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Wall St. shaken by fears of stretched valuations, Asian markets retreat
Investors' concerns over stretched valuations eroded confidence in the early trading of Wednesday, as Asian stocks continued to fall overnight on Wall Street. MSCI's broadest Asia-Pacific share index outside Japan fell by 0.8%. South Korean shares were the biggest losers, with a drop of 4.1%. U.S. E-mini Futures fell 0.4% after the S&P500 dropped 1.2% overnight. Chris Weston is the head of research for Pepperstone Group, based in Melbourne. There aren't a lot of reasons to buy, and the market is lacking a catalyst until Nvidia announces its earnings on November 19. The stock market is retreating after reaching record highs, amid fears that equity markets have become stretched. This comes as CEOs from Wall Street giants Morgan Stanley and Goldman Sachs asked whether such valuations could be sustained. Jamie Dimon, CEO of JPMorgan Chase, warned last month of the increased risk of a major correction of the U.S. Stock Market within the next 6 months to 2 years. The warnings coincide with a global surge of enthusiasm for generative AI that has affected stock markets around the world this year. SoftBank Group shares plunged 10%, while Japan's Nikkei index fell 2.5%. After the Bank of Japan released the minutes of its September policy meeting, the U.S. Dollar fell 0.2% to 153.41 yen. The dollar index (which tracks the greenback versus a basket other major trading partners) briefly reached a five-month peak of 100.25. The yield on 10-year Treasury Notes benchmark edged down to 4.0697% from its U.S. closing of 4.091% Tuesday. Bitcoin dropped below $100,000 for first time since last June but recovered and closed the day up 0.2%, at $100,499.70. Gold was up 0.1% at $3,936.48 an ounce after three days of consecutive losses. Early trading saw the euro single currency at $1.1484, after it hit a three-month-low following five consecutive days of declines. Brent crude remained unchanged at $64.44 a barrel. Reporting by Gregor Stuart Hunter Editing done by Shri Navaratnam
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Commodities pull Australian shares down on lower prices
Australian shares fell on Wednesday as weak performances by gold and iron ore mining companies weighed down on commodity stocks. However, positive financials helped to limit the downward trend. As of 2340 GMT, the S&P/ASX 200 was down by 0.2% to 8,798. The benchmark index closed the previous session at its lowest level in over a month. After the dollar strengthened overnight, investors quickly sold their gold stocks. Gold prices have risen 78% this year. On Wednesday, the gold sub-index fell as much as 4,7% to its lowest level for more than a week. Northern Star Resources, Evolution Mining and other gold miners have declined by 2.9% and 4.6% respectively. The mining stocks continued to lose ground, reaching a new low of one month amid the continuing weakness in iron ore due to weak demand from China. The sub-index dropped 2.5%. Mining giants BHP Group, Rio Tinto, and BHP Group fell 1.2% and 2.0%, respectively. The mining sub-index was also affected by the weak copper and gold prices. Australian energy stocks fell nearly 1% following the fall in oil prices, as weaker manufacturing data and a stronger dollar weighed down on demand. The technology stocks fell more than 2%. They took their cues from Wall Street which had closed sharply lower over night after the big banks warned of a possible drawdown in equity markets. The benchmark index was able to recover from its losses thanks to the 0.8% rise in heavyweight financial stocks. The "Big Four' banks rose between 0.4% to 1.4%. CBA, the largest lender, led the way with a 1.4% increase. Reserve Bank of Australia, which had kept rates unchanged as expected, took a cautious stance on further easing of monetary policy on Tuesday. Increased interest rates could potentially boost bank margins. The benchmark S&P/NZX50 index in New Zealand fell by 0.3%, to 13,562.94.
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Budget plan: Canada could remove oil and gas emission cap
The government revealed in its budget plan for the first budget of Prime Minister Mark Carney that Canada may scrap the cap on oil-and-gas emissions and replace it with other measures, such as industrial carbon pricing or the deployment of technology to capture and store carbon. In the climate plan that was part of the first budget of Prime Minister Mark Carney, it said the cap would be no longer needed because its value would be marginal. The Canada's emission cap is not being enforced by legislation, and it will not take effect before 2030. Canadian oil and natural gas companies have condemned it, claiming that this would lead to a reduction in production. Carney has been criticized for renouncing the Liberals' environmental focus. He has focused on trade wars between Canada and the U.S. In the budget, it was also announced that the government would amend greenwashing laws which had caused investment uncertainty. The legislation was passed during the former Trudeau government's tenure last year. Oil companies had criticized it. "PAN-CANADIAN AGREEMENT" The Carney government has said that it is committed to reducing greenhouse gas emissions, and will work with the provincial governments to improve Canada's industrial carbon pricing system. In the budget, it is stated that a "pan Canadian agreement" on carbon pricing would help to increase investor confidence. The government will also apply the federal industrial price of carbon dioxide (CO2) to emitters from any province whose efforts at carbon-pricing do not meet federal standards. Alberta, a province that produces oil and natural gas, has, for instance, frozen its industrial carbon price, while Saskatchewan does not currently have one. Mike Holden is the chief economist of the Business Council of Alberta. The council's members include Canada's biggest energy companies. He said that the industry had "universally condemned" the cap on emissions. Holden stated that "if you have to choose between this and a stronger industrial carbon price I would prefer the latter." Analysts say that large-scale corporate investment in decarbonization, such as the C$16 billion ($11.47billion) carbon capture project proposed by Pathways Alliance, Canada's six biggest oil sands firms -- does not make financial sense without a price for emissions. The budget refers to the Pathways Project as "potentially transformational" for the country and extends the existing investment tax credit available for carbon capture project by five years.
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Stocks drop after recent rally, dollar hits 4-month-high vs Euro
The major stock indexes fell on Tuesday. Chip stocks were also lower. Goldman Sachs' and Morgan Stanley's CEOs warned that the market could be headed for a correction. Meanwhile, the dollar rose to a 4-month high against euro. U.S. Treasuries increased, pushing yields down, amid a flight of safety that also supported the dollar. Bitcoin, the cryptocurrency, fell by more than 6 percent and dropped below $100,000 for first time since last June. At an investment summit held in Hong Kong, bank CEOs warned of the possibility of a stock-market correction of over 10% within the next two year. These comments raised concerns about inflated valuations and potential market bubbles. Nvidia shares fell 4% while a semiconductor index also dropped 4%. Palantir Technologies shares fell more than 8%, despite its strong quarterly results. The company's value has more than doubled this year. It forecasts fourth-quarter results that are above market expectations, as rapid adoption of AI is driving demand for its products. Michael Burry (known for his successful bets in 2008 against the U.S. Housing Market) has placed bearish wagers on Nvidia, and Palantir. This was revealed by a Monday regulatory filing. The Nasdaq fell more than 2 percent, while the S&P 500 dropped more than 1 percent. The Nasdaq has still gained about 21% this year. Greg Faranello is the head of U.S. Rates Strategy at AmeriVet Securities, New York. The Dow Jones Industrial Average dropped 251.44 points or 0.53% to 47,085.24, while the S&P 500 declined 80.42 points or 1.17% to 6,771.55; and the Nasdaq Composite was down 486.09 points or 2.04% to 23,348.64. Shares of Advanced Micro Devices fell more than 2% after the closing bell. This was despite the fact that the company had forecast revenue for the fourth quarter above analyst estimates. The stock closed the regular session at a loss of 3.7%. The MSCI index of global stocks fell 11.51 points or 1.14% to 996.34. The STOXX 600 Index fell by 0.3%. Stocks have been helped by optimism about AI deals. Stocks rose on Monday following Amazon.com’s $38 billion cloud service deal with ChatGPT creator OpenAI. Reduced bets on Federal Reserve rate cuts in the near term boosted the U.S. Dollar, as divisions within the Fed raised doubts about another rate cut for this year. Jerome Powell, the Fed's Chairperson, said that a rate cut in December was not predetermined. CME FedWatch shows that traders are now betting on a 66% chance of a December rate cut, down from 94% one week ago. The euro dropped for the fifth consecutive session and was down by 0.3% to $1.1483, which is its lowest level since August 1. The dollar fell 0.4% against the yen to 153.60yen. However, the Japanese currency was still near its recent 8-1/2 month low. Sterling fell after UK Finance Minister pointed out "hard choices" for her upcoming budget. Sterling dropped 0.9% to $1.3015. The yields on U.S. Treasury bonds fell amid a general risk-off mood in the financial markets. Due to the U.S. government shutdown, the Bureau of Labor Statistics' closely-watched monthly jobs report will not be released on Friday as originally scheduled. In the afternoon, the 10-year benchmark yield sat at 4,089%. This was 1.8 basis points below the previous day. The dollar rose, and oil prices dropped. U.S. crude oil fell by 49 cents, settling at $60.56 per barrel. Brent crude dropped 45 cents, settling at $64.44. Spot gold dropped 1.69%, to $3.933.67 per ounce.
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Utility AES reports a rise in profit for the quarter on higher electricity prices
AES, a U.S. utility company, reported on Tuesday a higher profit for the third quarter due to increased electricity rates and booming demand. Utilities are pushing to increase customer bills in order to fund upgrades to critical infrastructure, such as electrical grids or power lines. This is to support a surge in electricity consumption that has never been seen before. The main reason for this is the rapid expansion of data centers devoted to artificial intelligence (AI) and cryptocurrency. AES's renewables unit has seen significant growth since last year. This is due to a global push towards cleaner power sources, as the U.S. electricity consumption is predicted to reach record levels. Andres Glski, CEO of Gluski Energy, said: "We have a backlog of 11.1 gigawatts of power purchase agreements signed, including 4 GW from hyperscalers, with the majority coming online in the next three to four years." Utility reported revenue of $3.35billion for the third quarter. This is up from $3.29billion a year earlier. The Virginia-based firm reported a net income of $634 million attributable shareholders, up from $504 million the year before. (Reporting and editing by Shilpi Mahumdar in Bengaluru, Vallari Srivastava from Bengaluru)
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Eversource Energy exceeds profit expectations for the third quarter on higher power rates
Eversource Energy, aided by its higher service rates, beat Wall Street's expectations for the third quarter profit on Tuesday. After the bell, shares of the company grew 2%. U.S. utilities are seeking rate increases to upgrade their grids in the face of extreme weather conditions and a growing demand for industrial electrification, data centers and industrial electrification. Rate-case proceedings are used by utilities to determine the amount customers pay for services such as electricity, gas, steam, and private water. Eversource's profit in its electric transmission unit rose by 6% during the third quarter to $185.5 millions, while that of its electric distribution business increased by nearly 9% to a total of $221.6 millions. According to LSEG, Eversource has lowered its profit forecast for 2025 to $4.72 - $4.80 per common share. The midpoint of this range was higher than the average analyst estimate of $4.73. The third-quarter results have been partially offset by a charge of $75 million or 20 cents per common share due to an increase in liability on two wind projects that were sold to Global Infrastructure Partners. Eversource sold to GIP its stakes in the South Fork Wind and Revolution Wind Projects last year. The adjusted gross proceeds were $745 million. This was down from $1.12billion due to reduced capital expenditure and a delayed commercial operation for Revolution Wind. According to data compiled and analyzed by LSEG, the Massachusetts-based firm posted an adjusted profit per share of $1.19 in the quarter July-September, compared to the analysts' estimated average of $1.15. (Reporting by Dharna Bafna in Bengaluru; Editing by Alan Barona and Tasim Zahid)
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Stocks drop after recent rally, dollar gains and bitcoin drops
The major stock indexes fell on Tuesday. Chip stocks were also lower. Goldman Sachs CEOs and Morgan Stanley warned that the equities market could be headed for a correction. Meanwhile, the dollar rose to a 4-month high against euro. The dollar was also supported by the drop in U.S. Treasury Yields, as a result of a risk-off mood. Bitcoin, the cryptocurrency, fell 6.45% and dropped below $100,000 for first time since last June. At an investment summit held in Hong Kong, the bank CEOs warned of the possibility of a stock-market correction of over 10% within the next two year. Nvidia shares fell by 4% and an index of semiconductors was also down 4%. Palantir Technologies shares fell more than 8%, despite its strong quarterly results. The company's value has more than doubled this year. It forecasts fourth-quarter results that are above market expectations, as rapid adoption of AI is driving demand for its products. Michael Burry (known for his successful bets in 2008 against the U.S. Housing Market) has placed bearish wagers on Nvidia, and Palantir. This was revealed by a Monday regulatory filing. The S&P 500 dropped by more than 1%, and the Nasdaq fell by more than 2 %. The Nasdaq has still gained about 21% this year. Keith Buchanan is a senior portfolio manager with Globalt Investments. He said, "The market has been moving up as it should from an earnings perspective, but it appeared that it was positioning itself for a risk off pullback, even if there were the slightest disappointments." The Dow Jones Industrial Average dropped 251.44 points or 0.53% to 47,085.24, while the S&P 500 declined 80.42 points or 1.17% to 6,771.55; and the Nasdaq Composite was down 486.09 points or 2.04% to 23,348.64. The MSCI index of global stocks fell 11.51 points or 1.14% to 996.34. The STOXX 600 Index fell by 0.3%. Stocks have been helped by optimism about AI deals. Stocks rose on Monday following Amazon.com’s $38 billion cloud service deal with ChatGPT creator OpenAI. Divides within the Fed have raised doubts about another rate cut in this year. Jerome Powell, the Fed Chair, said that a rate cut in December was not predetermined. The Fed lowered its rates last week. CME FedWatch shows that traders are now betting on a 66% chance of a December rate cut, down from 94% the week before. The euro dropped for a fifth consecutive session, and was down by 0.3% to $1.148. This is its lowest level since August 1. The dollar fell 0.5% against the yen despite the Japanese currency remaining near its recent 8-1/2 month low. Sterling fell after UK Finance Minister pointed out that her budget will include "hard decisions". Sterling fell 0.72% to $1.3144. U.S. Treasury rates declined amid a risk-off mood in the financial markets. Due to the shutdown of the federal government, the Bureau of Labor Statistics' closely-watched monthly jobs report will not be released on Friday as originally scheduled. The yield on the benchmark U.S. 10 year notes dropped 2 basis points from 4,107% to 4.087% on Monday. Brent crude dropped 45 cents and settled at $64.44 per barrel. U.S. crude was down 49 cents. A stronger dollar weighed. Spot gold dropped 1.69%, to $3933.67 per ounce. (Additional reporting by Twesha Dikhshit, Purvi agarwal, Johann M Cherian and Lucy Raitano, in Bengaluru, and Kevin Buckland, in Tokyo. Editing by Sam Holmes and Mark Potter; Sharon Singleton, Richard Chang, and Mark Potter)
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Budget plan: Canada could remove oil and gas emission cap
The government revealed in its budget plan for the first budget of Prime Minister Mark Carney that Canada may scrap a cap on gas and oil emissions if other initiatives like carbon markets, stronger regulation, and carbon capture and storage technology prove successful. In the climate plan that was part of the first budget of Prime Minister Mark Carney, it said the cap would be no longer needed as its value would be marginal. The Canadian emissions cap is not legally enforced and will not take effect until 2030. However, Canadian oil and natural gas companies have condemned it because they believe that this would lead to a reduction in production. Carney has been accused by members of his party for ignoring the Liberals' environmental focus. He has focused on trying steer Canada's economic growth through trade wars against the U.S. Carney's Budget also included measures to accelerate investments in clean energy, including more tax credits, updated clean fuel regulations, and plans to upgrade Canada's electrical networks. The government said it would amend greenwashing laws that created uncertainty for investors. The legislation was passed during the former Justin Trudeau government's tenure last year. criticized Oil companies. Keith Stewart, senior energy strategist for Greenpeace and former UN climate special envoy, said Carney, who was due to release the budget, should do more for the environment. "When you are the Prime Minister, you can set the rules, and tell people that they cannot do certain things, such as continue to develop fossil fuels," said Stewart. "There are some things that government can do, but bankers cannot - and I'm not sure he has made the shift yet." The budget referred to the transition towards low-carbon technology and energy as "an economic necessity." It also called it a "moral duty." (Reporting and editing by Maria Cheng, Caroline Stauffer, and Deepa Babington).
EXPLAINER-From trade to environment, 5 takeaways from the EU election
The European Parliament took a shift to the right after a fourday election concluded on Sunday, with more eurosceptic nationalists and less mainstream liberals and Greens.
The parliament's essential function is reviewing and authorizing new legislation and it usually develops modifications on which it and EU governments require to agree in the past EU regulations or instructions can enter force.
The EU assembly will also need to approve the next president of the European Commission - probably incumbent Ursula von der Leyen for a 2nd term - and their 26 other commissioners.
The rightward shift could have a bearing on a series of essential policy areas in the next five-year term.
ENVIRONMENT
The next 5 years will be essential for identifying whether Europe achieves its 2030 climate change targets.
The EU invested the last five years passing a bumper bundle of clean energy and CO2-cutting laws to strike its 2030 targets, and those policies will be tough to reverse.
However a more climate-sceptical EU Parliament could try to include loopholes to damage those laws, because lots of are due to be evaluated in the next few years - including the bloc's 2035 phase-out of the sale of brand-new combustion engine vehicles, which dealt with criticism throughout the EU election project, including from lawmakers in von der Leyen's centre-right political group.
The European Parliament will also work out with EU nations a new, legally binding target to cut emissions by 2040. That goal will set the course for a future wave of policies to suppress emissions in the 2030s in every sector, from farming, to manufacturing, to transport.
DEFENCE, UKRAINE
Foreign and defence policy are primarily the domain of the EU's member nations, not the European Parliament. So the election outcome ought to not have any instant influence on EU assistance for Ukraine or military matters.
However, the Parliament will have a role to play in strategies to encourage pan-European cooperation between nations and business on defence tasks and to get governments to buy more European military set. The European Commission's Defence Industrial Program, which aims to understand those objectives, requirements the permission of both EU federal governments and the European Parliament.
Gains for celebrations that oppose higher European integration might make these aspirations harder to attain. Likewise, for the Commission's plans to bring any real influence, they will require lots of money from the next long-lasting EU budget, which should also be approved by the Parliament.
TRADE
The European Parliament's principle role in EU trade policy remains in approving open market agreements before they can go into force. It is not straight associated with trade defence, such as the imposition of tariffs.
The European Commission and some EU leaders argue that the bloc needs more trade agreements with dependable partners to make up for lost company with Russia and to lower dependence on China.
A number of trade agreements are still awaiting approval, such as with Mexico and the South American bloc Mercosur, while the European Commission is also looking for to strike handle the likes of Australia.
All those deals, and the Mercosur arrangement in specific, have faced opposition and pushing them through parliament might be even more hard with greater numbers of nationalist eurosceptics.
CHINA, U.S. RELATIONS
The European Commission argues that the EU needs to provide a united stance towards major competitors such as China and the United States, particularly if former President Donald Trump returns to the White Home.
It likewise says the European Union needs a clearer unified industrial technique to remain a major industrial base for green and digital items as rivals pump in enormous subsidies.
Critics say the nationalist conservative celebrations advocate a. looser, more fragmented Europe that will be less able to increase to. these obstacles.
AUGMENTATION, REFORM
The EU needs to reform its internal farming policy and. the way it supports its members to equalise standards of living. before it admits new nations, specifically huge ones such as. Ukraine, because the current system of transfers is already seen. as too costly.
To confess brand-new members - Ukraine, Moldova and the Western. Balkan countries - the EU will likewise need to change how it makes. decisions, reducing the need for unanimity, which is proving. significantly challenging to achieve.
If such reforms are proposed in the next 5 years, the. parliament will have a crucial function to play in forming them and. a more powerful voice of the far-right, which opposes deeper EU. combination, may have a crucial effect.
(source: Reuters)