Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
London is playing host to the latest stage in the US and China’s efforts to agree a trade deal.
Top US and Chinese officials are due to meet in the UK capital today, in an attempt to build on the preliminary agreement reached last month in Geneva, with rare-earth minerals and advanced technology likely to be high on the agenda.
Both sides are sending senior representatives – the US delegation is being led by Treasury secretary Scott Bessent, commerce Secretary Howard Lutnick and US trade representative Jamieson Greer. Vice premier He Lifeng leads China’s team.
Investors, and leaders, around the globe will hope that the two superpowers can cool their dispute; they’re currently partway through a 90-day truce which reduced the new tariffs between the pair to 10%.
Yesterday, a UK government spokesman said:
“The next round of trade talks between the U.S. and China will be held in the UK on Monday.
“We are a nation that champions free trade and have always been clear that a trade war is in nobody’s interests, so we welcome these talks.”
The meeting follows a phone call between Donald Trump and Xi Jinping last week, in which Xi reportedly told Trump to “withdraw the negative measures” which the US has taken against China”.
Reminder: a week ago, China accused the US of “seriously violating” their Geneva pact, after Washington complained that Beijing had not delivered on promises to roll back restrictions on the export of key critical minerals to the US.
The sight of the two sides meeting again may cheer markets, which “are sniffing out the scent of détente”, according to Stephen Innes, managing partner at SPI Asset Management.
Innes writes:
This isn’t your typical trade theatre. Forget the pomp of Mar-a-Lago photo ops—this is trench diplomacy in Savile Row suits, with both sides recognizing that the clock is ticking. Trump needs market serenity to maintain the illusion of economic strength heading into the Summer.
At the same time, Xi navigates a domestic economy riddled with landmines in the property sector and a consumer base still struggling to recover from the pandemic. That creates a mutual incentive to tone down the tariff tantrums and cue up the handshake optics—even if no signatures are signed.
The agenda
Trade talks between delegations from the United States and China have started in London, Reuters reports.
The trade talks between the US and China were due to start a few minutes ago, at 11.30 GMT, Reuters reports.
They add:
Officials from the two superpowers were due to meet at the ornate Lancaster House to try to get back on track with a preliminary agreement struck last month in Geneva that had briefly lowered the temperature between Washington and Beijing.
That was quick. Spectris has confirmed it has received a takeover approach from Advent.
In a statement to the City, Spectris reveals that the offer is worth £37.35 in cash, plus a proposed interim dividend of 28p per Spectris share.
Spectris reveals that this follows a number of earlier approaches from Advent to the Board regarding a possible all cash offer. It now believes it “would be minded” to recommend it unanimously to Spectris shareholders, should a firm bid be made.
Shares in Spectris have pushed higher; now up 27% at £25.88.
Another bout of takeover speculation just swept through the City!
Shares in Spectris, the UK-based maker of precision and testing equipment and software, have jumped by 15% following a report that private equity firm Advent is considering a takeover.
According to Bloomberg, Advent has approached Spectris about a potential deal, said the people, who asked not to be identified as the information is private.
Spectris develops high-tech instruments, testing equipment and software used in sectors such as life sciences, automotive, electronics and semiconductors. More here.
Newsflash: Media company Warner Bros Discovery has announced plans to split itself in two.
Warner Bros Discovery is to divide into two companies – one focused on streaming and its studios business, while the other will house its entertainment, sports and news brands.
The Streaming & Studios company will consist of Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO, and HBO Max, as well as their legendary film and television libraries, the company says.
Global Networks will include premier entertainment, sports and news television brands around the world including CNN, TNT Sports in the U.S., and Discovery, top free-to-air channels across Europe, and digital products such as the profitable Discovery+ streaming service and Bleacher Report.
Samuel A. Di Piazza, Jr., Chair of the Warner Bros. Discovery Board of Directors, says:
“We committed to shareholders to identify the best strategy to realize the full value of our exciting portfolio of assets, and the Board believes this transaction is a great outcome for WBD shareholders.
This announcement reflects the Board’s ongoing efforts to evaluate and pursue opportunities that enhance shareholder value.”
David Zaslav, president and CEO of Warner Bros. Discovery, will become president and CEO of Streaming & Studios. Gunnar Wiedenfels, CFO of Warner Bros. Discovery, will serve as president and CEO of Global Networks.
Newsflash: All UK pensioners with an income of £35,000 or less a year will have the winter fuel payment restored in full, Rachel Reeves has announced, after weeks of uncertainty over the decision to make a U-turn on scrapping the benefit.
Ministers are restoring the automatic payments as a universal benefit this winter and then recouping the money when higher-income pensioners fill in their tax returns, as creating a new means test would be a highly complex option.
The decision means that about 7.5 million pensioners in England and Wales who missed out on the payment of up to £300 last year will now get it, after a backlash against one of the most unpopular policies of the Labour government.
Here’s the full story, from our politics editor Pippa Crerar:
The stakes are high for some fresh breakthrough in the London talks betweeen the US and China today, reports Raffi Boyadjian, lead market analyst at Trading Point.
Negotiators from the world’s two largest economies will meet in London today as the US and China seek to bridge the gap in their long-running differences over trade following the shaky truce agreed last month in Geneva. Since those first round of talks, the two sides have accused each other of violating the terms of the temporary deal. But a call between the US and Chinese leaders last week appeared to put the negotiations back on track.
Hence, there is reasonable optimism that the second round of talks this week will lead to a further thaw in trade relations between Washington and Beijing. The US is hoping that the Chinese will loosen their export restrictions on rare earths, which are crucial for the tech industry. China on the other hand wants greater access to advanced American technology such as AI chips, as well as for the White House to grant more visas for Chinese students.
The US team is again being led by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greet. But Commerce Secretary Howard Lutnick is also attending this time, suggesting that an easing of chip curbs may be on the cards.
Elsewhere in London today, Sir Keir Starmer has made the eye-catching claim that “AI and tech makes us more human”.
Addressing London Tech Week this morning, the Prime Minister said:
“AI and tech makes us more human, which sounds an odd thing to say, but it’s true.
“We need to say it because […] some people out there are sceptical.
“They do worry about AI taking their job.”
Starmer also acknowledged that the pace of change in artificial intelligence can feel relentless, before pledging that AI can create “a better future”.
He said:
“By the end of this Parliament we should be able to look every parent in the eye in every region in Britain and say ‘look what technology can deliver for you’.
“We can put money in your pocket, we can create wealth in your community, we can create good jobs, vastly improve our public services, and build a better future for your children.
“That, to me, is the opportunity we must seize. That’s what my plan for change will deliver and, today, I think we’re taking another big step towards it.”
Over at London’s High Court, Australian financier Lex Greensill has arrived to testify at a $440m legal battle between Swiss lender Credit Suisse and Japanese conglomerate SoftBank.
Greensill is the founded of supply-chain finance specialist Greensill Group, which lent money to companies by buying their invoices upfront. It collapsed in March 2021, a blow to Credit Suisse, which had lent the company money, and was forced to winded down specialist funds worth $10bn (£7.2bn) that were mostly invested in loans linked to Greensill.
Credit Suisse is suing Softbank over funds which Greensill Group lent to Katerra, a SoftBank-backed U.S. construction group.
Lex Greensill and Eric Varvel, former chairman of Credit Suisse’s investment bank, are among the key witnesses expected to testify at the trial.
Reuters has more details of the case:
The lender alleges that Greensill, at SoftBank’s behest, gave up rights to Katerra’s debts in return for shares which it then passed on to a SoftBank Group entity, leaving Credit Suisse out of pocket in relation to $440 million of notes.
Lawyer Sonia Tolaney, representing the Credit Suisse fund that held the notes, said SoftBank was heavily exposed to both Greensill and Katerra, to a total of around $3.5 billion, and “needed to protect the value of its investments”.
SoftBank, however, says the lawsuit lacks merit and is simply an attempt by Credit Suisse to “pin blame (on SoftBank) for a loss caused by their own negligence and risk-taking”.
This US Geological Survey from January 2025 showing production and reserves of rare earth oxide equivalents illustrates the sheer dominance of China in this sector.
It notes, in footnote 14, that this does not include undocumented supplies.
China’s vice premier He Lifeng met with UK chancellor Rachel Reeves in London on Sunday, Chinese state media has just reported.
According to a readout published by state broadcaster, CCTV, the two exchanged “in-depth views” on the bilateral economic relations and “issues of common concern to both sides”.
The readout was in Chinese, and below is a machine translation from my colleague Helen Davidson in Taipei.
“He Lifeng said that China and the UK should work together to implement the important consensus reached by President Xi Jinping and Prime Minister Starmer, promote the implementation of the results of the China-UK Economic and Financial Dialogue, further deepen exchanges and cooperation in various fields of economy and finance, promote mutual benefit and win-win results, and maintain the continued healthy and stable development of China-UK economic relations.
Reeves said that the UK attaches great importance to cooperation with China and is willing to strengthen communication with China to implement the results of the UK-China Economic and Financial Dialogue and inject new impetus into UK-China economic cooperation.”
The meeting came a day before He is set to meet US counterparts for UK-hosted talks today, to try and return to peaceful negotiations over the tariff war.
Investors have not been spooked by today’s customs data, showing that China’s exports to the United States sank fell nearly 10% in May, year-on-year.
Chris Beauchamp, chief market analyst at IG, explains:
Trade tensions between the US and China were reflected in the weekend’s China data, but with fresh trade talks taking place in London today the reaction from investors has been a collective shrug.
Even data that does show tariffs have had an impact is being discounted, given the abrupt volte-face performed by the US administration since 2 April. Despite all expectations to the contrary, stock markets seem content to keep pushing higher.
China has a rare earth and critical minerals card it can play whenever it wishes.
If it doesn’t own the raw material, it processes it – a strategy that has seen it, for example, dominate the world’s supply of lithium hydroxide, used in batteries for electric vehicles.
Turning on and off supplies can impact manufacturing across the globe, particularly in the auto sector.
It is estimated that it controls up to 70% of global rare earths, 85% of refining capacity and 90% of rare earth metal alloys and magnet production.
The European car manufacturing trade association, Comité de Liaison des fabricants d’Equipements et de Pièces Automobiles (Clepa), said the lack of supply of rare earths was already “shutting down production” in Europe.
“With a deeply intertwined global supply chain, China’s export restrictions are already shutting down production in Europe’s supplier sector,” said Benjamin Krieger, secretary general of CLEPA.
“We urgently call on both the EU and Chinese authorities to engage in a constructive dialogue to ensure the licensing process is transparent, proportionate, and aligned with international norms.”
The EU has launched initiatives including the Critical Raw Materials Act to boost European rare-earth sources but it doesn’t address the stranglehold of China directly.
Last week European commission vice president Maros Šefčovič raised the export restrictions on seven rare earths at an OECD meeting with Chinese commerce minister Wang Wentao.
On Saturday, China’s Ministry of Commerce said it was willing to establish a “green channel” for eligible rare earth export license applications to expedite the approval process to EU firms. That could be a reprive to the car sector, with Beijing hoping the EU would take “reciprocal steps”….
