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Gold nears record highs amid softer inflation data that fuels Fed's cut bets
Gold prices rose on Wednesday as investors hoped that the Federal Reserve would resume rate reductions at its meeting next week, after softer than expected U.S. inflation figures. As of 9:16 am EDT (1316 GMT), spot gold was up 0.6% to $3,647.79 an ounce after reaching a record high on Tuesday of $3,673.95 per ounce. U.S. Gold Futures for December Delivery were up 0.2% to $3,687.40. Labor Department data revealed that U.S. producers prices fell unexpectedly in August. This was due to a decrease in service costs. Fawad Rasaqzada is a market analyst for City Index and FOREX.com. He said that any further weakness in U.S. economic data would continue to support the gold price, as it could indicate more than two interest rate cuts before the end of the year. Gold is traditionally viewed as a hedge to political and economic uncertainties and inflation. It also tends do well when interest rates are low. It has increased by more than 38% in the past year. CME's FedWatch showed that the markets are pricing in 90% of a quarter point cut during the Fed's meeting on September 16-17, and there is a slim chance for a bigger cut. The market confidence that easing is imminent was reinforced by the soft nonfarm payrolls data released last week, which indicated a cooling of labor market conditions. The Labor Department revised down its estimates of job growth through March. This suggests that job growth had already slowed before President Donald Trump's aggressive import tariffs. A federal judge temporarily blocked Trump’s Tuesday attempt to remove Federal Reserve governor Lisa Cook. This was a setback for White House in the legal battle that threatens central bank independence. The Fed will now focus on Thursday's Consumer Price Index reading. Ricardo Evangelista is a senior analyst with ActivTrades. He said that the $3,750 level was the next major resistance. If the precious metal consolidates above this mark, it could reach $3,900 before the end of the year. Silver spot increased 0.4%, to $41.06 an ounce. Palladium climbed 2.7% to 1,179.30 and platinum gained 1%. (Reporting by Sherin Elizabeth Varghese and Ishaan Arora in Bengaluru)
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Lazy investors, unite! Vanguard takes on the challenge of 'rational indifference': Ross Kerber
The problem that would-be reformers of corporate voting continue to face is the same: It's so complicated for an individual investor. Reformers might want to be careful about what they wish for. Shareholders in Vanguard 500 index funds, for example, could be faced with 4,500 decisions each year regarding how to vote proxy ballots during corporate annual meetings. Who could sort all that out, anyway? In a forthcoming paper, a group of professors of law and business from Duke University, University of Florida and Columbia University refers to the "rational apathy" problem. They say that shareholders will not waste time trying to figure out how to vote in a complicated way with little effect. Fund companies are now handling the voting themselves. Until recently, only environmentalists and social reformers cared. Then conservatives in the United States realized that they could exert pressure on companies and asset managers to change how they cast their ballots. The top managers could avoid the fire by using "pass through" voting programs that allow fund investors to influence the proxy votes funds cast at annual corporate meetings. John Galloway, Vanguard's chief of stewardship, told journalists in a press briefing this week that 82,000 investors had used the Voting Choice program over the 12-month period ending June 30. This is about twice as many as the previous year. They voted $9 billion worth of shares, which is triple what they did last year. This is still a small amount compared to Vanguard, which has 50 million investors with $11 trillion of assets under management. Get ready to see things take off. Galloway stated that Vanguard is working with corporate sponsors in order to provide voting options to participants of 401(k), or similar retirement plans. He released new statistics showing that investors are dispersing their vote across a wider variety of voting policies, including a new Egan Jones policy with anti ESG criteria. Galloway stated, "We have seen investors demonstrate the 'choices' of Investor Choice in this year's Investor Choice. PUMPING UP BOSSES Reformers who want to rein in CEO compensation have high hopes that the change will take power away from the fund managers, who, among other things, earn fees by managing corporate retirement funds. In the draft paper the academics state that a surprising result of increased pass-through voting would be an increase in the power of the boards. This is because individual investors are more likely to support policies that benefit management. Two close votes at Tesla took place last year. Shareholders approved narrowly measures that called on Tesla to reduce its director term from three to one year and require only simple majorities for certain governance changes, rather than the two-thirds standard currently in place. Both measures were supported by Vanguard's main stewardship group. In the pilot voting program last year, 36% of shares either abstained from voting or supported management. If that 36% had applied to all Vanguard index equity funds, then both proposals would have been just below the 50% threshold required by both items. The authors note that as proxy voting programs increase, "the reality of a changing ecosystem becomes more and more probable." Dorothy Lund of Columbia University Law School, one author, stated in an interview that pass-through voting is a great way to empower investors who don't agree with the voting decisions made by their managers. Most mutual fund investors aren't interested in their holdings, much less how to vote. The new voting policies will empower proxy advisers. This could eventually include financial online influencers (FinFluencers) who would post their voting recommendations to TikTok. Lund stated that in theory, more competition should lead to better options. She said that if proxy voting is so open, companies may not know who to listen to. Lund stated that "implementation of an open proxy system could lead to fragmentation where issuers do not know with whom to speak because no one is really directing votes."
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Bain Capital sells China data center business to Chinese consortium at $3.9 billion
The companies announced that U.S. investment company Bain Capital had agreed to sell the China operations of data centre operator WinTriX DC Group to a consortium headed by Guangdong Hec Technology, for 28 billion Yuan ($3.93billion). Hec Technology, its controlling shareholder, and a subsidiary will increase capital by 7.5 billion Yuan in a joint-venture to partially finance the deal. Bain Capital announced in a separate press release that institutional investors and funds from local governments are also included in the consortium. In a filing, Hec Technology said that the acquisition would help it expand its data centre business as well as strengthen its core competitiveness within the digital infrastructure industry chain. In 2019, Bain Capital acquired WinTriX DC Group (formerly known as Chindata Group Holdings) and merged with Southeast Asia Data Centre operator Bridge Data Centres. Bain Capital acquired Nasdaq listed Chindata in a $3.16 Billion deal nearly two years ago. WinTriX's largest customer is social media giant ByteDance, according to Fitch Ratings. ByteDance contributed 86% of WinTriX's revenue in 2022. It also has data centres in India, and Malaysia. Reporting by Yukun Zhi, Kane Wu, and Ryan Woo, Editing by Joe Bavier and Kirby Donovan
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Copper continues to be steady despite data from China and the US
The copper price remained stable on Wednesday, as the market awaited data on loans from China's top consumer and U.S. Inflation numbers that may determine the direction in which U.S. Interest Rates will move. The benchmark copper price on the London Metal Exchange was 0.10% higher, at $9.929 per metric ton of official rings. Traders reported that volumes were low as consumers and producers were absent. The market was dominated by funds, which reacted to macro-factors. China's loan data is due on September 10-15. Analysts will focus on the total social finance numbers, which they use as a gauge for industrial metals demand. They expect that August's figures are higher than July's. Financial markets expect a quarter point cut in interest rates from the Federal Reserve, with a slight chance of a half point cut. The report on U.S. Consumer Inflation on Thursday may influence the possibility of a bigger cut. The U.S. Dollar would fall when the Fed rate falls, making dollar-priced precious metals more affordable for holders of other currencies. This could increase demand. Ed Meir, Marex analyst, said that "the dollar's weakness will likely provide some support, at least in the early part of September." If the Fed catches the markets by surprise, a stronger currency could lead to a downward trend in prices for the rest of the month. A temporary halt in mining at Freeport McMoRan’s Grasberg mine, one of the largest copper mines in the world, was a major factor supporting copper. Zinc stocks are also a focus In LME-registered warehouses, the 50,825 tonnage has dropped by nearly 75% from mid-April. The LME system is expected to lose another 15,375 tonnes of zinc due to cancelled warrants and/or zinc that was earmarked for shipment. Concerns about zinc availability on the LME have led to a premium or backwardation with the forward cash contract for the next three months. The current price of a ton is around $18. Lead was unchanged at $1,977. Tin rose 1% to $35,350. Nickel was slightly lower at $15,090.
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Russia considers a moratorium on the bankruptcy of metal giants with indebtedness
A government document published on Wednesday showed that Russia was considering a moratorium for bankruptcies within the metals sector. This is a sign of increasing concern over a struggling industry battling with falling demand and high interest rates, as well as a strong rouble. In the document, which was a protocol of the meeting held by the Financial Stability Commission on August 28, the ministry of economy and the ministry for industry were asked to submit proposals on October 28 regarding the feasibility of a ban on bankruptcy in the sector. Kommersant was the first to report on this news. This move is part of a wider package to support the industry. It follows similar measures taken to assist the struggling coal sector. These included tax deferrals, limiting bonuses and dividends for top managers, and even deferring taxes. The Economy Ministry declined comment. Russia will be the fifth largest steel producer in the world by 2024, with a production of 71 million tonnes. Severstal, one of the country's leading steelmakers estimated in July that steel demand had fallen by as much as 15% during the first half due to high interest rates. This, combined with low prices, caused a 55% drop in the net profit of the company in the second quarter. On September 12, the central bank board will meet to determine the key interest rate. The analysts polled expect a 200 basis point cut as the economy has slowed faster than expected and inflation is declining. The Russian economy will slow down to 1.2% from 4.3% growth last year. In a January research note, a think-tank that advises the government stated that Russia may face a wave corporate bankruptcies as the percentage of companies with high levels of risky debt will double by 2024. The central bank and government dismissed these warnings by saying that the situation was in control. (Written by Gleb Brynski; Additional Reporting by Darya Korsunskaya; Anastasia Lyrchikova; Gleb Stolyarov, Editing by Guy Faulconbridge & Jan Harvey).
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Sources say that Zijin Gold aims to raise the Hong Kong IPO valuation above $30 billion.
Two people who have direct knowledge of this matter said that Zijin Gold International is planning to begin bookbuilding next week for its Hong Kong IPO, with a target valuation of more than $30 billion. One source said that Zijin Gold plans to open its books September 19 and aims to raise over $3 billion. According to LSEG, if the listing were that large, it would rank as Hong Kong's second largest listing of this year after Chinese battery company CATL raised $4.6 Billion in its May offering. Sources who refused to name themselves because the information is confidential said that Zijin Gold will price its offering on September 24, with the debut scheduled for September 29. According to the other source, Zijin Gold is valued between $30 and $40 billion based on the estimated range of prices. Sources said that the market or unforeseeable events could affect the timing, size of the offering, and valuation of a company. Zijin Gold - which owns all the gold mines of Zijin Mining outside China - did not respond immediately to comments. Zijin announced in late April that it would spin off Zijin Gold International, and list the company on the Hong Kong stock exchange as part of an overhaul of its overseas assets. This was done to reflect its confidence about stepping up its investment in gold. The eight gold mines that will be listed in the proposed listing are located in South America and Central Asia. They also have operations on Africa, Oceania, Africa, and Oceania. Gold prices are on a record-breaking rise, reaching $3,673.95 an ounce Tuesday. This is due to growing geopolitical uncertainties, expectations that the U.S. will cut interest rates this month, and central bank purchases in several countries, including China. Goldman Sachs said last week that prices could rise well above their $4,000 base by mid-2026. Laopu Gold shares, a Chinese luxury jewellery brand that specializes in gold, closed Wednesday at HK$755 apiece, nearly doubling their HK$40.50 IPO value from June 2024. Zijin Gold was incorporated in Hong Kong, in 2007. It reported revenues of $1.8billion, $2.3billion and $3billion respectively for the last three years. This information was provided in a filing made to the Hong Kong Stock Exchange in June. Zijin Gold failed to disclose in its filing the purpose of the IPO proceeds. In the half-year reports, its parent stated that Zijin Gold’s listing was of strategic importance in order to achieve its goal of mining between 100 and 110 tons gold by 2028.
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Sources say that Brazil will propose a new forum for climate and trade complaints.
Brazil will propose the establishment of a forum where governments can discuss the impact climate policy has on trade. This is an issue that both the U.N. Climate talks and the World Trade Organization have failed to address, according to three officials who are familiar with the plan. The European Union has been accused by emerging economies such as Brazil, South Africa, and India of restricting the trade with its environmental policies. One example is a December ban on imports that are linked to deforestation. The EU said that trade discussions should take place at the World Trade Organization. Brazil, the host of COP30 (the U.N. Climate Summit) in November, wants to break this impasse. One official said that Andre Correa do Lago, the Brazilian COP30 president who will be making the proposal next week at the WTO annual public forum, is expected to make it during the WTO Forum. Source: The goal is to get enough support for the forum so that it can be launched at the COP30 summit, in November, with the members already in place. Officials declined to identify themselves and refused to comment publicly. Brazil's COP Presidency did not respond immediately to a comment request. One official expressed concern about the impact on international trade of two EU environmental policies: the EU’s anti-deforestation legislation and its carbon border tax, which will begin imposing pollution fees on imported cement and steel in January. The official, who is Brazilian, said: "We are worried about the growing trend to limit trade by using climate change as a justification. Today we don't have an appropriate forum to discuss this." The WTO does not have the capacity to deal with climate change. Source: The new forum may also provide solutions, such as tools for tracking deforestation which are affordable to producers and acceptable to buyers in Europe. A spokesperson from the European Commission didn't immediately respond to an inquiry for comment. The EU has been claiming that its carbon border tax is not a measure of trade, but rather a way to bring foreign producers up to par with European manufacturers who pay for CO2 emissions. The draft EU negotiating mandate for COP30, which was seen by, stated that the bloc is open to discussing international impacts of its climate policies in "bilaterally, and within the context of WTO, Paris Agreement context, and other appropriate forums." According to sources, the Brazilian forum's proposal would include at least two groups: one for climate and trade and another on energy transition. The sources added that they wanted to have representatives from both the trade and climate sectors meet every few months.
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Austria loses its legal challenge against EU 'green gas' and nuclear rules
Austria lost its legal challenge to European Union rules classifying nuclear energy and gas as climate-friendly investment on Wednesday. Europe's second highest court sided with the EU in the case. Austrian government challenged the European Commission decision to include nuclear and gas in the EU "taxonomy", which is a list of investments that are able to be marketed and labeled as sustainable. The court agreed with Brussels in a ruling that said the EU Commission was "right to believe that certain economic activities within the nuclear energy sector and the fossil gas sector can, under certain circumstances, contribute significantly to climate change adaptation and mitigation." The Austrian Ministry for Environment said that the decision was "very regrettable". "We have always believed that nuclear energy does not meet environmental sustainability criteria. The role of fossil gas in the energy transformation will be temporary. The company said that it will now review the decision and decide on any possible next steps, including whether or not to appeal. Gas and nuclear will be included in the EU taxonomy in 2022, causing a deep divide between countries on which energy source to use in order to achieve climate change goals. Spain and Denmark, among others, had said that it was not credible for gas, which is a fossil fuel emitting CO2, to be labelled as climate-friendly. Poland and Bulgaria sought to support gas investments as a way to get rid of more polluting coal. Austria's legal case, filed to the EU general court by an earlier coalition government where the Greens controlled the environment ministry, argued that Brussels should annul rules because nuclear energy can't meet the requirement of "doing no significant harm" in the environment due to concerns about radioactive wastage. Austria has long been against nuclear energy. The European Commission didn't immediately respond to a comment request. (Reporting and editing by Charlotte Van Campenhout, Sharon Singleton, Francois Murphy, Vienna)
Stocks struggle after Meta moodswings, tepid United States GDP
Stocks snapped a threeday winning streak on Thursday as frustrating projections from Facebook and Instagram owner Meta hammered the tech sector, while FX markets watched Japan's yen sink through 155 per dollar for the very first time considering that 1990.
Warm U.S. GDP information pushed Wall Street lower at its open however with more 'Big Tech' revenues scheduled for later it was Meta's downturn that soured the state of mind one of the most.
It plunged practically 15% in afterhours proceed Wednesday. Japan's tech-heavy Nikkei then slid 2%, followed by a 1%. slide in European tech, as dealers seemed to forget all. about the previous day's Tesla-driven optimism.
In an earnings-packed week, tech bellwethers are in the. spotlight, with Alphabet, Microsoft and Intel. also due to report after Thursday's closing bell.
If Meta is a guide, it appears the marketplace is just not. tolerant of in-line-- if you've had a good run through Q1 & & Q2. you either blow the lights out, or the market takes its pound of. flesh, said Chris Weston, head of research at Pepperstone.
Robert Alster, Chief Financial Investment Officer at Close Brothers. Asset Management, included that Mark Zuckerberg's discuss Meta. requiring to spend to keep up in the AI arms race had actually been another. major factor.
European incomes and M&A deals were flooding in too.
London's FTSE 100 struck another record high as. UK-listed miner Anglo American surged 11% on a $39. billion buyout offer from Aussie rival BHP, while. Deutsche Bank and BNP Paribas both edged up. after the euro zone's most significant lending institutions posted upbeat. first-quarter earnings.
US DOWNTURN
Beyond business incomes, financiers were absorbing the. sharper-than-expected slowdown in first quarter U.S. economic. growth.
GDP increased at a 1.6% annualized rate, the Commerce. Department's Bureau of Economic Analysis said, mainly supported. by consumer costs. Economists surveyed had actually anticipated. a brisker 2.4%.
Despite the expected GDP slowdown in 2024, there are no. impending signs of a recession, stated Mutual of America Capital. Management's chairman and president Stephen Rich.
Recent hotter-than-expected inflation reports have actually pushed. back and lowered expectations for Federal Reserve rate of interest. cuts, with markets now pricing in roughly a 70% possibility of a. very first decrease in September. They are not even fully convinced. there will now be another one this year, having actually expected around. 6 cuts at the start of the year.
The moving expectations of U.S. rates have raised Treasury. yields and the dollar, casting a shadow on the currency market. Versus a basket of currencies, the dollar ticked. fractionally greater to 105.89 after the GDP data.
The Japanese yen, which is sensitive to U.S. Treasury yields, has felt the impact of the dollar's ascent and. is down 9% this year, the worst carrying out G-10 currency.
It was fetching 155.70 per dollar, its weakest in 34 years,. in early afternoon in European and post-GDP information in the U.S. It. is also now strongly past the most recent line in the sand traders had. drawn for Japan to intervene in the markets.
Tokyo has still not stepped in, and I reiterate that it. does look like there will be no intervention so long as. USD/JPY's climb continues in a reasonably non-volatile fashion,. stated RBC Capital Markets' head of Asian FX method, Alvin Tan.
The Bank of Japan (BOJ) started its two-day rate-setting. conference on Thursday, with expectations that it will keep its secret. short-term rate of interest target the same.
Attention will be on what BOJ Guv Kazuo Ueda's states. about the yen's battles. Ueda will want to avoid any repeat of. an episode in 2022, when remarks by his predecessor triggered a. big yen tumble that forced Tokyo to spend an estimated $60. billion attempting to stabilise it again.
At this stage, if they were to step in, they may as. well just throw their cash into the sea, said Rob Carnell,. head of Asia-Pacific research study at ING. For all the great it will. do, other than in the extremely short run.
Criteria bond prices were a touch lower after the U.S. information. while both Brent and U.S. crude were hardly moved. at $88.10 and $82.87 per barrel respectively. Gold, which. hit a record high previously this month, inched approximately $2,330 an. ounce.
(source: Reuters)