I am going to offer you an alternative view to this week’s relatively light-hearted mood when it comes to geopolitical macro.
On the back of a meeting between Trump and Xi Jinping – which included a handshake moment wherein Donald appeared to me at least like he was a little starstruck – apparently, if you read the news at face value, things have changed when it comes to rare earths; trade war(s); tariffs, trade, and fentanyl precursors for some reason.
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But they haven’t changed. Not really.
Get this: as the world started pushing out headline after headline about a so-called rare earths deal between China and US (a so-called deal about which detail remains scant,) within the same intraweek breath more or less, G7 came out with a reiterated plan to establish an ex-China rare earths critical minerals supply chain.
The US, of course, is part of the G7. So when you really think about it, the US has said there’s no more rare earth trade war with China, at the same time it’s agreed with its G6 counterparts there is, in fact, need for a trade war with China. Talk about offsets.
I really do think it’s about Trump wanting to be liked more than anything, why we didn’t get any typical to-and-froing this week, accepting it’s only Friday afternoon. He was respected at ASEAN because the man has apparently just brokered peace in the Middle East, and that seems to have made all the difference. Just ignore the fact they’re still bombing each other.
Anyway, this is’t a politics wrap. Let’s look at the XJO.
There were two big things in metals this week to consider that saw materials have a few good days. First, gold is inching back above US$4,000/oz – suggesting maybe the market even expected more from the ASEAN meetings.
Or at least some clarity around an REE deal.
But in all the excitement that was the “G2” meeting, there was a more fundamentally important metric for the Australian context that was overlooked (not helping matters was a hotter than expected CPI read.)
Iron ore prices actually jumped to US$107/tn on Singapore’s SGX on Thursday. That was missed by all but the daily watchers.
It was also a bad week to be a CSL shareholder, which has this week sunk the entire healthcare index nearly -10% on a WoW basis after confirming it’s having difficulties in the US and Asia and expects to make less money. (Not long ago on the HotCopper Wire podcast, I mused to Digital Editor Isaac McIntyre whether or not CSL was priced “weirdly high.” I could have been right.)
That’s what leads to this rather unfortunate week-by-week sector breakdown, if you’re in healthcare that is.
So, a majority red. That tracks – because the XJO just ended the week under 9,000pts again. Thanks, ABS!