Category: Economy and Policy

* SPDR Gold holdings fall for a third session

* Markets subdued after Trump’s State of the Union speech (Adds comment, updates prices)

By Sethuraman N R

Feb 6 (Reuters) – Gold prices held firm on Wednesday after U.S. President Donald Trump, in his State of the Union speech, vowed to build a border wall and gave little clarity over the ongoing trade discussions with China, but a firmer dollar capped bullion’s gains.

Spot gold was steady at $1,314.30 per ounce, as of 0546 GMT.

U.S. gold futures were also steady at $1,318.20 an ounce.

Trump spoke in the chamber of the House of Representatives facing political discord over his demands that Democrats end their opposition to funding for a border wall he says is needed to stem illegal immigration and smuggled drugs.

“There is a likely risk of another government shutdown with President Trump still sticking to the rhetoric of erecting a border wall,” said Hitesh Jain, vice president, Yes Securities, adding that a firmer dollar was capping gold’s gains.

“Market participants remain cognizant of the fact that global macro numbers are slowing. Gold as an investment avenue remains very much in the reckoning.”

Trump’s demand for $5.7 billion in funding for a U.S.-Mexico border wall triggered a historic 35-day partial government shutdown, which ended on Jan. 25. Trump has threatened to resume the shutdown if he is dissatisfied with the negotiations.

The dollar index stood near a two-week high.

Meanwhile, Dallas Federal Reserve President Robert Kaplan said on Tuesday that the Fed should leave interest rates where they are until the U.S. economic outlook is clearer, a process that in his view could take several more months.

The U.S. central bank last week promised to be “patient” in rate moves due to impending slowdown and uncertain trade backdrop.

While Trump’s address did not have anything significant on U.S-China trade front, senior U.S. and Chinese officials are poised to start another round of trade talks in Beijing next week, according to sources.

Trump has vowed to increase tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent currently if the two sides cannot reach a deal by 12:01 a.m. (0501 GMT) on March 2. “For a very short term, the narrowing of trading range (in gold) is possible because the better-than-expected U.S. non-farm payroll makes it less likely for the Fed to be accommodative,” Wing Fung said in a research note.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.18 percent on Tuesday. Holdings have dropped for three straight sessions.

Liquidity remained low as China and several other markets in Asia still closed for the Lunar New Year holiday

Among other precious metals, palladium dipped 0.2 percent to $1,379 per ounce.

Silver was down 0.3 percent at $15.79, and platinum edged 0.1 percent lower to $815. (Reporting by Nallur Sethuraman in Bengaluru; Editing by Shreejay Sinha and Sherry Jacob-Phillips)

Feb 6 (Reuters) – The following are the top stories on the New York Times business pages. Reuters has not verified these stories and does not vouch for their accuracy.

– Qatar Petroleum and Exxon Mobil Corp said on Tuesday that they are making a big investment in American natural gas exports, in a deal designed in part to strengthen Qatar’s ties with the U.S. nearly two years after Saudi Arabia and its allies launched a trade embargo against the country. (nyti.ms/2DTYoTR)

– Canadian cryptocurrency exchange Quadriga CX said it could not repay at least $250 million to clients after its chief executive died suddenly while visiting India, as he was the only person who knew the security keys and passwords needed to access the funds. (nyti.ms/2WG4XRj)

– Apple Inc said on Tuesday retail chief Angela Ahrendts, will leave the company in April, in an unusual move for a top executive at the company, which is facing retail challenges as sales in China have dropped and iPhone sales have turned sluggish. (nyti.ms/2HUUX3e)

– Snap Inc said on Tuesday that it had stanched the flow of people leaving its platform, after it lost millions of users last year following an unpopular redesign of Snapchat. (nyti.ms/2TA9vqf)

– Bloomberg News uses some form of automated technology for about a third of the content it publishes. The system used by the company, Cyborg, is able to assist reporters in churning out thousands of articles on company earnings reports each quarter. (nyti.ms/2HRLucN)

ZURICH/BERLIN, Feb 6 (Reuters) – Here are some of the main factors that may affect Swiss stocks on Wednesday:

Novartis

Alcon, the eye care business being spun-off by Novartis , will be included in the Swiss Market Index of Switzerland’s 20 largest listed companies, market operator SIX said.

SUNRISE COMMUNICATIONS

Sunrise Communications has confirmed it is in talks with broadband provider Liberty Global about a potential acquisition of its Swiss business UPC Schweiz.

ECONOMY

No major Swiss economic data due (Reporting by Zurich newsroom and Berlin Speed Desk)

CHICAGO (Reuters) – United Airlines said on Wednesday it was adding 1,600 premium seats to nearly 250 international and domestic aircraft, including the introduction of a first-class cabin on 50 Bombardier Inc regional jets.

The move is part of a push by large U.S. airlines to attract more lucrative premium travelers. Rivals Delta Air Lines Inc and American Airlines Group Inc have also added premium seats, which can fetch at least twice the coach fare.

United’s new regional jet, called the CRJ 550, will be the only 50-seater on the market to offer a first class cabin, the Chicago-based airline said, providing premium travel on connecting flights from small U.S. cities to the rest of the world.

Under the plan, United will work with Bombardier to use the frame of its current CRJ 70-seat fleet for a new two-cabin, 50-seat configuration with a self-serve beverage and snack station for premium travelers and four storage closets for carry-on bags.

The CRJ 550s will eventually replace United’s current 50-seat regional fleet with a model permitted under its pilots’ contract, which became amenable in January.

While not generating new orders for cash-strapped Bombardier, United’s plan would allow the Canadian plane and train maker to market the new model to other U.S. airlines looking to replace aging regional jets. Bombardier aims to take a decision on its money-losing CRJ regional jet program this year.

On United’s mainline fleet, there will be 50 percent more premium seating on its Boeing 767-300ERs and Airbus A319s, and 33 percent more on its A320s. Following the changes, United will have a total of 167 seats on the 767-300ER, 126 seats on the A319 and 150 on the A320.

Andrew Nocella, chief commercial officer for United, told reporters that “in an era where many airlines are adding seats to the aircraft to crowd more passengers onto the plane,” United is “doing exactly the opposite.”

United said it plans to complete the changes by the end of next year, with the first reconfigured 767 flying between Newark and London.

The new CRJ 550 will be operated by United’s regional partner GoJet out of Chicago and Newark, pending a final agreement and government certification.

Nocella said United’s overall coach footprint would continue to grow despite the new seating configurations thanks to the introduction of larger aircraft like the Boeing 787 to its fleet.

United Airlines is part of United Continental Holdings Inc.

TOKYO/SYDNEY (Reuters) – Asian shares were subdued on Wednesday after U.S. President Donald Trump’s State of the Union speech failed to give markets fresh trading catalysts, while the Australian dollar slumped after the central bank opened the door to a possible rate cut.

MSCI’s broadest index of Asia-Pacific shares outside Japan barely moved with China and several other markets in the region still closed for the Lunar New Year holiday.

Japan’s Nikkei gained 0.3, while E-Mini futures for the S&P 500 edged higher. Australian shares advanced half a percent, rising for a third session.

The Australian dollar slumped more than 1 percent to hit a one-week low of $0.7153 after Reserve Bank of Australia (RBA) Governor Philip Lowe said the central bank remained optimistic about the economic outlook but acknowledged rates might fall if unemployment were to rise and inflation stay too low.

“Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the probabilities appear to be more evenly balanced,” he said in a speech in Sydney.

Chris Weston, Melbourne-based head of research at foreign exchange brokerage Pepperstone, said the comments show the RBA will react when it needs to though the bar to cutting rates remained quite high.

“I think he (Lowe) has opened the door to a degree. A lot of people in the market do see the fragility that’s coming through in quite a lot of parts of the Australian economy,” he said.

Trump vowed in his State of the Union speech on Tuesday to build a border wall that is a source of a deep partisan divide and said Democratic attempts at “ridiculous partisan investigations” could damage U.S. prosperity.

Some investors were hoping Trump would offer evidence of real, concrete progress in the U.S.-China trade negotiations, said Nick Twidale, chief operating officer at Rakuten Securities in Sydney.

“The market had much more hopes that he would come up with something more concrete. We didn’t really get it,” Twidale said.

“We got a lot of positive rhetoric — a lot of backslapping, or self-backslapping if you like. Because of that, we just had a really subdued reaction.”

Senior U.S. and Chinese officials are poised to start another round of trade talks in Beijing next week to push for a deal on American intellectual property and avert a March 2 increase in U.S. tariffs on Chinese goods, two people familiar with the plans said on Tuesday.

Dow Jones reported earlier that the talks next week would be led by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin, citing an unidentified senior administration official.

Wall Street had already racked up gains courtesy of strong corporate results from Europe and the U.S., including a blockbuster from Estée Lauder Cos Inc.

The Dow ended Tuesday up 0.68 percent, while the S&P 500 gained 0.47 percent and the Nasdaq 0.74 percent.

Treasury bonds also bounced, helped by data showing a surprisingly soft U.S. service sector index of 56.7, with new orders falling to a one-year low.

A LENGTHY PAUSE

The Federal Reserve should leave interest rates where they are until the U.S. economic outlook is clearer, Dallas Fed President Robert Kaplan said on Tuesday, a process that could take several more months.

The dollar held up well thanks in part to a retreat in sterling, which hit two-week lows at $1.2923 in early trade after poor survey data and uncertainty about Brexit talks pushed it below a key market level.

Against a basket of currencies, the dollar was firm at 96.104 and well above last week’s low of 95.162. It fell 0.1 percent on the yen to 109.84.

The euro slipped to $1.1397 after a survey showed on Tuesday that euro zone businesses expanded at their slowest pace since mid-2013 at the start of the year.

In commodity markets, the Wall Street Journal reported Saudi Arabia and its Persian Gulf allies were proposing a formal partnership with a 10-nation group led by Russia to try to manage the global oil market, an alliance that could transform the cartel.

U.S. crude futures edged down 1 cent to $53.65, while Brent was off 2 cents at $61.96.

Spot gold was a shade higher at $1,315.00 per ounce, about 0.9 percent short of its recent peak at $1,326.30.

(Adds details, updates prices)

By Naveen Thukral

SINGAPORE, Feb 6 (Reuters) – London copper rose on Wednesday for a third straight session as trade tensions between Washington and Beijing ease, although concerns over slowing factory activity in China limited gains.

Senior U.S. and Chinese officials are poised to start another round of trade talks in Beijing next week to push for a deal to protect American intellectual property and avert a March 2 increase in U.S. tariffs on Chinese goods, two people familiar with the plans said on Tuesday.

COPPER: Three-month copper on the London Metal Exchange rose 0.1 percent to $6,238 a tonne by 0358 GMT.

TALKS: The new round of talks in Beijing, to be led by U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, was earlier reported by the Wall Street Journal, citing an unidentified senior administration official.

FACTORY ACTIVITY: China’s factory activity shrank by the most in almost three years in January as new orders slumped further and output fell, a private survey showed, reinforcing fears that a slowdown in the world’s second-largest economy is deepening.

NICKEL: LME nickel rose 0.6 percent to $13,115 a tonne after dropping 1.7 percent in the last session.

“Driven by strong trading in Chinese markets, nickel had notched up its longest run of gains in almost eight months, amid speculation that output cuts at Vale’s Brazilian operations would spread to its nickel operations,” ANZ said in a note.

“The company said that none of its nickel mining operations utilise the upstream method dams which have caused issues in its iron ore operations.”

Brazilian miner Vale SA on Tuesday declared force majeure on some iron ore contracts after a court-ordered halt at a mine responsible for 9 percent of its output. The halt follows a burst dam that likely killed more than 300 people.

President Donald Trump in his State of the Union speech on Tuesday vowed to build a border wall that is a source of a deep partisan divide and said Democratic attempts at “ridiculous partisan investigations” could damage U.S. prosperity.

PRICES

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(Reuters) – Electric carmaker Tesla Inc is lowering the price of its Model 3 by $1,100, citing the end of a costly customer referral program, a company spokeswoman said on Wednesday.

The second price cut to the Model 3 this year now brings the cost of its least expensive variant to $42,900, according to the company’s website here.

Tesla’s customer referral incentive plan ended on Feb. 1 after Chief Executive Officer Elon Musk had tweeted that the referral program was “adding too much cost to the cars, especially Model 3”.

Tesla delivered fewer-than-expected Model 3 sedans in the fourth quarter and cut prices for all its vehicles in the United States to offset a reduction in a green tax credit.

The company is rapidly increasing production of its Model 3 sedan and lower prices could help it reach a broader customer base than its pure luxury vehicles.

* Market looks for U.S.-China trade war comments in State of the Union address

* Shiseido soars after Estée Lauder’s brisk quarterly results

* Sega Sammy dives after expecting annual net loss

By Ayai Tomisawa

TOKYO, Feb 6 (Reuters) – Japan’s Nikkei edged up on Wednesday but gains were limited as the market focused on President Donald Trump’s State of the Union address while Estée Lauder’s strong results lifted Japanese cosmetics makers.

The Nikkei share average rose 0.4 percent to 20,935.01 in midmorning trade.

In his speech that began at 0200 GMT, Trump said he wants a U.S. immigration system that is “safe, lawful, modern and secure” as he seeks funding for a border wall rejected by Democrats.

“Investors are focused on some potentially market-moving issues but especially on whether there will be specific comments from Trump to work out trade deals with China,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.

Analysts said that overall sentiment was supported by the U.S. Federal Reserve’s dovish stance, with Dallas Fed President Robert Kaplan saying that the Fed should leave interest rates where they are until the U.S. economic outlook is clearer.

Adding to the positive mood was brisk U.S. corporate results which pushed up Wall Street overnight.

Shiseido Co, Japan’s biggest cosmetics maker, jumped 7.7 percent and added a hefty 16 positive points to the Nikkei, after cosmetics maker Estée Lauder Cos Inc reported strong quarterly results, driven by robust growth in China.

Since Shiseido has a big exposure to the Chinese market, the U.S. cosmetics maker’s earnings bode well for Shiseido, traders said. Other cosmetics makers followed suit, with Kose surging 5.2 percent and Fancl Corp soaring 2.8 percent.

On the other hand, NTT Data stumbled 7.8 percent and took off 20 points from the Nikkei after it said it would launch a tender offer for Netyear Group for 850 yen per share. Netyear was untraded with a glut of buy orders, indicated to rise 19 percent to a daily limit high of 496 yen.

Suzuki Motor shed 2.6 percent after its operating profit for the October-December quarter dropped 33 percent.

Sega Sammy Holdings dived 10 percent after the company said it expects a net loss of 1.5 billion yen for the year ending March, compared to a previous forecast of 12 billion yen ($109.3 million) in net profit.

The broader Topix added 0.3 percent to 1,587.48. ($1 = 109.7800 yen) (Editing by Jacqueline Wong)

SINGAPORE, Feb 6 (Reuters) – London copper prices edged lower on Wednesday, falling for the first time in three sessions on concerns over slowing factory activity in China – the world’s biggest industrial metals consumer.

FUNDAMENTALS

* Three-month copper on the London Metal Exchange slid 0.1 percent to $6,229.50 a tonne by 0149 GMT.

* China’s factory activity shrank by the most in almost three years in January as new orders slumped further and output fell, a private survey showed, reinforcing fears that a slowdown in the world’s second-largest economy is deepening.

* Senior U.S. and Chinese officials are poised to start another round of trade talks in Beijing next week to push for a deal to protect American intellectual property and avert a March 2 increase in U.S. tariffs on Chinese goods, two people familiar with the plans said on Tuesday.

* Trump was expected to challenge Democrats to approve funding for his long-sought border wall but stopped short of declaring a national emergency over it, at least for now. The speech starts at 2100 ET (0200 GMT).

* Brazilian miner Vale SA on Tuesday declared force majeure on some iron ore contracts after a court-ordered halt to a mine responsible for nearly 9 percent of its output following a dam burst which likely killed more than 300 people.

* The force majeure on some iron ore and pellets sales contracts came after a court on Monday ordered it to stop using eight tailings dams, including one affecting production of about 30 million tonnes of iron ore output per year.

* For the top stories in metals and other news, click or

MARKETS NEWS

* Asian shares started cautiously on Wednesday as investors waited to see if U.S. President Donald Trump drops any hints of progress on tariffs in his State of the Union speech.

DATA/EVENTS (GMT) 0700 Germany Industrial Orders Dec 1330 US International Trade Nov

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin