Welcome to the latest edition of TradeFred’s weekend roundup, our look at the major news events that took place while the markets were closed. This week’s instalment covers the implementation of the USA’s oil sanctions, the latest on Brexit negotiations and much more besides.
The United States confirmed it would temporarily allow eight countries to continue importing Iranian Oil after its sanctions come into effect on Monday. The decision was announced by Secretary of State Mike Pompeo, who declined to name the jurisdictions involved.
US President Donald Trump announced earlier this year that he was pulling out of the 2015 nuclear deal and re-imposing sanctions on Tehran. The move was likely designed to curb Iran’s nuclear ambitions and halt its support for militia in Syria, Yemen and other parts of the Middle East.
Turkey’s Energy Minister revealed his country was one of the jurisdictions to be granted a temporary reprieve, while Iraqi officials confirmed the same applied for their nation – as long as it does not pay Iran in US Dollars. An unnamed source said India and South Korea were also on the list.
Mr Pompeo said the waivers had been granted because the jurisdictions had “demonstrated significant reductions in their crude oil and cooperation on many other fronts.” He added that the ultimate goal was to stop exports from Iran completely.
In response, Iran’s Supreme Leader claimed the world was united against the US President’s policies. Supreme Leader Ayatollah Ali Khamenei. He said: “America’s goal has been to re-establish the domination it had (before 1979) but it has failed. America has been defeated by the Islamic Republic over the past 40 years.”
Meanwhile, both Democrats and Republicans continued to campaign heavily as the US midterm elections edge closer. Former President Barack Obama warned against the use of rhetoric that inspired fear, while Donald Trump spoke heavily on immigration.
Finally, electric carmaker Tesla confirmed that the US Securities and Exchange Commission (SEC) has issued it with a subpoena over forecasts the company made about production of its Model 3 car last year. The regulator is examining whether investors had been misled over the targets, which were not hit on time.
Both SEC and the US Department of Justice are said to be investigating whether Tesla gave misleading information to the markets. The company wrote: “To our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred.”
The Brexit negotiations were back in the spotlight over the weekend, with a newspaper article claiming that an all-UK customs agreement had been made that would finally alleviate the problematic issue of the British-Irish border. The report said that Theresa May’s cabinet would be discussing the plans on Tuesday and it was hoped enough progress would be made for the EU to announce a special summit on Friday.
However, Mrs May’s office has dismissed the plans as “speculation”, claiming she had been “clear” that good progress was being made. A spokesman confirmed her stance that “95% of the withdrawal agreement is now settled and negotiations are ongoing.”
The Sunday Times newspaper has claimed that more than 70 leading names in business have joined the call for a public vote on the final divorce terms. Companies are said to be extremely worried the UK will either crash out of the economic bloc without securing an agreement, or a deal would be struck that limits their access to the continent’s markets.
According to the newspaper, the business leaders said in a letter the country was “now facing either a blindfold or a destructive hard Brexit,” claiming either scenario would “further depress investment”. It continued: “They will be bad for business and bad for working people. Given that neither was on the ballot in 2016, we believe the ultimate choice should be handed back to the public with a People’s Vote.”
The Brexit department claimed it was confident a deal would be reached that worked for businesses and reaffirmed the government’s opposition to a second vote.
Meanwhile, German Chancellor Angela Merkel faced more difficulty over the weekend, as her Christian Democrats (CDU) party argued over what to do when she steps down as chair. The discussions involved whether to take up a more conservative agenda after years of moving more to the centre of politics.
Health Minister Jens Spahn, who is one of the candidates to replace Mrs Merkel, said the party had “watered down” its profile over the last few years. Its Deputy Chair Armin Laschet warned against the move, saying it should stick to its current course.
Both members of Mrs Merkel’s grand coalition were due to meet to discuss their future, with support for the Social Democrats (SPD) hitting a record low.
In other news, Italy’s Deputy Prime Minister said that the agreement made between his 5 Star Movement and the League must be adhered to. Luigi Di Maio made the statement after a government official raised doubts about one the document’s key pledges.
The leader of the League Matteo Salvini denied there was a disagreement between the two parties, claiming he was “very happy” with the legislation that had already been created and what was still to come.
Rest of world roundup
Iran has again called on the EU to support the country in the face of Monday’s oil sanctions. The country’s state news agency said Tehran’s Foreign Minister spoke with his counterparts from Germany, Sweden and Denmark, plus the European Union’s foreign policy chief to come up with measures to limit the effect of the sanctions.
The officials were said to have “highlighted the importance of the finance ministers’ commitment to Europe’s financial mechanism to save the Iran nuclear deal and said the mechanism will be operational in the coming days.”
India has said it and other oil buyers will benefit from the waiver granted by the US that temporarily allows them to buy Iranian oil after the sanctions hit. Oil Minister Dharmendra Pradhan praised the work of Prime Minister Narendra Modi in highlighting the impact a complete ban would have on the economy.
Meanwhile, China has confirmed it would provide economic aid to Pakistan after a meeting over the weekend. Last month, Pakistan received $6 billion from Saudi Arabia and still plans to ask for a bailout from the International Monetary Fund (IMF) to try and avert a balance of payments crisis.
The country’s foreign reserves have plummeted by 42% since the start of the year, down to $8 billion – less than two months of import cover. Pakistan’s new leader Imran Khan told Chinese President Xi Jinping he had inherited “a very difficult economic situation”.
China’s Vice Foreign Minister Kong Xuanyou said: “During the visit the two sides have made it clear in principle that the Chinese government will provide necessary support and assistance to Pakistan in tiding over the current economic difficulties. As for specific measures to be taken, the relevant authorities of the two sides will have detailed discussions.”
Finally, Australia’s Trade Minister travelled to China to try and ease political tensions between the two countries. Simon Birmingham was there to attend the China International Import Expo (CIIE), which is said to be an attempt by Beijing to alleviate foreign concern about the country’s trade practices.
The relationship between the two nations had soured over Australia accusing China of trying to meddle in its media, universities and policies. It also banned Huawei Technologies Co Ltd from suppling equipment for a 5G mobile network. This is despite Beijing still being the country’s top goods and services trading partner.