What are rare earth minerals, and why are they central to Trump’s trade deal with China?

Commodity

Economic

Summary:

Rare earths are 17 metals used in electronics, EVs, and military systems. China dominates mining and processing, giving it leverage. The U.S.–China trade deal seeks to ease China’s export restrictions and reduce U.S. dependence.

The US trade deal with China seeks to resolve a major sticking point of their ongoing trade war: rare-earth minerals.

Despite multiple rounds of talks with US trade negotiators over the past several months, China continued to slow-walk promises to the Trump administration that it would free up crucial rare-earth metals, and earlier guarantees of expedited rare-earth licenses to US companies never materialized. Beijing even tightened earlier this month its controls by massively expanding its restrictions..

Under Thursday’s deal, China agreed to roll back those newly imposed rules, though the initial restrictions unveiled in April appear to remain in place.

The tussle over rare earths precedes the current administration; China for years has built up near-total control of the minerals as part of its wider industrial policy.

Here’s what you need to know about rare earths.

What are rare earths, and are they actually ‘rare?’

Rare earths include 17 metallic elements in the periodic table made up of scandium, yttrium and the lanthanides.

The name “rare earths” is a bit of a misnomer, as the materials are found throughout the Earth’s crust. They are more abundant than gold, but they are difficult and costly to extract and process and are also environmentally damaging.

What are rare earths used for?

Rare earths are ubiquitous in everyday technologies, from smartphones to wind turbines to LED lights and flat-screen TVs. They’re crucial for batteries in electric vehicles, as well as MRI scanners and cancer treatments.

Rare earths are also essential for the US military. They’re used in F-35 fighter jets, submarines, lasers, satellites, Tomahawk missiles and more, according to a 2025 research note from CSIS.

Where do rare earths come from?

Sixty-one percent of mined rare earth production comes from China, according to the International Energy Agency, and the country controls 92% of the global output in the processing stage.

There are two types of rare earths, categorized by their atomic weights: heavy and light. Heavy rare earths are more scarce, and the United States doesn’t have the capability to separate rare earths after extraction.

“Until the start of the year, whatever heavy rare earths we did mine in California, we still sent to China for separation,” Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, told CNN.

However, the Trump administration’s announcement of sky-high tariffs on China in April derailed this process. “China has shown a willingness to weaponize” America’s reliance on China for rare earth separation, she said.

The US has one operational rare earth mine in California, according to Baskaran.

Why do rare earths matter in the trade war?

Beijing is using rare earths as major leverage in the trade war, and its latest restrictions were a major topic of conversation when Xi and Trump met Thursday at the APEC summit in South Korea.

Earlier this month, China added five rare-earth elements – holmium, erbium, thulium, europium, ytterbium, and related magnets and materials – to its existing control list, requiring export licenses. That makes the total amount of restricted rare earths to 12. China also required licenses to export rare earth manufacturing technologies out of the country.

It’s not the first time this year that Chinese restrictions on rare earths have angered Trump. In June, Trump said on Truth Social that China violated a trade truce as Beijing kept its export controls on seven rare earth minerals and associated products.

The export controls could have a major impact, since the US is heavily reliant on China for rare earths. Between 2020 and 2023, 70% of US imports of rare earth compounds and metals came from the country, according to a US Geological Survey report.

But China’s latest restrictions were seen as a dramatic escalation in Trump’s trade war between the world’s two biggest economic powers.

Source: cnn

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Stocks

The froth in U.S. stock markets can be seen in small companies too.

The Russell 2000 index has outperformed the S&P 500 since this year's April troughs, hitting records this week thanks to bets that interest-rate cuts can keep them climbing. Those hopes have fueled optimism that small-caps—generally, those with market capitalizations between $250 million and $2 billion—will continue to climb.

But under the hood of the index, some investors see reasons for concern. Unprofitable companies in the Russell 2000 had surged about 19% this year through Oct. 21, more than double the 9% gain for profitable firms, according to Oren Shiran, portfolio manager of the Lazard US Systematic Small Cap Equity ETF (SYZ). And the S&P 600—the small-cap index that requires positive earnings—is up about 2% for the year as of Thursday's close, lower than rates offered by low-risk CDs.

Investor enthusiasm over the prospect of lower interest rates, which tend to benefit small companies, may have driven the speculative rally, Shiran said in an interview with Investopedia. (Federal Reserve Chair Jerome Powell tempered rate-cut expectations this week after the Fed trimmed its key rate for the second time in as many months, but market participants still expect more cuts are coming.)

Why This Matters to Investors

Small-cap rallies have been disappointingly short-lived in the past few years, but experts in that size group say they now have greater conviction that those companies will deliver bigger gains than their larger peers.

In spite of the speculative lift, fund managers continue to make a case for small-cap stocks, because they are expected to show stronger earnings growth following two years of relatively little movement in profits.

Also, small-cap valuations remained relatively attractive at the end of the third quarter even after its run-up from April lows. That shows in two ways—the Russell 2000's total market capitalization as a percentage of the total market index Russell 3000 is at 4.4%, substantially lower than the historical average of 7.6% since late 1984, according to Royce Investment Partners. And small-cap valuations compared to large-caps as measured by enterprise value to earnings before interest and taxes, after stripping out companies with profit losses, are near 25-year lows, the firm said. Meanwhile, the Russell 2000's estimated 2025 earnings is expected to rise over 25%, more than double the Russell 1000's 10%.

A strong U.S. economy is generally seen as particularly helpful to smaller companies, which tend to have less international business. There's uncertainty in that "recent jobs numbers have been underwhelming, consumer confidence is still wobbly and manufacturing data has been sluggish," Francis Gannon, Royce's co-chief investment officer wrote in a quarterly note earlier this month. "However, consumers continue to spend, the economy is growing, and access to capital has widened with the reduction in rates."

The concerns about small-caps echo those leveled at stocks generally, with indexes at records, but unlike their large counterparts, they haven't had their time in the spotlight for years. If asset prices and historical returns revert to their long-term averages, per mean reversion theory, then small-cap stocks should continue running.

Source: finance.yahoo

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Adam

Economic

If Google has already moved past its most perilous legal challenge and wiggled out of the perception of playing catch-up to its rivals, the remaining question is one of search economics: How can Google make money from AI without dismantling the foundation of its search business?

In every quarter this year, and most resoundingly this week, Google's answer to that existential question is that artificial intelligence will expand its users' appetites for information. Google's AI assistant, AI overviews, and AI Mode may eventually supplant the legacy search bar that has built the company. But the search giant's first $100 billion quarter suggests cannibalization isn't the right frame for Google's AI transition. Augmentation is more like it.

The stock rose 5% following a triumphant report that exceeded expectations and thrust Google's parent Alphabet back into the Big Tech spotlight. Where several of its peers flunked the initial rush after earnings as investors recoiled from ballooning AI spending, Google powered through it. The stock is neck and neck with Nvidia as the best-performing member of the "Magnificent Seven" so far this year, enjoying a gain of more than 50%.

"Alphabet's execution on artificial intelligence, evidenced by strong traction for its Gemini app, which has more than 650 million monthly users, along with its ability to deliver solid advertising revenue, continues to drive results while refuting the AI-led disruption narrative," Morningstar senior equity analyst Malik Ahmed Khan wrote in a note on Thursday.

Dan Ives, an analyst at Wedbush, was similarly bullish on Google's search business. The record quarter was a show of strength and marks an inflection point of moving past legal troubles that had weighed on its valuation and escaping the laggard's position in the AI race.

"Concerns around the impact of genAI on the business are fading, and following a favorable regulatory outcome for the Search business in the DOJ case last month, we are increasingly constructive on the longer-term durability of the segment," Ives wrote in a note on Thursday.

Investors' reaction to Big Tech's nonstop capex spree can seem fickle. But a reliable way to win approval is to present dazzling earnings, softening the blow of a bigger AI bill, or in Google's case, showing that even gargantuan investments are already paying off. Alphabet increased its capital expenditures forecast for the year to a high point of $93 billion from its previous estimate of $85 billion. Alphabet CFO Anat Ashkenazi emphasized that customer demand for AI technology exceeds supply.

The company has another ace up its sleeve. Or several. As Bank of America analysts Justin Post and Nitin Bansal wrote in a note after earnings, early-stage bets, including Waymo and quantum computing, offer long-term opportunities that are not reflected in Google's valuation.

Yes, Google has had its share of consumer product failures (Google Plus, RIP). And even Apple called it quits on its car project. But Google is good at the things it's good at.

And right now, that's convincing people that the company will be at the center of the AI story.

Source: finance.yahoo

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Adam

Economic

Nvidia CEO Jensen Huang said on Friday that artificial intelligence had reached a “virtuous cycle,” tipping the industry for continuous growth.

Speaking at the APEC CEO Summit in South Korea, Huang said the vast improvements in AI models were leading to more investment in the technology, which was, in turn, improving the AI models even further.

“We have now achieved what is called the virtual cycle,” he said on stage at the event, wearing a suit rather than his usual black leather jacket.

“The AIs get better. More people use it. More people use it, it makes more profit, creates more factories, which allows us to create even better AIs, which allows more people to use it. The virtual cycle of AI has been designed, and this is ... the reason why you’re seeing the world’s capex going so fast.”

His comments come as Big Tech is spending billions to build out AI-related infrastructure and serve its end users.

This year was expected to be a big one for AI spend with Meta, Amazon, Alphabet and Microsoft announcing plans to spend over $300 billion combined on AI technologies and datacenter buildouts. This looks set to continue into 2026 as the tech giants plan to boost spending again, per their respective earnings, reported this week.

Dan Ives, Wedbush Securities global head of technology research, described Nvidia as “the foundation of the AI Revolution” in comments to CNBC after Huang’s comments on stage.

He described the AI virtuous cycle as: “The more demand, the more building of AI building blocks. And demand creates more demand and capex.”

Huang stressed that profitability was at the heart of the current boom in AI capital investment.

“When something becomes profitable, you want to manufacture more of it, just like when you’re manufacturing chips and wafers and DRAM, if the manufacturing of those chips were profitable, you want to build more factories to create more chips,” he added.

A new era of computing

It is the beginning of a new era of computing, as, with AI, “every single layer of the computing stack is being fundamentally changed,” Huang said on stage.

We are at the beginning of a 10-year build-out of this new era, he added.

“AI runs on GPUs [graphics processing unit], whereas hand-coded software runs on CPUs [central processing unit]. This entire software stack, from the ... the needs of energy, chips, the infrastructure, all of the software associated with the systems, the AI models and the applications on top, every single layer of computing has been fundamentally changed,” he said.

“Just think: the computer industry has been largely the same for 60 years, and now, with AI and accelerated computing, every single layer of the computing stack is being changed. All of the computers we’ve created in the past, a trillion dollars, maybe more, of computers needs to now be transitioned, shifted to the new computing platform,” he added.

Nvidia, which became the first company to surpass $5 trillion in market value earlier this week, announced a partnership with Korean semiconductor giant Samsung earlier on Friday. Samsung plans to buy and deploy a cluster of 50,000 Nvidia GPUs to improve its chip manufacturing for mobile devices and robots.

Huang painted a picture of the future in which AI is able to “work,” rather than just be used as a tool. Highlighting the rise of fully automated manufacturing factories, the CEO expects AI to reshape $100 trillion worth of industries around the world.

Source: cnbc

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Justin

Forex

Stocks

Economic

Unprofitable Air India Ltd. is seeking at least 100 billion rupees ($1.1 billion) in financial support from its owners Tata Sons Pvt. and Singapore Airlines Ltd., said people familiar with the matter, as the airline grapples with the aftermath of a deadly plane crash among other challenges.The request includes funds for overhauling Air India's systems and services as well as developing in-house engineering and maintenance departments, some of the people said, requesting not to be identified as the information is not public.

The ailing carrier is far from a goal of breaking even operationally by end of March next year after facing multiple setbacks. The appeal for more funding underscores the challenges of operating in the India's aviation market where many carriers have exited after burning cash. Sector leader Interglobe Aviation Ltd., which operates the IndiGo fleet, is the only profitable domestic carrier with over 64% market share.The carrier is 74.9% owned by the Tata Group, with the rest held by SIA. Any financial support would be proportional to ownership, the people said, adding that the owners would decide if the funding will be an interest-free loan or via equity.

Spokespersons for Tata Sons, Air India and SIA did not respond to emailed queries seeking comments on the financial support sought by the carrier.Air India's pursuit of profitability was already tottering in early June as it had to fly longer hours for its non-stop west-bound flights from India after an armed border conflict in May with Pakistan led to airspace curbs.The financial math worsened after one of its Boeing 787 Dreamliner headed for London crashed immediately after take off from Ahmedabad on June 12, killing all but one on board. Safety concerns following the tragedy led to a system-wide audit by India's aviation regulator. Air India also slashed international flights on widebody jets by 15% starting June through August, which curbed revenue as well.

SIA is closely involved in key functions such as engineering, operations and airport services at the airline after the Ahmedabad crash, the people said.AI Engineering Services Ltd. - a government-owned entity and formerly a subsidiary of Air India - does maintenance work for the airline. The financial support will help Air India scale up its own engineering and maintenance capabilities by building hangars at key airports in the country, the people said.

Airport services at six key airports are done through Air India-Singapore Airport Terminal Services - an equal joint venture between Air India and SATS, the people said, adding that ground services at other airports were also being looked into.

Source: Bloomberg Europe

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Adam

Commodity

Gold and silver posted substantial gains this week, defying the traditional inverse relationship with the U.S. dollar as investors increasingly turn to precious metals amid geopolitical uncertainty and shifting market dynamics.

According to data released by the World Gold Council, investor appetite for gold continues to strengthen, with total demand for the precious metal rising 3% year-over-year to reach 1,313 metric tons. The organization attributed this growth primarily to robust exchange-traded fund inflows and heightened retail investment in bars and coins. The Council noted that fear-of-missing-out sentiment has taken hold among retail investors, amplified by ongoing geopolitical concerns. Notably, gold's rapid price appreciation—which has historically dampened demand during previous rallies—appears to have had little deterrent effect on current buying activity.

The World Gold Council maintains an optimistic outlook for the remainder of the year, projecting central bank purchases to remain substantial at between 750 and 900 metric tons. While this estimate represents a decline from the previous year's levels, it aligns with purchasing patterns observed year-to-date, underscoring continued institutional demand for gold reserves.

Recent developments in U.S.-China trade relations have contributed to dollar strength, with the Trump administration announcing a one-year agreement with Beijing covering rare earth elements and critical minerals. As part of the deal, tariffs on fentanyl-related imports were reduced by half to 10%, while China committed to curtailing fentanyl production and resuming purchases of American agricultural products, including soybeans.

These trade developments, combined with what markets interpreted as hawkish commentary from Federal Reserve Chairman Jerome Powell, propelled the U.S. Dollar Index to consecutive daily gains of 0.41% and 0.38% respectively. The greenback reached an intraday high of 99.72—a level last observed on August 1st—marking its strongest performance in months.

Despite the appreciating dollar, which typically exerts downward pressure on commodity prices, both gold and silver demonstrated remarkable resilience. Silver futures for December delivery on the Comex exchange advanced $1.50, or 3.17%, to trade at $48.75 per ounce. Spot silver gained $1.34, or 2.84%, to $48.89, with the premium of spot prices over futures indicating a return to backwardation—a market structure that signals robust demand for physical metal is outpacing available supply.

Precious metals rally defying dollar strength with surging investment demand_1

Gold followed silver's lead with an even more pronounced rally, posting nearly $100 in single-day gains. The most actively traded December Comex gold futures contract climbed $98.30, or 2.51%, to settle at $4,039.80 per troy ounce. The advance restored both futures and spot gold above the psychologically significant threshold of $4,000 per ounce, reinforcing bullish sentiment in the precious metals complex.

The concurrent strength in precious metals and the dollar represents an unusual market dynamic, suggesting that safe-haven demand and investment flows are currently overriding traditional currency-driven price relationships.

Source : kitco

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Economic

Euro zone firms are enjoying a slight improvement in business conditions but this still points to only modest growth, even if some sectors, such as AI, are booming, the ECB's survey of non-financial companies showed on Friday.

The ECB kept policy unchanged on Thursday, saying the economic outlook remained in line with its earlier projections for slow but steady growth as tariff headwinds are offset by consumption.

"Many firms were investing strongly in digital infrastructure, giving rise to substantially growing demand for software and databases, particularly cloud solutions, and AI," the ECB said.

Firms said these investments were particularly strong in the financial and public sectors and the increasing deployment of artificial intelligence was also starting to disrupt the business model of traditional consultancy firms.

Meanwhile, manufacturing, continued to struggle.

"Manufacturing output was still weighed down by tariffs, uncertainty and challenges to competitiveness as well as relatively muted growth in consumer goods spending, with little improvement anticipated in the short term," the ECB said.

Construction was, however, slowly turning the corner, and firms pointed to good or reasonable growth, linked especially to consumer spending on tourism and hospitality, and to investment in software, data solutions and artificial intelligence, the ECB added.

Consumer spending remained lacklustre, appliance and electronics manufacturers were more positive and contacts in tourism, hospitality and entertainment had grown strongly over the summer.

Machine investment still remained subdued but spending on AI was booming.

The survey also showed that the employment outlook remained relatively subdued, wage growth was moderating and selling price momentum was showing a further slight slowdown.