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Study says climate change will affect Italy's economic growth in the long term and increase debt risks.
A study published on Wednesday suggests that climate change could have a significant impact on Italy's economic growth in the long term and make its heavy debt burden even harder to sustain. The output of Italy could be reduced by as much as 6% by 2050. These findings are coming at a time when 'Europe, including Italy, is grappling with an intense heatwave which has seen temperatures rise above normal seasonal levels and been linked to thousands deaths on the continent. The Euro-Mediterranean Centre on?Climate Change's (CMCC) analysis argues that the damage caused by climate change goes beyond direct economic impact. It also affects government finances, reducing tax bases, increasing debt sustainability risk and driving up borrowing costs via what researchers?describe a "climate-spread". Massimo Tavoni is the director of the European Institute on Economics and the Environment (CMCC) and one of the study?authors. The study concluded that without additional mitigation and adaption?measures Italy's GDP in 2050 would be between 2.2% to 6.0% lower than a scenario with no climate damage. Even if the growth scenario was more favorable, the GDP would still fall between 1.6% to 4.2% below what it would otherwise be. The report warns that climate impacts are?uneven across Europe with southern and east nations more vulnerable to economic losses. Italy is the country with the highest debt burden in the currency bloc, with public debt amounting to 138% of its gross domestic product. Economists have warned for years that a weak trend in growth makes the country particularly vulnerable to shocks, which can undermine tax revenue and increase borrowing costs. Researchers estimate climate-related impacts may eventually double the refinancing risk on Italian public debt. However, they emphasize that "the outcome depends on future climate policies and adaption efforts." Matteo Calcaterra is another author who said that "delaying action?means increasing global warming's economic costs." "Action quickly means protecting the growth trajectory of the country and its long-term debt sustainability." (Reporting and editing by Keith Weir, with Valentina Consiglio)
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Is MORNING BID AMERICAS 'over?
Anna Szymanski is the Editor-in Charge of Open Interest. The oil prices?rose on Wednesday, after the U.S. & Iran exchanged new military strikes. This was the biggest?escalation of violence since both sides agreed to a truce last month. Donald Trump said the memorandum was also "over". The U.S. launched strikes on Iranian targets on Tuesday after several oil tanks were struck by projectiles in the Strait of Hormuz recently. Washington's action prompted Iranian attacks against U.S. base in the region. Global stock markets were shaky on Wednesday as chip stocks continued to fall, which dragged down major Asian indexes. The chip-heavy KOSPI Index in South Korea has now fallen into bear market territory after falling 20% since a record closing date at the end of June. It's still a good 70 percent higher than last year. Below, I will go into more detail. Check out Mike Dolan’s mid-week article, where he talks about issues such as Russia's Achilles heel in its conflict with Ukraine. Listen to the Morning Bid podcast. Subscribe to the Morning Bid daily podcast and hear journalists discuss the latest news in finance and markets seven days a weeks. IS IT "OVER"? After the recent military exchanges, and Washington's decision to revoke sanctions on Iranian oil effective July 17, oil prices rose 3% on Tuesday. Brent crude traded at over $78 per barrel on Wednesday, after Trump's comments on the MoU. The traders may be a little on edge, but will likely believe that this flare-up was just a bump along the road and not a permanent restart of hostilities. They'll also assume that the U.S. president's statements were mostly bravado. The chip stock selling continued on Tuesday. The SOX chip index fell nearly 5% in the US and the Nasdaq dropped more than 1%. Elon Musk’s SpaceX also fell victim to the selling. It lost nearly 7% in its first day of being a Nasdaq 100 constituent. SK Hynix and Samsung, both South Korean chipmakers, closed their shares lower on Wednesday despite yesterday's impressive results. In Europe, shares opened lower and Wall Street futures fell sharply just before the bell. The kiwi currency jumped in New Zealand after the central bank raised rates by a quarter point to 2.5%. Further tightening is "likely" to be needed. This is a timely reminder of the global price pressures that continue to exist. This will be even more acute, now that a new uncertainty is looming over the improving energy situation in the Middle East. The bond market fell on Wednesday. Today, the minutes of the Fed's policy meeting from last month will be released, and could shed more light on policymakers' thinking. The reports predate the recent Hormuz transits, which is a reminder that economic reports have a short shelf-life. Chart of the Day South Korea's benchmark KOSPI index fell over 5% on Tuesday, down roughly?20% since a record-breaking close in late July, signaling a bear market despite massive gains in this year. Watch today's events Minutes of the Federal Reserve's policy meeting held in June released * ?U.S. 10-year note auction (6 p.m. EDT) The second day of the NATO summit is underway in Ankara. Want to receive Morning Bid in your email every morning? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed here are the author's. These opinions do not represent those of News. News is committed, as part of the Trust Principles to independence, integrity and neutrality. (By Anna Szymanski, with additional writing by Al Reed).
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Gold drops over 1% and oil increases after Trump declares Iran peace deal "over"
Gold prices fell more than 1% after the?U.S. Donald Trump declared that the interim peace agreement with Iran is "over", which sent oil prices soaring and revived fears of inflation. Gold spot fell by 1.4% at 1027 GMT to $4,049.92 an ounce, its lowest price since July 2. U.S. gold futures for August delivered fell 2.3% to $4.059.80/oz. Oil prices rose by more than 6% following a statement from?Trump that the Memorandum of Understanding signed with Iran in June to end their four month conflict was "over", and that he did not want to engage Tehran. UBS analyst Giovanni Staunovo said that the spike in oil prices has rekindled fears of an 'inflationary surge,' which could influence the Fed policy decisions at future meetings. The Iranian Revolutionary Guards had earlier claimed that they had targeted U.S. bases in Bahrain, Kuwait and Saudi Arabia following U.S. attacks on Iran and the suspension of the license to sell oil. Gold is considered a hedge against inflation, but higher interest rates to curb inflation can weigh on this non-yielding material. The CME FedWatch tool shows that the markets now expect a 68% probability of a U.S. interest rate hike in September compared to a 62% chance on Tuesday. The Fed's Minutes, which are due at 1800 GMT on Wednesday, will be closely monitored for clues about the future outlook of interest rates. "Gold will continue to be under pressure in the coming sessions. The prospects of new lows 2026 are rising amid heightened geopolitical tensions as well as Fed rate 'hike bets", stated Nikos Tzabouras. Silver spot fell by 2.6%, to 58.45 dollars per ounce. Platinum dropped by 4.1%, to 1,574.03, while palladium was down 4.9%, to $1214.96.
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Copper drops, aluminium gains after Middle East flare-up
After fresh hostilities threatened an interim ceasefire agreement in the Middle East, copper prices fell on Wednesday. This sparked concerns about the economic growth and metal supply. The benchmark three-month copper price on the London Metal Exchange fell?1.2%?to $13,210 per metric ton at 0950 GMT after dipping 0.3% the previous session. After the United States President Donald Trump declared that the Gulf Conflict was "over", after both sides exchanged attacks, the oil prices soared and the global stock market fell. Brent crude?stood more than 5% higher, but was still trading well below the highs of the Iran War. Ole Hansen is the head of commodity strategy for Saxo Bank, a bank in Copenhagen. The U.S. must sort out this problem because it cannot continue to sustain high oil prices for a long time and its own reserves are running low. Investors feared, during the conflict, that a surge in oil prices could spark inflation and halt global economic growth by reducing metal demand. U.S. Comex Copper Futures fell 2.1% to $6.10 a lb. LME aluminium increased 0.7% to $3.159 per ton, on concerns about new disruptions to smelters. The region accounts for 9% of the global supply. The most traded aluminium contract at the Shanghai Futures Exchange?rose 0.7%, to 23,075 Yuan ($3,394.38) per ton. After peace talks between Iran and the U.S., traders began to discount 'war risk premiums. "Looking forward, copper will likely remain driven?by broader global sentiment, while aluminum could continue to perform if geopolitical concerns about further supply disruptions increase," said ING commodities strategist?EwaManthey. The LME zinc price fell by?1%, to $3,538 per ton. Tin prices dropped 0.9%, to $52,890. Lead rose 0.3%, to $1,890. Nickel increased 0.3%, to $16,390. $1 = 6.7980 Chinese Yuan Renminbi (Reporting and editing by Ronojoy Mazumdar; Additional reporting by Solomon Cefai, Singapore)
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India Silver Import Curbs Create Shortages, Push Premiums to Six-Month High
India's import restrictions have caused shortages on the world's largest market for precious metals, driving premiums up to their highest levels in six months despite a weaker than usual demand. India's lower imports, which meet more than 80% its silver demand by purchasing it overseas, could have a negative impact on the global price of silver, as well as help narrow its trade deficit and reduce pressure on its currency, the rupee. Chirag Thakkar, the chief executive officer of Amrapali Group Gujarat - a major silver importer - said that "Silver Imports are almost at a standstill, creating a severe shortage on the Indian market." Silver is now trading at a significant premium to global prices. Dealers said that silver premiums above official domestic prices soared this week to $6.5 an ounce, or 10% more than benchmark?prices. In May, discounts as high as $5.5 per ounce were offered. IMPORT CURBS ARE INTENDED TO EASE FOREX RESERVE PRESSURE In mid-May, India'restricted the imports of nearly all forms of silver with immediate effect. In June, India further tightened the rules and added silver powder and grain to the restricted category. According to data from the trade ministry, silver imports dropped to 46.8 tons in May. This is down from 534.3 tones a year ago. Thakkar said that India's imports of silver fell in June compared to May. In recent months, India has tried to reduce precious metal imports in order to relieve pressure on its reserves of foreign currency and support the rupee. In order to help with this effort, the government increased import duties on gold from 6% to 15%. A Mumbai-based dealer for a private bank said that after India increased import duties in May many investors exited their silver exchange-traded fund (ETF) and booked profits. The tighter import regulations didn't cause an immediate shortage. Now that these supplies are gone, the market is "feeling the pinch", the dealer explained. In India, silver is used in jewellery, coins, bars, and industrial applications, such as solar panels, electronics, and electronic devices. Investment demand has exceeded traditional consumption in the last year due to a growing interest in silver ETFs. A dealer in Kolkata said that the silver market is largely dependent upon the supplies of Hindustan Zinc. He said that premiums will continue to rise as demand recovers, something which has already started. India imports silver from the United Arab Emirates (UAE), Britain, and China. (Reporting by Rajendra Jadhav; Editing by Joe Bavier)
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Oil surges, stocks tumble as Trump declares Iran MOU 'over'
Oil prices rose by more than 5% Wednesday, while global stock and bond markets fell as investors fled risky assets after U.S. president Donald?Trump declared that the Gulf Conflict was over following the signing of a memorandum with Iran. Trump said that he didn't want to engage Tehran. He was speaking in Ankara, Turkey, ahead of the NATO summit. He said that dealing with Iran was a waste. After the U.S. and Iranian forces exchanged attacks in Gulf, market sentiment was already fragile. Brent crude futures jumped 5% to $78 per barrel, the biggest gain in a single day since late may. Although this was far below the $120 peaks seen at the height of fighting, the inflation risk was still enough to inject into the bond markets, especially since months of conflict had reduced global oil inventories. Chris?Beauchamp is the chief market strategist for IG. He said: "It really weighs on sentiment." The benchmark 10-year U.S. Treasury notes yields have risen for the seventh consecutive day, reaching a new one-month record of 4.56%. In Europe, German and Italian bonds yields also reached one-month records at 3.06% apiece and 3.9% apiece. This week, data showed that crude oil stocks in the U.S. Strategic Petroleum Reserve have fallen to their lowest levels since 1983. The markets are now more vulnerable to future supply shocks. Khoon 'Goh, the head of Asia Research at ANZ Singapore, stated that "the main issue is whether or not we can still see oil flowing and whether or not traffic continues to pass through (and) if oil can continue flow." STOCKS DROP European shares fell 1.6% on the way to the largest one-day decline in the STOXX600 since mid-March. U.S. Futures dropped 0.8% to 1.2%. The VIX volatility indicator jumped almost 13%, its biggest one-day increase in more than a month. However, it was still lower than the March highs. Investors are questioning the value of high-flying semiconductors and AI-related stocks. Samsung Electronics' shares fell for the second session in a row on Wednesday, even though the company announced a 19-fold increase in profits. Analysts and investors worry that the demand for memory chips may slow down in the second half. In the last few weeks, the focus has shifted away from the hot chip stocks to 'other areas of the market. This includes financials and consumer stocks, and then back to so-called "hyperscalers" that have dominated the market for the past year or so. Samsung's results showed that investors are questioning valuations more and more as the AI supply chain, such as memory or data centres, begins to unclog. Pricing for AI models is also becoming harder to predict. Marieke Blom, ING's chief economist and global director of research, said: "You could see the market trying to determine what pricing power it will have. This can lead to fluctuations in valua-tions." We also see that capex expenditure is increasing relative to EBITDA, meaning that the amount of assistance that can be provided via'share buybacks' and other means is decreasing. We may also see a downward pressure on the valuations of some areas in the AI chain. The dollar has risen, pushing the euro just above $1.14 while the yen is hovering around 162.4, which is not far from its 40-year low. The minutes of the Federal Reserve's meeting last month are due on Wednesday. Traders believe that Kevin Warsh, as new chair, may reduce any detail in order to dampen a policy signal. Reporting from Tom Westbrook and Amanda Cooper, both in Singapore; editing by Kevin Buckland and Jan Harvey.
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Polyus, a Russian company, plans to stop dividends by 2030 in order to invest
Polyus, Russia's biggest gold producer, announced on Wednesday that it would?suspend all dividend payments until 2030 in order to finance large-scale investment projects. The company stated that the management intends to make a recommendation to the board of directors following a "thorough assessment of the current economic environment". The planned suspension of dividends reflects the high borrowing costs, increasing production expenses, lower prices for gold and risks associated with investment project timelines. Polyus shares fell by nearly 20% on the Moscow Exchange. Gold prices are now around 75% higher than they were two years ago, despite a 26% drop from their peak at $5,600 an ounce. According to Metals 'Focus, Russia will be the second largest gold producer in the world after China by 2025. It is expected to account for?about 9 percent of global mine production. Polyus's key project is the $6 billion Sukhoi log development in Siberia. According to company estimates, the project, which is currently in its construction phase, will double the gold production of the company. Western sanctions cover all major Russian gold miners, including Polyus. In 2022, the United States of America, Britain and Europe will ban imports from Russia. Polyus has resumed dividend payments based on its first nine-month results of 2024, after a pause of over?two years. This was aided by the high gold price. The company will revise its dividend policy in spring 2025 to make it more flexible and responsive to market conditions. The company warned that in the event of a deterioration in conditions and a risk of delaying its flagship Sukhoi Log Project, it would prioritise growth projects above dividends. (Reporting by Anastasia Lyrchikova. Felix Light is the author. Tomasz Janowski and Mark Potter (Editing)
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Gold falls as oil increases after Trump declares Iran peace deal "over"
Gold prices dropped more than 1% on Tuesday after U.S. President Donald Trump declared that the interim peace agreement with Iran had "ended". This sent oil prices up and fuelled fears of inflation, as well as higher U.S. rates. Spot gold dropped 1.02%, to $4,063.67 an ounce, by 0850 GMT. It had fallen to its lowest level since July 2, earlier in the session. U.S. Gold Futures for August Delivery fell 1.97% to $ 4,074.80/oz. Trump stated that the Memorandum of Understanding signed in June with Iran to end a four-month conflict was "over" and added that he did not want to engage with Tehran. After his remarks, oil prices rose more than 5%. Iran's Revolutionary Guards had earlier said that they "targeted" U.S. bases in Bahrain and Kuwait after U.S. attacks on Iran?and the revocation?of a license?to allow the country?to sell oil. Gold is traditionally regarded as a safe-haven metal, but the higher energy costs due to the war has raised concerns about inflation and rising interest rates. This would put pressure on the non yielding metal. The Fed's Minutes, which are due at 1800 GMT on Wednesday, will be closely monitored for clues about the future of interest rates. Gold is likely to remain in a consolidation phase in the near term. For gold to move higher, we need to have a further weakening in U.S. employment data and lower U.S. Inflation figures that allow?Fed officials sound less hawkish with respect to policy decisions," said UBS analyst Giovanni Staunovo. The CME FedWatch tool shows that the markets now expect 66% of a U.S. interest rate increase in September, up from 62% Tuesday. China's central banks reported on Tuesday its largest monthly increase in gold reserves for more than two-and-a-half years. Silver fell by 2.37% per ounce to $58.59, platinum dropped nearly 3% to 1,591.88 and palladium fell 3.9% to $1,000.18. (Reporting and editing by Sumit in Bengaluru)
Scientists warn that China's ability to cope with catastrophic storms will be tested in 2026.
Scientists warn that extreme weather will only become more common this year.
Weather systems are expected to bring severe weather conditions that will test the resilience and preparedness of densely populated urban areas as well as rural communities.
China's National Climate Center predicts that up to six typhoons will form in the Northwest Pacific Sea and South China Sea by July, more than the average of 3.8. Three of these storms could land, which is more than the average of 1.8. It said that the intensity of cyclones would also be higher.
Scientists claim climate change is exposing the second largest economy in the world to more destructive weather events. This year, the El Nino pattern that could fuel stronger typhoons (as hurricanes are called in Asia-Pacific) and increase temperatures, has been a cause for concern.
Super Typhoon Bavi is expected to hit China on Saturday, marking the second tropical storm in one week. Bavi, which measures more than 1,000 km in diameter (6221 miles), briefly touched down on Monday in the Western Pacific over the U.S. Island of Rota. Winds were in excess of 180 mph.
The storm caused the most damage in the Chinese region?Guangxi. Maysak's remnants also caused at least two tornadoes to form in central China.
Benjamin Horton is the dean of City University of Hong Kong's School of Energy and Environment.
Horton warned that the magnitude of these events was increasing, and there was no time to recover and become resilient. He expects to see more "frequent and intense" cyclones in this year, which will drop unprecedented amounts rainfall and cause floods, landslides and crop damage, as well as a loss of life.
He said, "This will just repeat itself over and over again."
WATER, WATER EVERYWHERE
Hengzhou, which is at the epicenter of the Guangxi flooding, was hit with heavy floodwaters after the dams in local reservoirs failed. Officials have confirmed that at least six people are dead in Guangxi and 375,000 other people are affected. Death toll expected to increase.
A call for assistance posted on Chinese social networks on Tuesday stated that "at least a 1,000 people are trapped in the mountains, it is dark everywhere and we need an urgent rescue." The post has not been independently verified.
CCTV reported that after the failure of an intermediate-sized reservoir, on Monday, floodwaters containing large amounts of silt and mud inundated farmland downstream and villages.
CCTV reported that in some homes, floodwaters had reached the second-floor, trapping people on roofs while violent torrents rushed all around them.
Hengzhou is a largely rural city with more than 1,000,000 residents. It has six reservoirs of medium size and over 200 smaller ones.
The canal project, which is expected to be completed in September, will cost 70 billion yuan (10.3 billion dollars).
Hui Su is the chair professor of Department of Civil and Environmental Engineering, Hong Kong University of Science and Technology. He said that "the severe impacts of Maysak and looming threats of Super Typhoon Baavi indicate that 2026 will be more intense and destructive than a 'typical year.
El Nino shifts typhoons westward to China's coast,?increasing the risks. Climate change also makes storms more destructive and wetter."
The United Nations weather agency increased its forecast last week for the rapid emergence in the next months of a strong El Nino.
El Nino, according to World Meteorological Organization, is a periodic increase in sea surface temperature over the eastern and central Pacific Ocean. This could potentially raise global temperatures, and the risk of extreme weather.
(source: Reuters)