Rare earths in focus as high-level US-China talks enter second day
The US market has seemingly welcomed news that three high-powered US aides continue to meet with their Chinese counterparts in London for new trade discussions.
US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer are currently meeting with Chinese officials to try to ease the trade dispute between the world’s two largest economies.
Reports say the trade talks will continue for a second day to focus on the impact of the tariff war between the two countries.
Key component
The respective rare earths positions of the two nations are a key component of the discussions.
Reports have suggested the US administration may ease some of its export controls and that China may increase its exports of the rare earths the US is desperate for.
The news saw S&P 500 futures trading up marginally after most Asian markets rose and Europe stayed flat in early trading.
End to restrictions
Director of the US National Economic Council, Kevin Hassett, said one goal of the negotiations was to get China to end its restrictions on rare earth exports.
China, the world’s biggest rare earths producer by a fair degree, commenced restrictions on its exports in April in the midst of trade tensions between the two countries.
“We want the rare earths – the magnets that are crucial for cell phones and everything else – to flow just as they did before the beginning of April and we don’t want any technical details slowing that down,” Mr Hassett said on US TV.
Copper reacting well
On the commodities front, copper has continued to rebound on the back of the positive developments on the trade front after China’s domestic growth had slowed.
Gold is also forecast to stay strong as the US-China trade talks progress, while silver continues to rally strongly.
Elsewhere, the oil market remains uncertain on the back of the tariff negotiations and data showing how trade uncertainty and the impact of the US levies are flowing through into the global economy.
“The potential for increased US sanctions in Venezuela to limit crude exports and the potential for an Israeli strike on Iranian infrastructure add to upside risks for prices,” BMI analysts reported.