost 6 percent this week, the most since October 2008. The BIST 100 Index rose 0.9 percent, still down more than 8 percent since July 6. The yield on 10-year bonds fell 19 basis points to 18.36 percent, paring its increase this week to 93 basis points.