US President Donald Trump’s latest salvo against Chinese imports is hitting commodities again.
Just when markets were beginning to recover on optimism the US and China could reach an agreement and take the heat out of their escalating trade war, the US president called for tariffs on an additional US$100 billion in imports from the Asian nation, sending copper, soybeans and oil lower on Friday along with US equities futures.
It has been a turbulent week for commodities as they are sucked deeper into the tussle between the world’s two biggest economies.
US soybean futures were hammered on Wednesday after China said it would impose tariffs on US imports, which it buys in greater volume than any other country, while copper came under pressure on concern the trade war would dampen economic growth and hurt demand.
“Commodities are tumbling today on a global sell-off in risky assets as Trump continues to hold an aggressive stance in his dispute with China,” Ahn Yea-ha, a commodities analyst at Kiwoom Securities Co, said by telephone from Seoul. “Unless we see the two countries having a negotiation to iron out differences, downward pressure on commodities will remain.”
Soybeans were among the biggest losers on Friday as Trump’s call for more tariffs dampened any optimism that some sort of agreement could be reached between the world’s top producer and its biggest customer.
On Wednesday, prices slid after China said it planned to impose a 25 percent duty on US soy in addition to other agricultural produce, though they recovered somewhat the following day on hope that an accord could be struck.
“Concerns are growing that the US proposal of additional tariffs may prompt China to take further retaliatory measures against US agricultural imports,” said Takaki Shigemoto, an analyst at JSC Corp in Tokyo.
May soybean futures were 1.5 percent lower at US$10.1575 a bushel on the Chicago Board of Trade. Trading volume was almost double the average for the time of day.
Copper, too, had recovered from losses earlier in the week in the wake of China’s threatened tariffs on US$50 billion of US goods. However, it was back down again on Friday, losing 0.9 percent on the London Metal Exchange as base metals retreated.
Gold has been a rare beneficiary of the spat, eking out a gain of 1.7 percent this year amid trade war fears and equity-market volatility.
While investors seek bullion as a haven during market turmoil, which sent the metal on a wild ride on Wednesday, they have been skittish due to the prospect of tighter US monetary policy and stronger global growth.
Investors have been piling into bullion, taking holdings in all exchange-traded funds tracked by Bloomberg to 73.3 million ounces, the highest in almost five years.
Spot bullion was little changed at US$1,332.72 an ounce, up 0.5 percent from last week’s US$1,325.50 an ounce.
“Metals have reacted negatively while bullion has regained confidence,” said Gnanasekar Thiagarajan, a director at Commtrendz Risk Management Services in Coimbatore, India. “The ongoing news flow on the trade war on a daily basis is bound to dent confidence for risky assets and favor bullion going forward.”
The Bloomberg Commodity Index of 22 raw materials has declined 4 percent from a more than two-year high in January as fears of a global trade war have deepened.
It was 0.5 percent lower on Friday.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to