USA
Wall Street futures rose as investors’ attention turned to quarterly earnings reports from the big U.S. banks for clues on Corporate America’s expectations for the pace of an economic recovery in the second half of the year. European and Asian shares slipped as possibilities of another economic shutdown due to surging coronavirus cases and simmering Sino-U.S. tensions kept a lid on investor optimism. The dollar was little changed, while gold prices were lower. Oil fell on worries that rising infections could threaten a recovery in fuel demand just as OPEC+ producers prepare to increase output from August. U.S. consumer price index data for June is scheduled for release later in the day.
USA – CHINA
The Trump administration rejected China’s expansive claims in the South China Sea, with Secretary of State Michael Pompeo saying they are ” completely unlawful.” The statement is a reversal of a previous policy of not taking sides in maritime disputes in the region. In another sign of tensions rising between the world’s two largest economies, China announced it was imposing sanctions on Lockheed Martin Corp. after the U.S. approved a deal for the supply of missile parts to Taiwan. Relations between the nations have been hit on a number of fronts, including by the security law imposed in Hong Kong, the treatment of minorities in Xinjiang, and the pandemic itself.
BREXIT
The U.K. government just presented a 206-page manual for how the country will trade with the European Union on Jan. 1 when Britain’s exit from the 27-nation bloc becomes official 4 1/2 years after the nation voted to leave. The plan includes:
A so-called Smart Freight System, where truckers will have to file information electronically and receive approval from the tax authorities before being allowed to travel toward the U.K.-EU border.
A new government computer system — the Goods Vehicle Movement Service — won’t be operational until July next year. Before then, hauliers will still need permission before moving goods to the U.K.-EU border.
Spending of 705 million pounds ($883 million) on border infrastructure, including the potential for a 27-acre truck holding plaza outside Ashford, a borough 20 miles from the Dover port that has more heritage sites than any other in the county of Kent.
The U.K.’s tax authority has previously estimated that, after Brexit, firms will need to file 400 million extra customs declarations annually, at an average of 32.50 pounds each. That puts the cost of the new Brexit customs paperwork alone at about 13 billion pounds a year.
EU – USA
The EU will recommend keeping its external borders shut to U.S. residents and most other foreigners for at least two more weeks as fears grow of a second coronavirus wave.
OIL
OPEC chief sees oil market moving closer to balance before key meeting. The oil market is getting closer to balance as demand gradually rises, OPEC’s secretary-general said on Monday, two days before the group and ally Russia meet to decide whether to ease output curbs from August. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, have been cutting output since May by 9.7 million barrels per day after the coronavirus crisis destroyed a third of global demand and caused a price collapse.
U.S. shale oil output to drop to 2-year low of 7.5 mln bpd in Aug -EIA U.S. crude oil output from seven major shale formations is expected to decline by about 56,000 barrels per day (bpd) in August to about 7.49 million bpd, the lowest in the two years, the U.S. Energy Information Administration said in a monthly productivity forecast on Monday. The EIA projected the biggest decline would be in the Eagle Ford in Texas where output will slide about 23,000 bpd to 1.1 million bpd, the lowest since August 2017.
China’s June crude oil imports rise to 2nd straight monthly record on bargain purchases China’s June crude oil imports jumped by a third from the same period a year earlier, setting a second straight monthly record, as cheap cargoes bought during April’s oil price crash arrived at Chinese ports. China, the world’s top crude oil importer, took in 53.18 million tonnes of oil, according to data from the General Administration of Customs on Tuesday, equivalent to 12.9 million barrels per day (bpd).
-Hedge funds pause oil buying as rally stalls: Kemp Hedge funds have stopped buying oil in recent weeks as the rally that carried prices higher during May and June has run out of momentum, amid concerns about the faltering economic recovery. Hedge funds and other money managers sold the equivalent of 21 million barrels in the six most important petroleum futures and options contracts in the week ending July 7.
China’s record crude oil, copper imports are more history lesson than predictor: Russell China’s imports of crude oil and copper surged to records in June, while iron ore hit the highest in 33 months, but the factors that drove the surge are already fading into history. There is little doubt the June trade data released on Tuesday was robust and will serve to confirm the prevailing market view that China is in the midst of a V-shape economic recovery from the novel coronavirus pandemic.
METALS
Chilean copper giant Codelco records 3,215 cases of COVID-19; nine fatalities Chile’s state-owned Codelco, the world’s largest copper producer, has registered a total 3,215 COVID-19 infections and nine deaths due to the pandemic, the chairman of the firm said on Monday, as pressure rises on the production of the red metal. Board Chairman Juan Benavides said 2,473 workers had already recovered while 37 remain hospitalized, according to comments made to a mining commission made up of lower-house lawmakers and confirmed by Codelco.
Big Chinese copper smelters see little impact by floods Major Chinese copper smelters have so far seen limited impact, like delays in river transportation, after flooding caused by torrential rain in several provinces, including the copper hub of Jiangxi, sources and analysts said on Monday. Jiangxi province on Saturday issued its highest flood warning, while China raised its flood response alert on Sunday to the second-highest level as heavy rain battered regions along the Yangtze River.
CHART OF THE DAY – TESLA ALTERNATIVES
