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Stocks drop as nervous markets await Fed decision, rates outlook
Investors worried about the direction U.S. interest rates could take next year amid fears about a divided Central Bank. Asian stocks dropped while the dollar remained steady on Tuesday. Investor sentiment was cautious after a shaky start to the week, with key central bank meetings. Markets are looking for clarity on the outlook of global interest rates. Reserve Bank of Australia kept rates unchanged as expected on February 2, ruling out any further policy easing. They warned that the next step could be an increase if inflation pressures remain stubborn. The Australian dollar traded just below a three-month high. Bank of Canada, Swiss National Bank, and the Federal Reserve are expected to keep rates unchanged this week. Many Wall Street banks predict that the Fed will not cut interest rates as much in 2026 due to lingering concerns about inflation and expectations for a stronger U.S. economic recovery. MSCI's broadest Asia-Pacific share index outside Japan fell by 0.65% after a weak session overnight on Wall Street. European futures point to a subdued opening as a cautious air grips the markets. Prashant Nnewnaha, senior Asia-Pacific rate strategist at TD Securities, said that "the low-hanging fruits from risk management reductions are likely over" and that Chair Powell's upcoming press conference is likely to reflect a more conservative approach in the future regarding policy recalibration. The dot plot is likely to show a single cut in 2026. If the dot plot indicates two cuts next year, this would be considered dovish. According to LSEG, traders are pricing in 77 basis point of easing at the end of the next year. Some strategists believe that the Fed's Policy Committee could be deeply divided. The meeting is also being held in the context of increased market interest about who will replace Powell as Fed chair when his current term ends next May. Kevin Hassett, White House Economic Advisor and leading contender for the Fed chair role, said in an exclusive interview that the Fed should continue to reduce interest rates. Xiao Cui is a senior U.S. economics from Pictet Wealth Management. He expects that a solid economy, inflation above target, and a slowing labor market will increase the internal divisions within the FOMC, making 2026 a challenging year for policymakers. We see risks that Fed reductions are delayed until the second half 2026. Asian chip stocks sank after U.S. president Donald Trump announced that the United States would allow Nvidia to export its H200 processors -?its second best artificial intelligence chips - to China, and charge a 25% tax on these sales. China's CSI Semiconductor Industry Index fell 0.5%, while the broader CSI300 Index dropped 0.47%. The dollar was stable on Tuesday. The euro was last trading at $1.1649, while the pound sterling was up 0.11% to $1.3336. The Aussie dollar was up 0.33% at $0.6646. It is hovering near its highest level since September after RBA Governor Michele Bullock warned of the possibility of an increase in interest rates due to inflationary forces. The yen remained unchanged at 155.91 to the dollar, after a sharp decline immediately following a powerful earthquake in Japan. The Japanese authorities lifted the tsunami warnings Tuesday, hours after a powerful 7.5-magnitude quake shook Japan's northeastern region, injuring 30 people at least and forcing 90,000 residents from their homes. Oil prices continued to fall in commodities after a 2% drop in the previous session, as traders kept an eye on the peace talks that were taking place in Ukraine to end Russia's conflict. Brent crude futures fell 0.3% to $62.32 per barrel. U.S. West Texas Intermediate Crude was down by 0.41% at $58.64. (Reporting and editing by Shri Navaratnam in Singapore)
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US military develops small refineries for critical mineral substances
The U.S. Military said it plans to build a fleet small-scale refineries that will produce the critical minerals needed to manufacture bullets, armor, and other types of weaponry. This is a step to create domestic sources of niche materials, which Chinese miners have 'long controlled. Plans, not previously announced, are being developed jointly by the U.S. Army, the Idaho National Laboratory, and the antimony and gold mining company Perpetua Resources. Antimony is the first mineral that the military wants to refine. The Army has said that it will not produce large quantities of minerals for private consumption. However, a small-scale approach could provide a constant stream of building blocks, without having to rely on commercial refineries which are often much larger and primarily focused on bulk commodities, such as copper and iron ore. Washington hopes to refine other minerals, such as?tungsten and rare earths, which the U.S. government considers critical. Mark Mezger is a U.S. Army munitions adviser. He said, "We must find a way of making our own critical minerals that we can control and monitor within our borders." The Army spent $30,000,000 over several years developing the refinery programme for antimony. Westpro Machinery, a private company, designed a refinery which can be transported within four shipping containers. The refinery is able to produce between 7 and 10 metric tons of trisulfide (a type of antimony) annually, which is far less than what a commercial refinery could produce. However, it's enough to supply the Army in peacetime. Mezger stated that if a conflict breaks out, the Army could expand processing by adding more mini-refineries for ore from Perpetua’s Idaho mine. He added that the Army was in discussions with other U.S. Antimony Projects to source additional antimony. Primers, which are the explosive caps at the base of a bullet, are made from antimony trisulfide. The United States hasn't produced this version of antimony since the 1960s. "You can't make primers without antimony trisulfide." Without primers you cannot make bullets. "An army without bullets would be a mere parade," Mezger said. Idaho National Laboratory is testing the facility over the next six-months and if it passes muster will be operating it for Perpetua and the Army. Perpetua is backed both by JPMorgan Chase and the billionaire investor John Paulson. Officials said that refineries for other minerals could be situated on military bases or government properties. In March, was the first to report that the Trump Administration was considering placing metal refining plants on U.S. Military bases. The portable refinery will perform steps that are common in larger facilities, such as crushing rock. The type of mineral produced will determine the chemicals that are used. INL will also be involved in ensuring that the facility is not only a copy of existing refinery standards, but is also cleaner and more efficient. In 2021, the Army learned that China had stopped shipping Trisulfide. This triggered a rapid drawdown of its one-year supply and a rush to find alternative supplies in India. Mezger explained that the refinery plan was borne out of a recognition that a domestic alternative was essential. Jon Cherry, Perpetua CEO, said that the development of the plant should "pave a way for sustainable American mineral independence and resilient." (Reporting and editing by Ernest Scheyder)
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Bezos Earth Fund increases marine conservation by $24.5 million
Head of Nature of the world's largest climate philanthropy, gave $24.5 million for coastal ecosystem protection as part of a plan that aims to create a cross-border marine Biosphere Reserve. The Bezos Earth Fund has awarded four grants to local communities in Costa Rica and Panama. Colombia and Ecuador will also receive a grant. The grants are part of a $1 billion plan to protect 30% of the land and oceans of the planet by 2030. The group of donors aims to contribute $5 billion in the same time period as part of the "Protecting Our Planet Challenge" with 10 other philanthropies. The Bezos?Earth?Fund, and the wider coalition have deployed more than $3.5 billion of the $5 billion total. Re:wild, an organization that helps partners establish and strengthen coastal reserves for turtles, hammerheads sharks and other marine species. Cristian Samper, the Bezos Earth Fund’s director of nature, stated that "it's an extremely important area for species migration." "The only way to protect this area is by doing it transboundary." He said that in two years, the four countries tripled the size?of the protected seas, to more than 600,00 square kilometres (231,660 square miles), across 10 different areas. The goal now is to create a biosphere reserve. "That'll be the first of its kind in the world," said Samper, adding that the Fund is also examining a similar?"reserve" in the Pacific which would be five times as large as the continental United States. The fund agreed to spend 100?million dollars helping the Pacific Region implement the global biodiversity goals and would announce the second set of grant in 2026. This is the kind of work that you should be doing to move the needle toward 30 by 30. (Reporting and editing by William Maclean, Simon Jessop)
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Saudi crude oil supplies to China in January are set to reach a three-month high following price drops
Sources said that Saudi Arabia's crude oil exports to China are set to reach a record high in January, after it lowered its official selling prices for Asia. Saudi Aramco, the state oil company, will send about 49.5 millions barrels or 1.60 million barrels a day to China in January, according to a list of allotments to Chinese refiners. According to records, the allocation volume is up from the two previous months when it was?under 40 millions barrels. It's also the highest since last October. Sources said that PetroChina, Rongsheng Petrochemical, and Shenghong Petrochemical were among the companies who planned to increase Saudi crude shipments next month. CNOOC, Hengli Petrochemical and others will lift less this month than the previous month. Saudi Aramco has not yet commented on the allocation of January to China. Last week, the state-owned producer released its official January selling prices. The price of the Arab Light crude oil to Asia was cut by 60 cents per barrel, compared with the average for Oman/Dubai, which is the lowest in five years. Two sources stated that the lower price attracted term buyers to lift more. OSPs were also cheaper than spot benchmarks, which also boosted demand. Late November, Chinese independent refiners received their first shipment of import quotas for 2026.
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MORNING BID EUROPE: Markets racked with anxiety as we approach the day of Fed
Ankur Banerjee gives us a look at what the future holds for European and global markets Investors are on edge about the U.S. financial policy outlook, ahead of the?expected Federal Reserve rate cut this week. A divided central 'bank and the prospect that a dovish Fed Chair will replace?Jerome Powell have investors worried. Welcome to the almost-Fed Day! The traders are almost certain that the Fed will cut rates by 25 basis points on Wednesday. Let's face it, most traders are focused on what Powell says and how many rate reductions the dot plot for 2026 will show. The markets are predicting 77 basis point easing by the end of 2026. This means that two more price cuts will remain after December. This week, the Fed is expected to adopt a semihawkish tone and warn that the next rate cut bar will be raised. Anything that sounds even vaguely dovish is a surprise, and could cause a lot of volatility. Bond investors are preparing for a short-term easing cycle by reducing their exposure to Treasuries with long maturities and rotating into intermediate maturities in order to get a better return. White House economist Kevin Hassett said that the Fed should lower interest rates in an interview. This added yet another layer to a likely complex Fed decision-making day. Jamie McGeever, Open Interest Markets columnist, writes that the markets aren't so sure. Stocks are largely trading sideways in the'skittish' mood. European futures suggest a lacklustre start to the year. However, chip stocks may be worth watching. Donald Trump announced on Monday that the United States would allow Nvidia H200 processors to be exported to China, and charge a 25%?fee? for such sales. The Australian dollar also fluctuated after the central bank of Australia kept interest rates the same as expected. After a brief period of weakness, the yen remained steady as soon as news of a powerful quake in Japan began to filter through. The impact of the earthquake has been minimal, as Japanese authorities have lifted tsunami warnings. The following are key developments that may influence the markets on Tuesday. Exports and imports of Germany for October
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Orangutans in danger as Indonesia floods destroy habitat
Amran Siagian (39), a resident of Sipirok in North Sumatra province, met Tapanuli Orangutans frequently on a hill. Siagian who has been working at the Orangutan Center (OIC), as a ranger, to protect this endangered animal for at least five year, recalls that the orangutans loved eating durians and other fruits grown in the surrounding area. Orangutans have disappeared from Sipirok after the landslides. As of Tuesday, 962 people had died from the cyclone-induced flooding and landslides. 291 are still missing. Storms in southern Thailand and Malaysia also claimed the lives of?about 200 other people. "They must have gone further and farther away." I could not hear their voices," Siagian said. Local leaders and green groups have said that?deforestation caused by mining and logging has exacerbated the impact of floods and land slides. Large trees were cut down in Sipirok, which is a village located in South Tapanuli, and was one of the worst hit areas by the disaster. Siagian claimed that a company has been logging the area for more than a year. He said that the deforestation affected orangutans before the floods. Orangutans live by moving from branch to branch between the forest canopy. Siagian stated that if the forest was sparse, they would have a difficult time. OIC founder Panud Hadisiswoyo stated that there were approximately 760 orangutans living in the Tapanuli Region. He said that the biggest threat to forests is due to plantations, and extractive industries. According to World Wildlife Fund, there are 119,000 orangutans in Indonesia and Malaysia. Orangutans may become extinct in this area if the government does not step up. Siagian added that the deforestation was a major factor. (Reporting and writing by Ahmad Luqman Ismail in South Tapanuli, Ananda Teresia, Editing by Stephen Coates.
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Gold prices stable as markets prepare for Fed's hawkish tone
The price of gold was flat on Tuesday, as investors had already priced in a Federal Reserve rate cut. They were also preparing for signs that the U.S. Central Bank may adopt a more moderate easing cycle than expected at its two-day meeting beginning later that day. As of 0444 GMT, spot gold was flat at $4,189.17 an ounce. U.S. Gold futures for December delivery were flat at $4.218.50 an ounce. Kelvin Wong, senior market analyst at OANDA, said that investors are repositioning themselves largely ahead of the Federal Reserve's policy-setting meeting. Powell had given a hawkish rate cut guidance in his press conference earlier this month. Investors in the U.S. Treasury Market are now adjusting their positions. The benchmark 'U.S. The 10-year Treasury yields remained near the 2-1/2 month high reached on Monday. Analysts expect to see a "hawkish" cut this week, accompanied by forecasts and guidance that indicate a high threshold of further easing next year. The U.S. The Fed's preferred inflation indicator, the Personal Consumption Expenditures Price Index (PCE), was in line with expectations. Consumer sentiment also improved in December. The private payrolls in November showed a sharpest decline since more than two-and-a half years. However, jobless claims dropped to a 3-year low during the week ending November 28. According to CME’s FedWatch Tool, the markets now give an 89% chance of a quarter point cut at the Fed’s meeting on December 9-10. Gold is a non-yielding asset that tends to be favoured by lower interest rates. Silver rose by?0.2%, to $58.24 an ounce. This is not far off the record high of $59.32 per ounce that was reached on Friday. Wong said that silver was a more risky play than gold, due to its low inventories and strong industrial demand. He also added that the Fed's rate cut expectations and low inventory levels are pushing silver into a high-risk mode. Palladium rose 0.7%, to $1475.38, and platinum gained 0.4%, to $1649.10. (Reporting and editing by Sumana Aich, Rashmia Aich, and Ishaan arora in Bengaluru)
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The US rate decision and peace talks with Ukraine have a positive impact on oil prices.
The oil prices fell a little more?on Tuesday. This was a continuation of the 2% decline in the previous session. Markets are keeping a close watch on the peace talks that will end the war between Russia and Ukraine, as well as the imminent decision by the U.S. Federal Reserve on interest rates. Brent crude futures fell 8 cents or 0.1% to $62.41 per barrel at 0409 GMT. U.S. West Texas Intermediate Crude was trading at $58.75 - down 13 cents or 0.2%. Both contracts dropped by more than $1 per barrel on Monday, after Iraq restored production of Lukoil’s West Qurna 2 Oilfield, which is one of the largest in the world. Priyanka Sahdeva, senior market analyst at Phillip Nova, said that Brent's move back?towards the $62 level (aligns) seamlessly with the broader narrative for December. The noise about potential Iraqi disruptions faded overnight and the market quickly returned to its core theme: ample supply and conservative demand expectations. After talks between the President of Ukraine Volodymyr Zelenskiy and leaders from?France Germany and Britain in London, Ukraine will share its revised peace plan with the U.S. Tim Waterer, KCM Trade's chief market analyst, said that oil is "keeping to a narrow trading range" until we know the outcome of the peace talks. He added that if the talks fail, oil prices will likely rise. If progress is made and it is possible for Russian energy to be supplied to the global market again, the price is expected to drop. Sources familiar with the issue claim that the Group of Seven and the European Union have been in discussions to replace the price cap on Russian oil exports by a complete ban on maritime services in an effort to reduce Russia's revenue from oil. The Federal Reserve policy decision is due on Wednesday. Markets have priced in a 87% chance of a rate cut by a quarter point. Low interest rates are typically a positive factor for oil demand, given that they reduce the cost of borrowing. However, some analysts remain cautious as to how this will affect oil prices in the near future. Sachdeva, of Phillip Nova, said that although markets are heavily invested in the FED's policy decision for Wednesday, which could result in a 25bp cut and provide short-term support to the lower end 60-65 range, the price structure is still anchored on the expectation of an oversupplied oil market by 2026. Reporting by Ashitha Shivprasad from Bengaluru, and Trixie Yap from Singapore. Editing by Thomas Derpinghaus & Jamie Freed.
Demand for carbon credits is fueled by the Big Tech industry
The demand from tech giants for high-quality credits to offset their AI emissions is fueling a shortage, which experts say is what's needed to stimulate investment in this nascent industry.
Credits tied to forest preservation projects will be nearly four times as expensive in 2024 due to heavy purchases by companies such as Microsoft and Google over the past two years.
Credit experts report that Big Tech collectively has spent hundreds of millions on carbon removals which capture and store CO2 for an extended time, a large portion of this in the past two years. According to CDR.fyi, the total amount spent on spot market agreements and long-term offtake contracts is $10 billion.
Scientists believe that carbon-removal project are vital to the global effort to reduce global warming. They say this is because they offset emissions from industries such as energy generation which continue to use fossils fuels.
Carbon credits linked to biochar projects, where biomass is transformed into a substance similar to charcoal that locks in the carbon, or direct-air capture are seen as a more reliable, long-term method of removing carbon. Credits that are linked to the restoration of degraded lands are also highly valued. The demand for credit is increasing as tech companies, which often use fossil fuels to power data centers, expand them in order to support artificial intelligence.
Brennan Spellacy is the chief executive officer of climate technology firm Patch. He said that many other companies are also using AI to expand and grow their business. Some of those returns can be used to purchase credits.
AI is the driving force behind companies' success. Spellacy stated that AI is driving profits and profit drives investment.
The tech giants pledged to eliminate their net emissions in the future. Under President Donald Trump, the United States has withdrawn from the 2015 Paris Climate Treaty.
Microsoft's spokesperson said that long-term purchases "send strong signals of demand" to create a positive cycle for innovation, funding, and deployment. By anchoring large scale projects, we drive new supply and leave headroom for corporate buyers to enter," a spokesperson from Microsoft said.
Alphabet, the parent company of Google, declined to comment.
Buyers must settle their differences
The credit supply has not kept up with the demand.
Patch reported that despite a third of the requests for credits to be purchased through its platform being for biochar, it only accounted for 20% of sales due to a shortage of stock.
Credits for reforestation were requested 25 percent of the time but only sold 12 percent of the times.
The numbers show that the desire for quality is real. "In 2024 there will be 8 million tons of durable removal carbon purchased. This year it is 25 million," Lukas May said, Chief Commercial Officer at Carbon Registry Isometric.
The big tech companies are certainly driving this trend.
CDR.fyi shows that less than one million tons of durable carbon removal credits has been issued to date, mainly from biochar projects.
More companies are entering offtake agreements to help increase supply. This should allow developers to have certainty about sales, added May.
The extra demand will ultimately drive the extra supply.
SCALING BIOCHAR IN BRITAIN
Some people find that the solution to the supply crunch is to create their own credit.
Pure Data Centres Group - a company that counts many large tech companies among its clients - plans to spend $31.6 million (24 million pounds) to build the UK's largest biochar project in Wiltshire, to make sure it has enough.
When we began to evaluate suppliers, it became clear that finding a high-quality, reliable product was a challenge. "We decided that the best way to ensure quality was to develop and produce our own expertise," said Dawn Childs, Chief Executive.
Alastair Collier, chief R&D Officer at A Healthier Earth subsidiary, which will manage the project, stated that it would start operating in December and scale up over the next 18 months, removing 9,000 tons carbon per year. Three additional sites are planned for the UK.
"My investment thesis for the past three years has been that demand will and already outstrip supply."
(source: Reuters)