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US. and Chinese will Try to Ease Trade Tensions

 

US. and Chinese officials will try to ease trade tensions and bridge differences on Wednesday in annual economic talks that trade experts say will likely yield some small-scale agreements to grant U.S. firms more access to some of China’s markets.

But the talks are not expected to solve larger problems, such as U.S. complaints about China’s excess capacity in steel and aluminum and subsidies for state-owned enterprises, nor China’s complaints about U.S. refusals to sell Beijing advanced technology products.


China agrees to open up its markets more and which the U.S. can claim as victories,“ said Eswar Prasad, a professor of trade policy at Cornell University and a former China division chief at the International Monetary Fund.

U.S. Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross said on Tuesday they would be looking for China to agree to concrete steps with specific delivery dates to open markets, including more access for U.S. firms in the financial services sector.


The talks, rebranded by the Trump administration as the "U.S.-China Comprehensive Economic Dialogue,” come at the end of a 100-day effort by the two countries to craft an economic plan aimed at reducing the U.S. goods trade deficit with China, a gap that reached $347 billion last year and was up 5.3 percent through May this year.

China agreed in May to resume purchases of U.S. beef for the first time in 14 years and made commitments to buy U.S. liquefied natural gas and allow U.S. card payment services companies to operate in China. But while U.S. beef is now available in Chinese shops, it has taken longer for the other promised steps to be implemented.


Chinese Vice-Premier Wang Yang said on Tuesday that China has some concerns of its own to air at the talks, including “outdated” U.S. export controls for high-technology products.

In remarks to a business lunch, he said such Chinese purchases would reduce the U.S. trade deficit, noting that China imported $227 billion worth of integrated circuits last year, but only 4 percent of that came from the United States.


Prasad said the United States would be better served by focusing less on near-term steps but pushing China for bigger reforms such as opening major portions of its services sector to U.S. competition, relaxing corporate ownership rules, reducing subsidies for state-owned enterprises and clamping down on intellectual property theft.

Some U.S. officials said China was likely to push to turn the 100-day plan into a year-long effort, partly because China is viewed as unlikely to launch bolder economic reforms before its 19th Party Congress, a once-in-five-years event to set leadership, takes place this fall.


The annual summer dialogues, first launched in 2006, have focused in the past on China’s currency practices and what was once viewed as an undervalued yuan. But that issue has faded after the U.S. Treasury declined to follow through on Trump’s campaign threats to name Beijing a currency manipulator.

David Dollar, a former Treasury attache to Beijing who is now a senior fellow at the Brookings Institution, said that as in the past, the meeting is likely to focus more on process than substance, with the same complaints airing year after year.

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Oil Price Surge Above $46 as Demand Increases

Oil prices surge above $46 a barrel as optimism that demand will help shrink supplies outweighed an increase in U.S. rigs drilling for crude.

Futures were little changed in New York, after rising 5.2% last week. Stockpiles will drop at a faster pace worldwide this half of the year as demand rises and OPEC members comply better with an output-cut agreement.

 

While oil advanced last week, prices in New York are still below $50 a barrel on concerns expanded global supplies will offset output curbs by the Organization of Petroleum Exporting Countries and its allies as part of a deal to help re-balance the market.

The group’s output climbed last month to the highest this year as members exempt from the deal Nigeria and Libya pumped more and others slipped in delivering their pledged curbs.

West Texas Intermediate for August delivery was at $46.66 a barrel on the New York Mercantile Exchange, up 12 cents, at 11:37 a.m. in Seoul. Total volume traded was about 47% above the 100-day average. Prices gained $2.31 to $46.54 a barrel last week.

Brent for September settlement added 15 cents, or 0.3%, to $49.06 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 4.7% last week. The global benchmark crude traded at a premium of $2.18 to WTI.

 

The number of active oil rigs in the U.S. rose to 765. It’s the second week of renewed growth after drillers snapped a 23-week stretch of advances at the end of June.

Shale explorers have been the driving force behind a surge in U.S. production, more than doubling the rig count from a low of 316 in May 2016.

 

 

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Uranium Price Forecast to Rise by 40% by the End of 2018

Uranium was the glaring exception amid a broad-based rally in metals and minerals in 2016. The price of U3O8 fell 41% in 2016 with the industry tracker UxC's broker average price hitting 12-year lows below $18 per pound in November.

After top supplier Kazakhstan announced in the second week of January that it's cutting output by 5.2 million pounds, equal to 3% of global production, the price rallied, hitting $26.75 a pound by mid-February.

 

But Japanese utility TEPCO’s declaration of force majeure on a key uranium delivery contract from Cameco Corp., the world's top listed uranium producer, dampened enthusiasm.

And news in April that the US dept of Energy is making cuts to the amount of uranium that it disperses into the market (as much as 1.1m pounds per year less) did little to buoy sentiment, not to mention bad news surrounding nuclear power including the first new reactor to be built in the UK in a generation and risks to the US industry.

Last week Russian state nuclear corporation Rosatom suspended its Mkuju River uranium project in Tanzania for at least three years due to depressed uranium market.

Spot uranium rose to $20.75 this week but remains technically in a bear market, trading down more than 20% from its February peak. Despite the current negativity analysts surveyed in July predict a steady increase in the price from today's levels rising by 40% by the end of next year and over $40 a pound in 2020.

 

 

 

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16 ETFs in Hong Kong Closes Amid Plummeting Demands

Deutsche Bank’s asset management unit is closing multiple exchange traded funds (ETF) in Hong Kong amid low demand. The 16 Deutsche Bank X-trackers ETFs ceased trading who have assets of less than $40 million.

The closures highlight the challenge of operating ETFs in markets where investors have yet to be persuaded by their allure. 

 

While the $4.5 trillion global ETF market is setting new asset records almost every month, Hong Kong is bucking the trend. Investors have pulled money from ETFs this year even as equity prices in the former British colony climb to a two year high.

Hong Kong is at a slower stage of development and client needs are different. Distributing ETFs is harder in Asia and they may not have seen enough demand.  

Hong Kong’s ETF market is hampered by factors including use of a commission based fee model where banks or other distributors receive higher fees for selling active funds rather than ETFs.

Money flowing into U.S. equity ETFs increased by 7.5% or $177.6 billion this year. In Hong Kong, assets dwindled by 6.6%, or $2.3 billion. 

 

The ETF closures include 10 funds on China covering sectors including banks, health care, financials and energy. BlackRock has been shutting down funds in Hong Kong, most recently earlier this year. 

Six of those had also tracked sectors on the CSI300 index. BlackRock, the world’s largest money manager, and Deutsche Bank still operate ETFs in Hong Kong.

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U.S. Stock Market Indexes Surge at Record High

U.S. stocks market indexes surge at record high, led by modest gains in banks and technology companies.The latest gains were enough to nudge the Dow Jones industrial average to its second all time closing high in two days. 

The S&P 500 Index closed within five points of its record. The financial index was the best performer among the 11 major S&P sectors, ending up 0.61%. Quarterly earnings kick off later today with three of the biggest U.S. banks including JPMorgan Chase, Wells Fargo and Citigroup reporting results.

Analysts estimate Q2 earnings for S&P 500 companies rose 7.8% from a year ago, with financials projected to have had the third best profit growth among sectors.

Investors have more than doubled the amount of cash invested in a key financial sector fund in the last few days, betting that Q2 bank earnings will be strong.

 

The Dow Jones Industrial Average rose 0.1% to 21,553.09, the S&P 500 gained 0.19% to 2,447.86 and the Nasdaq Composite added 0.21% to 6,274.44.

About 5.8 billion shares changed hands on U.S. exchanges, below the 6.8 billion daily average for the past 20 trading days

 

 

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