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LONDON, Oct 31 (Reuters) – Everything Mike Dolan and the ROI team are excited to read, watch and listen to over the weekend.
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Wall Street got spooked on Thursday, with Microsoft and Meta both seeing their share prices fall on concerns about the AI capex binge. However, the big news of the week was chip giant Nvidia becoming the first company to see its market cap eclipse $5 trillion, having hit $4 trillion only three months ago. With U.S. equity futures up before the bell on Friday, it looks like Halloween may be more “treat” than “trick.”
The week began with news that we would likely see an agreement between U.S. President Donald Trump and his Chinese counterpart Xi Jinping. And we saw just that on Thursday following a meeting described as a “12 out of 10” by the U.S. president.
The two settled on a deal that would see reduced U.S. tariffs on Chinese goods and a delay of China’s rare earths curbs, among other promises. But don’t get too excited, warns ROI Markets Columnist Jamie McGeever, the U.S.-China story has been here before.
Another big news item this week came courtesy of Federal Reserve Chair Jay Powell. While the Fed’s decision to cut interest rates by 25 basis points on Wednesday was widely expected, the Chair also signalled that a December cut was far from a slam dunk. This may be an acknowledgement that interest rate cuts will likely be a pretty lousy tool if the Fed’s goal is to support an economy suffering from labor supply issues.
The Fed’s hawkish tone gave another boost to the U.S. dollar – which is on track for a roughly 2% gain this month – something that likely won’t go down well with the Trump administration, or so argues ROI editor-at-large Mike Dolan.
In energy markets, OPEC will meet this Sunday and is expected to announce another output increase. Saudi Arabia, OPEC’s de facto leader, appears to be caught between Donald Trump and a hard place, argues ROI Energy Columnist Ron Bousso, as the U.S. president’s latest oil sanctions on Russia force Riyadh to weigh competing geopolitical and economic priorities.
Staying on sanctions, how useful have those on Russia actually been? ROI Asia Commodities Columnist Clyde Russell considered this question earlier in the week, arguing that it all depends on how success is measured.
On the renewables side, ROI Energy Transition Columnist Gavin Maguire this week discussed how China’s electric vehicle output and exports may now hit reverse following a significant policy pivot.
Finally, in the metals markets, copper made headlines again as the London Metal Exchange price hit an all-time nominal high of $11,200 per metric ton on Wednesday.
As we head into the weekend, check out the ROI team’s recommendations for what you should read, listen to, and watch to stay informed and ready for the week ahead.
I’d love to hear from you, so please reach out to me at anna.szymanski@thomsonreuters.com, opens new tab ., opens new tab
This weekend, we’re reading…
CLYDE RUSSELL, ROI Asia Commodities and Energy Columnist: This excellent Reuters special report shows how a small insurer in New Zealand is a key link in the dark fleet responsible for shipping Iranian and Russian oil.
MIKE DOLAN, ROI Financial Markets Editor-at-Large: Former IMF and World Bank top official Anne Krueger’s column for Project Syndicate this week makes a powerful case for an alternative global trading system without America – a “Global Trade Organisation” or GTO, opens new tab – to replace the hobbled WTO, supporting the push by Canadian Prime Minister Mark Carney.
GAVIN MAGUIRE, ROI Global Energy Transition Columnist: This recent report from the Centre for Research on Energy and Clean Air (CREA), opens new tab explains how China, India and Indonesia – three of the world’s largest coal consumers – could all hit peak power sector emissions by 2030.
ANDY HOME, ROI Metals Columnist: Copper prices hit a new all-time high in London this week, so here’s a timely overview of the market from the International Copper Study Group, opens new tab. Everything you wanted to know about copper but were too afraid to ask.
We’re listening to…
RON BOUSSO, ROI Energy Columnist: I highly recommend the Reuters Econ World podcast in general, but especially the latest instalment where the Reuters Russian bureau chief and commodities editor discuss the intensifying energy war that has developed between Russia and Ukraine. They discuss its impact on the Russian economy as well as the global energy market.
And we’re watching…
JAMIE MCGEEVER, ROI Markets Columnist: In the latest episode of the ‘Monetary Matters’ podcast, opens new tab hosted by Jack Farley, former New York Fed desk trader Joseph Wangdissects the Fed’s latest decision, particularly the call to stop reducing its balance sheet on December 1. Wang explains the stress he sees in repo markets which, in his view, will soon prompt the Fed to start expanding its balance sheet again. Fair warning, this gets a bit wonky.
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Opinions expressed are those of the authors. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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Anna Szymanski is Editor in Charge of Reuters Open Interest, an essential source for data-driven markets and finance commentary. Anna overseas Reuters commentary on financial markets, commodities, macroeconomics, and other key topics of interest to markets professionals. Anna joined Reuters from Oaktree Capital Management, where she was Senior Vice President and Senior Financial Writer, managing the Oaktree Insights program. Anna is a CFA Charterholder. Follow Anna on LinkedIn.
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Nexperia, the EU-based automotive chipmaker at the centre of a geopolitical dispute, has suspended supplies to its Chinese factory, stepping up a trade war that threatens to halt production at carmakers around the world.
The company wrote to customers this week informing them all supplies to a Chinese plant had been suspended.
In September, the Netherlands used national security laws to take control of the chipmaker, citing concerns that its Chinese owner, Wingtech Technologies, was planning to shift intellectual property to another company it owned. The Dutch government said that threatened the future of European chip capacity, and removed the Wingtech chairman, Zhang Xuezheng, as chief executive.
China responded by halting exports from all Nexperia’s factories in China, prompting warnings this week that the embargo would force production lines at EU car factories to close within days.
An extended blockade threatens the supply chain, because many Nexperia products manufactured in Europe – including the wafers from which chips are cut – were previously shipped to the Chinese factory for packaging and distribution.
Nexperia’s interim chief executive, Stefan Tilger, wrote that he had suspended shipments to the Dongguan factory, in the southern Guangdong province, on Sunday, saying it was “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms”, according to extracts first published by Reuters.
Nexperia said it still hoped to resume shipments, and wanted to de-escalate the situation. A person with knowledge of the situation said shipments could resume if the contractual payments were made. The company will also continue to ship products to a factory in Malaysia, which is smaller than its Chinese plant.
A succession of carmakers have warned of the possibility of shortages of components that are crucial throughout modern cars.
The automotive industry suffered from severe semiconductor shortages in the wake of the coronavirus pandemic, but these affected more advanced chips, rather than the cheaper power control ones made by Nexperia. The company generally ships more than 100bn products a year, to be used in parts ranging from airbags and adjustable seats to wing mirrors and central locking.
Nissan said this week it had enough chips to last until the first week of November, while rival Honda said it had suspended production at a plant in Mexico. Mercedes-Benz said it was “covered” in the short term, but it was looking for alternatives. Volkswagen signalled on Thursday that its annual profit targets were at risk without sufficient chips.
However, Toyota, the world’s largest carmaker, told reporters at a car show in Tokyo on Friday that it was not facing a major supply problem, even if it could eventually face a hit to production.
The German Association of the Automotive Industry (VDA) said on Thursday it feared “significant production restrictions in the near future, and possibly even production stoppages” if the Nexperia situation could not be resolved soon.
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The EU’s tech chief, Henna Virkkunen, will meet Nexperia leaders on Friday to discuss the crisis.
British operations may also be affected. Nexperia produces some chip wafers in Manchester, in a factory set up originally by the Dutch manufacturer Philips.
Nexperia previously owned another UK factory, in south Wales, but was blocked from completing a takeover of Newport Wafer Fab by the UK government on national security grounds, because of its ultimate Chinese owners. The US semiconductor company Vishay Intertechnology eventually agreed to buy the factory in November 2023.
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