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Gold drops on stronger dollar amid renewed US/Iran tensions
The dollar strengthened on Monday, and gold prices fell. Meanwhile, news that the "Strait of Hormuz" is once again closed pushed up oil prices, reigniting inflation concerns. As of 0537 GMT spot gold was down by 0.7% to $4,794.21 an ounce after reaching its lowest level since April 13 during the earlier session. U.S. Gold Futures for June Delivery fell 1.3% to $ 4,813.70. Ilya Spivak is the head of global macro at Tastylive. He said that gold prices were lower today because the U.S. - Iran war ceasefire, which markets celebrated last Friday, appeared to have broken down. "This has brought back the familiar 'war-trade' dynamics that we have seen since the start of the conflict. Crude oil prices rose, which led to an increase in inflation expectations and a rise in both yields and U.S. dollar. dollar." Dollar?index increased, making bullion priced in greenbacks more expensive for holders of other currencies. Benchmark 10-year U.S. Treasury yields increased 0.6%. Stock markets wobbled and oil prices spiked, as tensions in the Middle East pushed shipping into the Gulf to the bare minimum. The U.S. seized a cargo ship from Iran that was trying to circumvent its blockade, and Iran has said that it will retaliate. This raises the possibility that even the two-day ceasefire that is supposed to be in place between the two nations may not last. Tehran has said that it will not take part in the second round of talks the U.S. hoped to start before the ceasefire ends on Tuesday. Since the U.S. launched its strikes against Iran in late Feburary, gold prices have fallen about 8%. This is due to fears that higher energy costs could stoke inflation. Gold is a good inflation hedge but higher interest rates will reduce demand for this non-yielding investment. Gold demand at one of India's most important buying festivals was muted on Sunday, as record prices slowed jewellery purchases, which offset a modest increase in investment demand. Silver spot fell 1.3%, to $79.75 an ounce. Platinum dropped 0.8%, to $2,086.90. Palladium was 0.4% lower, at $1,553. (Reporting and editing by Subhranshu sahu, Mrigank dhaniwala; Noel John from Bengaluru)
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Oil prices soar, while stocks sway as the Mideast ceasefire hangs on a thread
Stock futures and oil prices fell Monday, as rising tensions in the Middle East slowed shipping into and out of Gulf. However, traders held out hope for a solution and Asia's equity markets soared to record highs. Brent crude futures rose?about 6 percent to $95.36 per barrel. S&P 500 Futures dropped around 0.6%, and European Futures fell by 1.2%. Equity benchmarks in Seoul and Taipei, as well as Tokyo, shrugged off the risks and advanced, with Taiwan shares reaching a new record high, and the others not far behind. Iran has reinstated its de facto closing of the Strait of Hormuz despite Kpler data showing that over 20 vessels with oil products, metals and gas, as well as fertiliser, passed through the Strait on Saturday. This was the busiest?day?for this chokepoint since March 1. The Iran war ceasefire, which was supposed to last until Tuesday, is now in doubt, after the U.S. seizes an Iranian cargo ship, and the top military command in Tehran vows to retaliate. Damien Boey is a portfolio strategist with Wilson Asset Management, Sydney. "But, I think, in the end, both sides are looking to make a deal. That's why,?the markets are optimistic and not selling too much." Hong Kong's Hang Seng rose by 0.7%. Japan's Nikkei gained 0.8%. South Korea's KOSPI? rose by 1%. National Australia Bank (Australia's largest lender to business) was one of the markets that sounded the most cautious on Monday. It announced a $500-million impairment charge, citing the expectation that the war will increase bad debts. NAB shares fell 3.6%. Keir starmer, British prime minister, is scheduled to speak in Parliament on Monday. He will be facing calls for resignation due to his handling of Peter Mandelson's appointment as U.S. Ambassador despite the fact that he failed the vetting procedure. Question Peace Talks; Focus on Hormuz Iran's state news agency reported that it rejected new peace negotiations with the United States on Sunday. This came after Donald Trump, president of the United States, said he would send envoys to Pakistan for talks and launch new attacks on Iran if they did not accept his terms. "Our base-case (AKA guess), is still a resolution of the war. Paul Chew, Singapore's Phillip Securities head of research in a client note said that Trump was still focused on the November midterm elections. Bonds that had rallied on the Friday have retreated. The yield on benchmark 10-year Treasuries has risen 2.2 basis points, to 4.266%. German and French bond contracts fell. The dollar, which has been?sold' for most of the last two weeks, is now steady at $1.1760 to the euro and 158.8 Japanese yen. Wall Street indexes reached record highs Friday on the back of expectations for robust first-quarter results, with most of them coming this week. The week will also bring British inflation figures, U.S. Retail Sales and European Purchasing Managers' Index. However, the markets will focus on Gulf Shipping. Bob Savage is the head of BNY's markets macro strategy. He said that "the?critical barometer of risk" can be reduced to one single data point, which is the number of ships passing through the Strait of Hormuz. The immediate focus of the talks is oil and other shortages that are driving inflation.
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FT reports that Germany will begin the privatization of its Gazprom division.
In a Monday interview with the Financial Times, the chief executive of Germany's Gazprom unit said that the country would begin the privatization process after Russia invaded Ukraine in 2022. The FT reported that the division, Securing Energy For Europe (SEFE), intends to raise 1,5 billion euros to 2 billion euros ($1.76 billion to $2.35 billion) via a capital rise to finance its expansion of infrastructure assets. SEFE (formerly Gazprom Germany) was nationalized in Berlin by 2022, after the former Russian parent of the group abandoned the division. This is an important part of Germany’s gas supply. The company operates 4,200 km (2,610 mi) or 10% of Germany's gas?network?system. According to EU rules, the German state must reduce its stake by no more than 25 plus one share before 2028. Egbert Laege, CEO of the company, told the FT the Iran War had given momentum to privatization plans. He also said that Middle East gas supplies were constrained and the need for reliable suppliers was highlighted. Laege said that Germany plans to dilute its SEFE stake after the initial capital increase, possibly via a second sale or an IPO. He said that given the short period of time we've been operating in, the IPO might be a little difficult for us. But in the end it's up to the market and the government.
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Markets are light on volume but high on hope
Tom Westbrook gives us a look at what the European and global markets will be like today. The markets chose to ignore the weekend headlines and the threat of a wider Mideast conflict re-igniting,?and traded thinly on the hope of a deal that would?get? ships moving through the Strait of Hormuz. S&P 500 futures fell. The 0.6% decline - at Asia's noon - was due to tiny volumes, and it was a modest retreat from the record highs of Friday. The majority of Asian markets rose. European futures fell 1.1%. Oil futures are now around 5-6 % higher than their opening levels, but still a little shy of $100 per barrel. The U.S. announced that it had seized a cargo ship from Iran which tried to circumvent its blockade. Iran has vowed retaliation. Iran has also announced that it will not take part in the second round of talks, which the U.S. hoped to start before Tuesday's?ceasefire expires. European allies are concerned that an inexperienced U.S. negotiation team is pushing a headline-grabbing agreement with Iran, which could lead to larger problems later. Mark Carney, Canada's prime minister, said that close ties with the United States used to be a strength. But now they are a weakness. Although Iran had said that the strait was closed again, the markets were encouraged by the data from Kpler, which showed that more than 20 ships transited the strait on Saturday, the busiest since March 1. The?picture was also re-evolving around earnings, data and other market drivers. Keir starmer, the British premier, will be addressing parliament in London on Monday. He is facing calls for resignation over his handling of Peter Mandelson's appointment as U.S. Ambassador, whose ties with a convicted sex offender Jeffrey Epstein resulted in his dismissal last September. Market developments on Monday that may have a significant impact U.S.-Iran Relations Starmer's parliamentary address - Canada CPI
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Is it time for us to give up on the hope that the Strait of Hormuz might open soon? Russell
The global oil market has been predicting that the closure of the Strait of Hormuz, which was a result of Israel and the U.S. attacking Iran in early February, would be temporary. This will also affect the supply of crude oil and refined products. This expectation is reflected in the price of crude oil futures. Although they have increased sharply since February 28, the prices are still far below the highs achieved in the aftermath of Russia's invasion in Ukraine in 2022. The paper 'crude market' has essentially believed U.S. president Donald Trump since the bombing began that the conflict would be short and Iran would accept U.S. conditions for a peace agreement. The reality is not what's being said on social media, and the more the Strait of Hormuz stays closed, the worse the energy crisis becomes, particularly in Asia. Brent crude futures dropped 9.1% to $90.38 per barrel on April 17, following Trump's claim that the Strait of Hormuz is fully open. They jumped 6.9% to $96.59 in the early Asian trading on Monday when it became apparent that the waterway remained closed. Trump's April 17 social media post that the Strait of Hormuz was "fully opened and ready for passage" prompted the latest optimism. Trump's claim was backed even by some Iranian officials. However, the optimism was short-lived, as the Islamic Revolutionary guards Corps moved to keep it closed due to Trump's decision of maintaining a U.S. Naval Blockade against Iranian ports. The market should ask itself several questions about the current state of affairs. What does this mean? Does it mean that the United States has effectively closed the Strait of Hormuz? Would it reopen if Trump lifted the blockade on Iranian ports? Is there enough trust between warring parties to accept the principle that the Strait should be opened to all? Iran's leaders are willing to negotiate, but will they do so with an administration that is known for abandoning agreements and has a history of doing so? These are all valid points of debate. However, what really matters is the fact that the strait remains closed and that the threat of an attack will likely keep it so for the hundreds of vessels that wait either side. SUPPLY STRESS During the?meantime, crude oil and refined products supply chains are more stressed. This is especially true in Asia which was the final destination of about 80% of the shipments that went through the Strait of Hormuz before the conflict. The crude futures market has largely been driven by the daily news and the underlying belief that the conflict would be short-lived. However, the physical oil and refinery products have shown a more serious supply issue in the near term. Singapore, the Asian trading center, has seen extreme levels of refined products. Jet fuel is also at an all-time high. The price of a barrel ended at $204.13 on April 17. This was more than twice the close of $93.45 on February 27, just one day before the start date of the war. Gasoil (the building block of diesel) ended the day at $145.27 per barrel on 17th April, up 59% from when the conflict began, but down from the $199.89 record set on 30th March. The biggest problem for Asia, however, is that the worst is yet to come as crude shipments in the region are falling sharply. According to Kpler, data from commodity analysts, Asia's seaborne oil imports were estimated at 20,62 million barrels a day (bpd), down from 22,36 million bpd a month earlier. The average of 26.76 millions bpd for the three months before the attack on Iran is now only about 26.2 million bpd in March and April. This is a particularly worrying situation for countries which are important refining and fuel exporting centres in the region. Singapore's crude oil imports will be?388,000 per day in April. This is down from?715,000 per day in March and?980,000 bpd?in January. South Korea's crude oil imports were estimated at 1,68 million barrels per day (bpd) in April. This is down from 2,24 million in March and 2,74 million in January. Japan's imports in April are expected to drop to 921,000 bpd from 1.63m bpd and 2.16m bpd?in March. India is the only country that has bucked this trend. Kpler estimates April imports at 4,67 million bpd. This is up from March's 4.45 million, but still below January's 5,15 million. India was able to secure Russian crude oil to offset the loss in barrels from the Middle East. 1.64 million bpd arrived in April, compared to 1.06 million in February. The problem with Asia's crude oil is that it's under pressure and that's why refineries will likely have to reduce their processing rates in the coming weeks. The real impact of Trump's war will only be felt when supply of refined products is more restricted. How long can the crude oil paper market maintain its hope that the conflict is going to end soon when reality appears to be moving in the opposite direction? You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of a columnist who writes for.
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Gold drops on stronger dollar amid renewed US/Iran tensions
Gold prices fell Monday as the dollar strengthened. Meanwhile, news that 'the Strait of Hormuz was closed again' pushed up oil prices and rekindled inflation fears. As of 0351 GMT spot gold was down by 0.7% to $4,793.98 an ounce after reaching its lowest level since the previous session. U.S. Gold Futures for June Delivery fell 1.4% to $ 4,813.60. Ilya Spirak, global macro head at Tastylive, said that gold prices were lower today because the U.S./Iran ceasefire that was celebrated by markets last week appears to have broken down. "This has brought back the familiar 'war-trade' dynamics that we have seen since the beginning of the conflict. Crude oil prices rose, which led to an increase in inflation expectations and drove both yields and?the U.S. dollar up. dollar." Dollar index increased, making greenback priced bullion expensive for holders of other currencies. Benchmark 10-year U.S. Treasury Yields increased by?0.5%. As tensions in the Middle East increased, shipping into and out of Gulf was kept to a minimum. The U.S. seized an Iranian ship that was trying to circumvent its blockade, and Iran has said that it will retaliate. This raises the possibility that even the two-day ceasefire that is supposed to be in place between the two countries may not last. Tehran has said that it will not take part in the'second round of talks' the U.S. hoped to start 'before the ceasefire expires on Tuesday. Since the U.S. launched its strikes against Iran in late-February, gold prices have dropped about 8%. This is due to a concern that rising energy prices would stoke inflation. Gold is considered a hedge against inflation, but higher interest rates reduce demand for this non-yielding investment. Gold demand at one of India's key buying festivals was muted Sunday as record prices curbed jewellery sales, which offset a modest increase in investment demand. (Reporting by Noel John in Bengaluru; Editing by Subhranshu Sahu) (Reporting by Noel John in Bengaluru; Editing by Subhranshu Sahu)
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Iron ore companies on inventory destocking and steady hot metal production
Prices of iron ore futures rose on Monday, as China destocked from high portside inventories, which indicated a steady demand for feedstock. As of 0325 GMT, the?most-traded?September iron ore contract at China's Dalian Commodity Exchange traded 0.58% higher. It was 782 yuan (114.66 dollars) per metric ton. The benchmark iron ore for May on the Singapore Exchange rose 0.38% to $106.2 per tonne. Data from Steelhome showed that iron ore 'inventory' at major Chinese port cities fell by 0.65%. However, the stocks of portside ore are still higher than seasonal norms. Mysteel, a consultancy, reported that the average daily hot metal production of 247 steelmills was 2.395 millions tons, up 0.12 million tonnes from the previous week. Mysteel data revealed that?both blast-furnace operating rates and capacity utilization rate increased week-on-week. According to a report by Shanghai Metals Markets, iron ore prices are supported by inventory destocking and the fact that end-use steel demands have room to increase, along with modest steel mill profits. The price of oil rebounded Monday after falling on Friday due to the news that the Strait of Hormuz was re-closed after the U.S., Iran and both said that the other party had violated their ceasefire agreement by attacking ships at the weekend. Iron ore prices are also supported by the firm oil prices. Coking coal and coke, which are used to make steel, have risen by 2.89% and 2.244% respectively. This is in line with the rise of energy costs. The benchmarks for steel on the Shanghai Futures Exchange were mostly in positive territory. Rebar rose 0.83%. Hot-rolled coil climbed 0.81%. Wire rod gained 0.15%. Stainless steel fell 0.23%. ($1 = 6.8199 Yuan) (Reporting and editing by Ronojojo Mazumdar).
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Oil prices soar, while stocks sway as the Mideast ceasefire is in doubt
Stock?futures dropped and oil prices rose on Monday, as tensions in the Middle East prevented shipping into and out of the Gulf. Traders held out hope that a solution would be found and the?Asian stock markets soared to record highs. Brent crude futures increased by about 5%, to $95.16 per barrel. S&P 500 Futures dropped around 0.6%, and European Futures dropped 1.1%. Equity benchmarks in Seoul and Taipei, as well as Tokyo, shrugged off the risks and advanced, with Taiwan shares reaching a new record high, and the others not far behind. Iran has reinstated its de facto closing of the Strait of Hormuz despite Kpler data showing that over?20 vessels with oil products, metals and gas, as well as fertiliser, passed through the chokepoint on Saturday. This was the busiest time for the chokepoint in March. The ceasefire in the Iran War, which was supposed to last until Tuesday, is now under question after the U.S. seizes an Iranian cargo vessel and the top military command of Tehran vows?to retaliate. Damien Boey is a portfolio strategist with Wilson Asset Management in Sydney. "But, I think, in the end, both sides are looking to make a deal. That's why the market is optimistic and hasn't?sold off too much." Hong Kong's Hang Seng climbed 0.8%. Japan's Nikkei rose 1%. South Korea's KOSPI grew 1.4%. National Australia Bank, Australia's biggest business lender, warned that the war would increase bad debts. It announced a $500-million impairment charge. PACE TALKS IN QUESTION, FOCUS ON HORMUZ Iran's state news agency reported that Iran had rejected any new peace talks after Donald Trump, the U.S. president, said he would send envoys to Pakistan for talks and launch new attacks on Iran if it did not accept his terms. "Our base-case (AKA guess) still remains a resolution of the war. Trump remains 'focused' on the November midterm elections, said Paul Chew in a note to clients from Phillip Securities. Bonds that had rallied on Friday have retreated, and the yield of benchmark 10-year Treasuries has risen 2.2 basis points, to 4.266%. The dollar, which has been sold over the last two weeks, is now steady at 158.8 yen per euro and buying 158.8 dollars. Wall Street indexes reached record highs last Friday, fueled by expectations for robust first-quarter results, with the majority of them coming this week. The week will also bring British inflation, U.S. retail and purchasing managers' index data. However, the markets' main focus is on Gulf shipping. Bob Savage is the head of BNY's markets macro strategy. He said that "the critical barometer of risk?has been reduced to one data point, which is the number of ships passing through Strait of Hormuz". The immediate focus of the talks is oil and other shortages that are driving inflation.
Ecuador sets 2nd debt-for-nature swap in motion
Ecuador has begun deal with an offer to swap more of its existing debt and free up cash for preservation efforts in the Amazon jungle, a stock exchange filing on Tuesday revealed.
In it, Amazon Conservation DAC, a special purpose vehicle, offered to redeem 4 Republic of Ecuador bonds from debt holders, an early action in a so-called debt-for-nature swap that permits nations to buy back more costly debt and use the savings produced to fund conservation projects.
BofA Securities is setting up the buy back, which will be financed by as much as $1 billion of brand-new bonds issued by Amazon Conservation DAC.
Given that Ecuador eurobonds are trading at a discount, the precise stated value of financial obligation that will be bought back will not be understood till the tender period expires.
The tender offer ends on Dec. 10, according to the filing at the Luxembourg stock market. Ecuador has been scoping out a brand-new offer to secure part of the Amazon rain forest - extensively regarded as the world's most important natural environment - after completing a record-breaking $ 1.6 billion debt swap for the Galapagos Islands in 2015, sources informed Reuters in April.
U.S. International Development Finance Corporation (DFC). will supply political-risk insurance coverage for the deal while the. Inter-American Development Bank (IDB) will supply a $155. million credit assurance to cover 2 years of interest payments. on the bonds. Nations from the Bahamas to Barbados to Gabon have. significantly turned to debt-for-nature swaps as a way to manage. their arrearage while maximizing capital to buy. climate or nature-conservation projects.
Ecuador's economy was struck hard by the COVID pandemic and. suffered further in the middle of increased violence in the nation, which. the government blames on local criminal organizations and their. allies consisting of Mexican drug cartels and the Albanian mafia.
In May, the International Monetary Fund approved a new. four-year plan under the Extended Fund Facility for. Ecuador, with gain access to equivalent to $4 billion.
(source: Reuters)