The pressure is increasing in Washington to agree to another stimulus package for the economy, with previous measures due to run out in the coming weeks. The Trump administration has said that it wants another package, not exceeding $1 trillion, to be agreed before lawmakers go on summer recess in August.
There are also moves in Europe to finalize a stimulus package for the region, with leaders holding their first in-person summit today. Under the deal being discussed 500 billion euros ($570 billion) of EU-issued debt would be given out as grants with a further 250 billion euros in loans. German Chancellor Angela Merkel said she expected “very, very difficult negotiations” while Dutch Prime Minister Mark Rutte put the chances of an agreement being reached at this meeting at “less than 50%.” European markets, which have rallied since the deal was first proposed by Germany and France in May, could have to wait until the end of the month, rather than the end of the week, for a deal to sign.
There is no clear driver for global equities today, with performance mixed around the world.
Chart of the day
The tepid demand from abroad is likely because the yield differential between Treasuries and other developed-market bonds has collapsed as a result of the Fed’s rate cuts, eroding any carry pick-up
OIL
OPEC fears second virus wave to prolong oil inventory overhang OPEC fears its record oil cuts will fail to rebalance the market and solve the worst glut in history if a second wave of the COVID-19 pandemic undermines an economic recovery later this year, according to internal OPEC research seen by Reuters. OPEC, Russia and their allies, a group known as OPEC+, said they would ease record oil curbs from Aug. 1 citing a gradual recovery in demand as global lockdowns loosen up.
Oil refiners and OPEC+ walk a tightrope as pandemic lingers: Kemp High-frequency data from the United States has provided the first convincing indication of global oil market rebalancing, but it also underscore the market’s vulnerability to a COVID-19 resurgence and new lockdowns. Total stocks of crude and refined products in the United States fell by 9 million barrels last week, the first week-on-week decline since the end of February, according to the U.S. Energy Information Administration.
Global recovery unlikely to be v-shaped, says Shell chief global economy will not achieve a v-shaped recovery after the coronavirus epidemic, which will curtail oil and gas demand for years, Royal Dutch Shell’s chief executive said. Ben van Beurden told an online interview with IHS Markit Chairman Dan Yergin that it was too early to know if demand for oil had peaked.
METALS
Rio Tinto posts strong Q2 iron ore shipments see China demand recovery Rio Tinto on Friday reported a 1.5% rise in iron ore shipments for the second quarter and said demand for the steelmaking ingredient was improving in China as its economy recovers from the coronavirus outbreak. The world’s largest iron ore miner shipped 86.7 million tonnes of the commodity in the quarter ended June 30, beating a Vuma consensus of 84.1 million tonnes, and up from 85.4 million tonnes a year earlier.
Copper prices are seen rising more, but so are risks – HKEX Forum Tight supply could mean a strong rally in copper prices is likely to continue in the second half of 2020, but downside risks are also rising, speakers at the HKEX Commodities Forum said on Thursday. Benchmark three-month copper on the London Metal Exchange hit a 25-month-high at $6,633 a tonne this week, erasing all losses caused by the coronavirus pandemic and the prolonged U.S.-China trade war combined.
Barrick sees a 15% drop in quarterly gold output on COVID-19 hit, dispute Barrick Gold Corp said on Thursday it expected a 15% decline in second-quarter gold production due to coronavirus-induced disruptions at an Argentinian mine and a dispute in Papua New Guinea. Global miners have had to wind down operations in certain mines during the quarter to comply with government-mandated measures to contain the rapid spread of coronavirus infections.
Global nickel market widens its deficit in May – INSG The global nickel market surplus widened to 9,000 tonnes in May from an overhang of 5,100 tonnes the previous month, the International Nickel Study Group (INSG) said on Thursday. For the first five months of this year, there was a global surplus of 57,300 tonnes compared with a deficit of 31,600 tonnes in the same period of 2019, Lisbon-based INSG added.
Agriculture
China buys more U.S. soybeans China booked deals to buy 522,000 tonnes of soybeans, the U.S. Agriculture Department said on Thursday, the latest in a string of purchases by the world’s top buyer of U.S. agricultural products. Another 351,000 tonnes of soybeans were sold to buyers in unknown destinations, the USDA said. Traders and analysts said those soybeans also were likely headed to China.
Brazil may plant record soybean area of over 38 million ha in next crop Brazilian soybean farmers are expected to expand the planted area to over 38 million hectares (93.9 million acres) in the season that will kick off in mid-September as demand for the oilseeds remains strong, agribusiness consultancy StoneX said on Thursday. In the 2019/2020 harvest, Brazil sowed about 37 million hectares (91 million acres) with soybeans, according to government data, resulting in a record harvest of 120.9 million tonnes of Brazil’s most wanted export commodity.
Fonterra raises lower-end of 2020/21 forecast farmgate milk price as China demand improves New Zealand dairy giant Fonterra raised the lower end of its farmgate milk price forecast range on Friday for the upcoming season as demand picks up in China, its top market. Fonterra narrowed the range to NZ$5.90 to NZ$6.90 per kg of milk solids (kgMS) for the 2020/21 season from the previous range of NZ$5.40 to NZ$6.90.
