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The US and China have reached a preliminary agreement to reduce trade tensions, focusing on the flow of sensitive goods like rare earth minerals and magnets, following intense negotiations in London. This framework, built on prior talks in Geneva, aims to resolve disputes over critical mineral exports that recently threatened to derail their nascent trade truce. US officials, including Commerce Secretary Howard Lutnick, expressed optimism about settling rare earth issues and potentially lifting related export controls in a balanced manner. The talks, held over two days in a historic mansion near Buckingham Palace, also addressed broader concerns like fentanyl, a priority for the Trump administration. While both sides hope to rebuild trust during a 90-day tariff reprieve, challenges remain, as the deal awaits approval from Presidents Trump and Xi with no further meetings scheduled. China’s leverage in rare earths, vital for advanced manufacturing, underscores the strategic importance of this agreement, though experts caution that fundamental issues like chips versus rare earths persist. Market reactions were muted, reflecting cautious optimism about shifting from confrontation to coordination, though uncertainties linger over implementation.
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The US has ordered a partial evacuation of its embassy staff in Baghdad and authorized families of military personnel to leave the region due to escalating tensions with Iran over its nuclear program. Iran has threatened to target US military bases in the Middle East if negotiations collapse and it is attacked, with its Defense Minister warning of significant retaliatory losses for the US. Reports also suggest Israel is preparing for a potential operation against Iran, prompting the Trump administration to advise some Americans to depart. President Trump has expressed dwindling confidence in nuclear talks, while Iran is preparing a new proposal for discussions in Muscat. The heightened tensions have broader implications, with the UK Navy issuing warnings about potential military escalation impacting shipping through critical chokepoints like the Strait of Hormuz. Oil markets reacted sharply, with West Texas Intermediate futures rising over 5% amid security concerns. The situation remains fluid, with the US Central Command coordinating with allies to maintain readiness, as geopolitical strife continues to threaten stability in the region.
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Oil prices fell on Thursday, with Brent crude dropping 0.4% to $69.47 a barrel and WTI declining 0.3% to $67.92, reversing earlier gains in Asian trading. The decline follows a surge of over 4% the previous day, driven by heightened U.S.-Iran tensions and U.S. decisions to reposition personnel in the Middle East ahead of nuclear talks with Iran scheduled for Sunday in Oman. President Trump reiterated his stance against Iran acquiring nuclear weapons, while Iran insists its nuclear activities are peaceful. Analysts, including Vivek Dhar from Commonwealth Bank Australia, suggest the recent price spike above $70 was excessive, anticipating a pullback but a lingering geopolitical premium until talks clarify outcomes. The U.S. is also partially evacuating its Iraqi embassy and allowing military dependents to leave certain Middle Eastern locations due to security risks. Meanwhile, U.S. crude inventories fell by 3.6 million barrels last week, surpassing expectations. Market participants are cautious, with some betting on reduced tensions post-talks, though Trump’s skepticism about reaching a deal and Iran’s warnings of retaliation if provoked add uncertainty to the oil market outlook.
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Asia Morning Briefing highlights key trends in crypto and financial markets as Asia starts its Thursday. Ethereum (ETH) trades at $2,770, up 11% this month, outpacing Bitcoin (BTC) due to institutional demand and its DeFi-TradFi bridging role, dominating derivatives trading. BTC, despite volatility, sees strong institutional accumulation. The stablecoin market reached a record $228 billion, with Tron attracting significant inflows, while Ethereum and Solana lose capital. AI agent economies are emerging, with crypto blockchains proposed as infrastructure for interoperable transactions, supported by initiatives from Coinbase and others. Web3 gaming, though leading in dAPPs, faces declining market share and funding due to unengaging gameplay and misplaced focus on tokenomics. Market movements show BTC slipping 2% to test $108.5K support, while ETH surged 5% past $2,800 on $815M ETF inflows. Gold rose nearly 1% on cooling U.S. inflation, and Tokyo stocks opened mixed. Despite macro uncertainties and geopolitical risks, institutional conviction in crypto remains strong, with ETH eyeing $3,000.
