Source: CNBCTV18
The Bank of Russia’s governor, who was praised for helping save the country’s economy after the invasion of Ukraine, is facing mounting pressure to reverse course on record-high borrowing costs amid worries over their toll on business.
The government expects Elvira Nabiullina to reduce the benchmark rate as the effect on the budget and civilian industries becomes more apparent, three officials familiar with the thinking in the Kremlin said, declining to be identified as the information is not public. Some are calling for the cut to come at the next central bank meeting on Friday.
Those comments signal a shift in the government’s position since November, when Finance Minister Anton Siluanov backed Nabiullina’s rate hikes, saying that bringing down inflation was the priority.
Hong Kong’s growth outlook was cut by a regional organization, which urged the city to diversify its economy and trading partners to counter growing protectionism.
The Asian financial hub is set to expand 1.9% in 2025 from the prior year, according to the ASEAN+3 Macroeconomic Research Office (AMRO), a step down from the group’s 2.4% forecast just last month.
While first-quarter activity proved better than expected, it was largely driven by a frontloading of exports — as companies tried to beat a 90-day tariff pause window — and a boost in tourism. The trade picture is growing uncertain for the rest of the year, though, AMRO analysts said.
The Trump administration is moving to repeal Biden-era curbs blocking oil drilling across most of the mammoth petroleum reserve in Alaska that’s home to an estimated 8.7 billion barrels of recoverable oil.
Interior Secretary Doug Burgum announced the planned policy shift late Sunday at a town hall in Utqiagvik, a village on the Chukchi Sea coast, as he and fellow members of President Donald Trump’s cabinet visit Alaska to promote energy development in the region.
The measure would open up new opportunities for oil and gas development in the 23 million acre National Petroleum Reserve-Alaska, an Indiana-sized parcel in the northwest of the state that was set aside as a source of energy for the Navy a century ago.
Leveraged funds reduced their bullish yen bets even as asset managers turned more positive, underscoring uncertainty over the Japanese currency’s outlook.
Short-term funds funds cut their net long positions in the yen by 12,183 contracts in the week ended May 27, their biggest reduction so far this year, according to Commodity Futures Trading Commission data. Meanwhile, asset managers increased their bullish yen wagers by 3,218 contracts over the same period.
The yen kicked off last week near its strongest level in a month before quickly paring gains amid efforts by Japanese authorities to stem a rout in the bond market. A lack of clarity on the dollar’s direction is also confounding yen traders, with the legal dispute over US President Donald Trump’s tariffs whipsawing the greenback.
Iron ore fell to its lowest level since early May alongside equity markets after President Donald Trump said he would double tariffs on steel and aluminum to help protect American workers.
Futures for the steel-making ingredient fell below $95 a ton on Monday on concerns about an increase in global trade tensions. Trump, who visited a United States Steel Corp. plant on Friday to champion an expected deal between US Steel and Japan’s Nippon Steel Corp., said at the event that the new tariffs would take effect June 4.
“A trade war presents the biggest challenge to the market,” ANZ Group Holdings Ltd. said in a note, adding that any reduction in demand for Chinese steel products could hurt iron ore demand.
OPEC+ is set to continue returning production for another three months, which will help drive oil prices lower, according to Morgan Stanley.
The eight key members in the cartel that had voluntarily cut output in November 2023 announced a fourth consecutive clawing back of those reductions on Saturday. That would mean the full 2.2 million-barrel-a-day decrease would be unwound by October, Morgan Stanley analysts including Martijn Rats said in a June 2 note.
“With this latest announcement, there is little sign that the pace of quota increases is slowing down,” they said. “Higher quota will likely create room for increased production in Saudi Arabia, and to an extent in Kuwait and Algeria. However, we do not expect that quota increases will lead to commensurate production increases for the rest of the ‘Group of 8’.”
Asia-Pacific markets traded mixed after President Donald Trump told US steelworkers late Friday that he will double tariffs on steel imports to 50%, effective from Wednesday.
Japan’s benchmark Nikkei 225 fell 0.89% and the Topix declined 0.65% at the open. South Korea’s Kospi added 0.16% while the small-cap Kosdaq traded flat.
Hong Kong’s Hang Seng index declined 1.66%.
China accused the US of violating their recent trade deal and vowed to take measures to defend its interests, dimming the prospect of an immediate leadership call that Donald Trump wants to have to further bilateral talks.
The Chinese Ministry of Commerce issued a statement on Monday rebuking the US president’s claim that Beijing breached the consensus reached in Geneva last month. The dust-up threatened to upend trade relations even as Trump expressed hope Friday he will speak with Chinese President Xi Jinping, with White House economic adviser Kevin Hassett expecting a call to take place this week.
Beijing accused the US of unilaterally introducing new discriminatory restrictions, including new guidelines on AI chip export controls, curbs on chip design software sales to China and the revocation of Chinese student visas.
Chinese shares traded in Hong Kong fell on Monday, as heightened US-China trade tensions jolted market sentiment.
The Hang Seng China Enterprises Index dropped as much as 2.9%, the most in more than six weeks, led by losses in technology and electric-vehicle companies. The index underperformed all of its Asian peers, with the MSCI Asia Pacific Index down 0.8%. The onshore market is closed for holiday on Monday.
Negotiations between the world’s two largest economies have deteriorated as they accused each other of walking away from the terms of their trade truce last month. President Donald Trump told reporters Friday that China “violated a big part of the agreement” the countries made in Geneva, while expressing confidence that a talk with Chinese President Xi Jinping could ease tensions.
The dollar will tumble to levels last seen during the Covid-19 pandemic by the middle of next year, hit by interest rate cuts and slowing growth, according to predictions by Morgan Stanley.
The US Dollar Index will fall about 9% to hit 91 by around this time next year, strategists including Matthew Hornbach predicted in a May 31 note. The greenback has already weakened this year as trade turmoil weighs on the currency.
“We think rates and currency markets have embarked on sizeable trends that will be sustained — taking the US dollar much lower and yield curves much steeper — after two years of swing trading within wide ranges,” the strategists wrote.
Manufacturing activity across several Asian nations weakened in May as US tariffs and trade uncertainty eroded demand.
In Vietnam, new export orders contracted for a 7th straight month and input costs fell for the first time in about two years, according to S&P Global data published Monday. In Taiwan, output and new export sales all fell for a second month, Indonesia saw the steepest drop in new orders since August 2021, and South Korean manufacturers recorded the deepest decline in output in nearly three years.
Vietnam, Indonesia, Taiwan, Japan and South Korea all recorded a contraction in overall activity, with the Purchasing Managers Index remaining below the 50-no change mark. Activity in the Philippines, meanwhile, grew at a slower pace.
Gold rose — after falling by 2% last week – as an increase in geopolitical and trade tensions revived demand for haven assets.
Bullion climbed as much as 0.8% in Asia after Ukraine staged a dramatic series of drone strikes across Russia on Sunday, hitting airfields as far away as eastern Siberia. Around the same time, Moscow launched one of its longest attacks against Kyiv, ahead of crucial peace talks this week.
President Donald Trump also stoked more worries over global trade at the weekend, vowing to double import tariffs on foreign steel and aluminum to 50%, with Canada’s industry minister warning that it would retaliate. There are also signs the US-China truce is at risk after Trump accused Beijing of reneging on an agreement reached last month.
Oil advanced after geopolitical and trade risk increased over the weekend, and as OPEC+ hiked production less than some had feared.
Brent crude for August rose as much as 2.1% to $64.09 a barrel, after losing 2.2% last week, while West Texas Intermediate was around $62. Ukraine struck air bases deep in Russia, Iran criticized a report showing its growing stockpiles of enriched uranium, and President Donald Trump said he would be increasing tariffs on steel and aluminum in the latest twist in the trade wars.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies agreed on Saturday to add 411,000 barrels a day of supply in July. The decision to match increases for May and June was in line with expectations, but defied reports late last week that the group was considering an even bigger volume.
Ukraine staged a dramatic series of strikes across Russia, deploying drones hidden in trucks deep inside the country to hit strategic airfields as far away as eastern Siberia.
Around the same time, Moscow launched one of its longest drone and missile attacks against Kyiv, escalating tensions ahead of crucial peace talks this week.
More than 40 Russian aircraft, including the Tu-95 and Tu-22 M3 long-range bombers capable of deploying conventional and nuclear weapons as well as the A-50, are reported to have been damaged in the operation on Sunday, an official in Ukraine’s Security Service said on condition of anonymity as the details are not public. Ukraine’s Security Service chief Vasyl Malyuk led the operation and losses are assessed to be at least $2 billion, the person said.
Here’s what US President Donald Trump told reporters:
Futures on Wall Street are indicating a cautious start so far for the new trading month.
The Dow futures are down over 100 points, while the S&P 500 and Nasdaq futures are down 20 points and 90 points respectively.
Futures on Wall Street have begun trading on Sunday evening US time on a negative note amidst rising uncertainties on trade and geopolitical tensions.
Both US and China traded barbs over violating the Geneva trade agreement. Rising tensions between Russia and Ukraine are also a negative development.
Watch this space for all the live updates.
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