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Market Talk Roundup: Latest on Trump, U.S. Politics

26 Jul 2018 9:11 am

The latest Market Talks covering President Donald Trump and U.S. politics. Published exclusively on Dow Jones Newswires throughout the day.

0511 ET - German car makers welcome the news that the U.S. and the EU have agreed to hold off on further tariffs and work to reduce trade barriers. "This signal of de-escalation is important and a major step forward following developments in recent weeks. There is now a real opportunity to prevent additional tariffs or even a trade war between the U.S. and the EU," says Bernhard Mattes, head of German automotive industry association VDA. German manufacturers produce more than 800,000 vehicles a year in the U.S. and more than half of those vehicles are exported to Europe, Asia and the rest of the world, he said. "It is therefore all the more important that the customs dispute be settled comprehensively, including with other countries involved, such as China or Mexico and Canada," he said. (max.bernhard@dowjones.com; @mxbernhard)

0503 ET - The DXY index, which weighs the dollar against 16 other currencies, is down by 0.2% at 94.22 on Thursday. ING says given that "the U.S. dollar had been the big winner" of the trade war disputes "it's not all too surprising to see the currency lower across the board on the back of easing global trade war risks." The dollar was trading at a 2-3% premium against most currencies relative to interest rate differentials and global risk sentiment, ING says. U.S. President Trump and European Commission President Jean-Claude Juncker agreed on Wednesday to hold off on further tariffs while they will negotiate to eliminate the tariffs imposed earlier in the year. (olga.cotaga@wsj.com; @OlgaCotaga)

0305 ET - The threat of the U.S. imposing car-import tariffs hadn't been priced in majorly in the foreign-exchange market, hence the subdued reaction to President Trump and Jean-Claude Juncker joint announcement from Wednesday. "Despite positive headlines following the meeting between Trump and Juncker, markets have a mildly risk-off tone," RBC says. Both parties have agreed to not introduce any new tariffs, including for autos, while negotiations are underway. "This is more positive outcome than many had expected," says RBC. Despite that, USD/JPY is down 0.3% at 110.65 and EUR/USD is flat. (olga.cotaga@wsj.com; @OlgaCotaga)

0258 ET - The U.K.'s FTSE 100 index is expected to open 5 points higher at 7,663, according to London Capital Group, tracking gains in U.S. stocks, which rallied after trade fears de-escalated after a joint announcement from U.S. President Trump and the European Union's Jean-Claude Juncker. The two said they will start negotiations to eliminate all tariffs and trade barriers on industrial goods between the U.S and the EU. Euro and sterling are up against the dollar, with the market set to focus on the European Central Bank meeting. Royal Dutch Shell and Diageo shares may be in focus as both companies launch share buybacks. Other stocks to watch are Anglo American, Sky and British American Tobacco, all announcing results today. (lorena.ruibal@wsj.com; @lorena_rbal)

0243 ET - Oil markets will probably have to brace for bigger supply losses than during prior US sanctions regimes against Iran, says RBC commodity strategy chief Helima Croft. That's "because the Trump administration is prepared to be much-more aggressive in using the sanctions." She sees the White House's aim being "to basically take Iran out of the market. That was not the goal of the Obama administration." She estimates that 600,000-700,000 barrels/day of oil won't reach the market by 4Q and likely top 1 million in 1Q. The sanctions will be phased in through November. (biman.mukherji@wsj.com)

2139 ET - So far US President Trump has been positive for share markets, but this year the focus is increasingly shifting to populist policies with greater risk for investors, says Shane Oliver, chief economist at AMP Capital Markets. Key risks relate to trade conflict and the expanding U.S. budget deficit, although the latter is more a risk for when the U.S. economy turns down next. The best approach for investors in relation to Trump is to turn down the noise given the often contradictory and confusing news flow he generates, Oliver says. (james.glynn@wsj.com; @JamesGlynnWSJ)

1757 ET - Canada intends to make its case before Commerce Department that the country's uranium exports don't pose a national-security threat to the US, Foreign Minister Chrystia Freeland tells reporters during a teleconference from Mexico. The Trump administration unveiled plans to probe uranium imports last week to determine whether tariffs on national-security grounds are required. Freeland said "having access to a safe and reliable supplier" of uranium like Canada, which happens to be a NATO and Norad ally, "is very much in the national security interest of the US." Trade watchers view the uranium probe as another way for the Trump administration to exert pressure on Canada to make concessions at the Nafta talks. Canada is the top foreign supplier of uranium to the US. (paul.vieira@wsj.com; @paulvieira)

1743 ET - Speaking to reporters via teleconference from Mexico, Canadian Foreign Minister Chrystia Freeland applauds efforts by the Trump administration and EU to take a step back from a full-scale trade row. The US and EU agreed to hold off on proposed car tariffs. The two countries also pledged to resolve their dispute over tariffs on steel and aluminum, which the US imposed on Europe and other allies, like Canada, on national-security grounds. "Any act taken by the US administration to pull back from imposing these [national-security] tariffs is a really good thing," she says, without elaborating on what effect that might have on Nafta talks. (paul.vieira@wsj.com; @paulvieira)

1710 ET - Copper prices bounce after the EU and US indicate they are coming to an agreement to de-escalate their recent trade dispute. President Trump says the two will resolve steel and aluminum tariffs, along with plans to ramp up trade in soybeans, liquefied natural gas and other goods. Copper futures fall to the lowest point in over a year as tensions between the US and trading partners increased, with market participants betting that economic growth and industrial demand would suffer. Comex September copper futures rise 2% to $2.867 a pound in after-hours trading, with platinum and palladium also climbing. Gold, which often finds buyers at times of heightened tension, inches lower. (benjamin.parkin@wsj.com; @b_parkyn)

1651 ET - The loonie strengthens against the US dollar amid easing trade concerns and rising oil prices. The US dollar was recently down 0.9% at C$1.3042, its lowest since last week. The loonie will likely continue to gain if there is positive sentiment Thursday when Canada and Mexico meet to discuss Nafta, analysts say. (orla.mccaffrey@wsj.com; @Orla_McCaffrey)

1646 ET - Canadian government bond prices fall after the EU agreed to make certain tariff concessions to avoid an all-out trade war with the US, WSJ reported. Yields on the benchmark 10-year Treasury note were recently at 2.280% from 2.227% on Tuesday. Yields, which rise as bond prices fall, had risen slowly throughout the day before the afternoon report on trade, when they reached their highest levels in more than a month. "This is definitely constructive news for Canada on the trade front," TD Securities says. But the news must be taken with caution, the firm says, as Nafta talks are still ongoing. (orla.mccaffrey@wsj.com; @Orla_McCaffrey)

1635 ET - President Trump says the EU will start buying more US soybeans "almost immediately," WSJ reports, alongside other concessions designed to ease the trade dispute. The EU is the world's second largest buyer of oilseeds after China, which this month introduced tariffs on US soybean imports. But the 15.3M metric tons the USDA expects the EU to bring in 2018-19 is modest compared with China's 95M. That means increased business with EU alone likely won't be enough to offset the lost demand from China, which has shifted purchases to Brazil. South American prices have surged as American prices sagged, giving European importers all the more reason to shop in the US. (benjamin.parkin@wsj.com; @b_parkyn)

(END) Dow Jones Newswires

July 26, 2018 05:11 ET (09:11 GMT)

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