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Copper prices reach five-month high on hope for US rate cuts
Investors' expectations of U.S. rate cuts and concerns over possible shortages have fueled copper prices to their highest levels in five months. The price of three-month copper at the London Metal Exchange rose 0.2% in open-outcry official trading to $10,068 a metric ton. This is its highest level since march 26. The price of copper has increased by around 15% in the past year, but it has been unable to break through the $10,000 psychological barrier. Base metals rallied along with other markets after U.S. jobless claims surged on Thursday, confirming the belief that Federal Reserve would cut interest rates. "I thought the consensus was for a quarter point cut, but I now think that it could be more." "I think the market has been lifted by this, and the bullish mood helped copper," Robert Montefusco of broker Sucden Financial said. CTAs bought dips below $10,000 and pushed it higher. The Chinese came in overnight and that got us started. Commodity Trade Advisor investment funds (CTAs) are driven primarily by computer programs that use technical signals. The Shanghai Futures Exchange's most-traded copper contract gained 1.22%, to 81.060 yuan (11,384.67) per ton. Supply concerns also supported prices. The massive Grasberg Copper Mine in Indonesia, one of the largest copper mines in the world, remained closed on Friday while the search for trapped workers continued. In July, copper production in Peru, which is the third largest copper producer in the world, dropped 2% on an annual basis to 228,007 tons. Nickel was the biggest gainer on LME. It climbed 1.3% to $15,340 per ton in official activity after a taskforce in Indonesia, the world's top nickel producer, seized large plots of land from miners as part of a crackdown against illegal exploitation. Lead was up by 0.1% to $1,998 while tin increased 0.2% to $34,750. Click here to see the latest news in metals.
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Stocks rise on Fed rate-cut bets; gold is on a tear
The global stock market was on course for a weekly increase on Friday, as the expectation of rapid U.S. interest rate cuts led to a reduction in borrowing costs worldwide. This would be a relief for stressed bond markets and drag on dollar. After Wall Street indexes reached new peaks over night, European shares fell 0.1%. Nasdaq futures and S&P500 futures were both flat or down by 0.1%. The MSCI All Country World Index is on track to achieve a weekly gain of 1.8%. Gold was also on course for its fourth consecutive weekly gain and traded at near-record levels as investor concerns over global economic uncertainty persist. Stock markets in Asia made significant gains earlier. Chinese stocks reached a three-and-a half year high due to expectations of AI related earnings growth. While the U.S. Consumer Price Report showed an increase, the markets were still focused on the weak job numbers from the previous week. Amelie Derambure is a senior portfolio manager of Amundi. She said, "Even though we may have weaker job numbers, the markets really focus on the Fed's impact, which will give growth a boost in the future." Veronica Clark, an economic at Citi, stated that the bank continues to expect 125 basis point Fed rate reductions over the next five meeting. The futures market shows a 95% probability of a quarter point cut next week to 4.00%-4.25 % and a 5% likelihood of a half point cut. The yield on the benchmark 10-year Treasury note rose by 2.5 basis points to 4,035%. It had fallen below 4% on Thursday for the first since April. ECB - "IN A GOOD PLACE" The dollar index, which measures the greenback versus six other currencies, was essentially unchanged at 97.635. The dollar rose 0.3% against the yen, to 147.68. This was after Japanese and U.S. Finance Ministers released a joint statement on Friday reaffirming their commitment not to target currency levels. The euro was largely flat at $1.17305 after receiving a modest boost on Thursday, when the European Central Bank left rates unchanged and indicated that it was "in a good place" with policy. Greg Fuzesi is an economist with JPMorgan. He said, "This indicates the Governing council is not inclined towards easing in the absence a significant growth shock." "We have therefore pushed back our call for the final rate cut to December from October." After the meeting, ECB source told us that the December meeting was the best time to discuss whether another cut is needed to cushion the economy. The markets indicate that there is only a 1 in 6 chance of an easing in December. The British economy registered zero growth for the month of July. This was in line with expectations, but a sharp decline in factory production weighed on sterling, which fell 0.1% to $1.35586. Gold prices rose 0.5% in commodity markets to $3651, just below the record high of $3673.95 that was set earlier this week. The oil prices rose despite predictions by the International Energy Agency that OPEC will continue to pump out more oil next year, resulting in an even greater record surplus. Brent crude oil was up 1.4% to $67.28 per barrel. U.S. crude rose 1.2% to $63.09 a barrel.
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China wants feedback on its plans to streamline gold import regulations
China's central bank announced on Friday that it is looking for public feedback on its proposal to streamline the licensing system to make it easier to export and import gold and gold-based products. The world's top gold consumer intends to expand the number of customs authorities that are eligible to manage the "Non-one-batch-one-licence" for gold products to 15 from 10 previously, People's Bank of China said in a statement. "Non-one-batch-one-licence" means that the same licence can be used for more than one customs clearance as long as this does not exceed the prescribed quantity, the central bank said. The document stated that the validity period for the permit was extended. There is also no limit to the number of licenses which can be used during the effective period. The "Non-one-batch-one-licence" will be valid for nine months, according to the document. These licences usually expire after six months. The gold price has staged an unprecedented rally this week, driven by geopolitical uncertainties, expectations that the U.S. will cut interest rates this month and central bank purchases. Gold prices have risen by 33% this year. The new proposal will simplify certain procedures for gold imports to make them more convenient, but that does not mean imports will increase. An industry expert spoke on condition of anonymity because the subject is sensitive. The central bank is the one who has the final word on import volumes. Reporting by Beijing Newsroom. (Editing by Jane Merriman).
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Stocks rise on Fed rate-cut bets; gold is on a tear
The global stock market was on course for a weekly increase on Friday, as the expectation of rapid U.S. interest rate cuts led to a reduction in borrowing costs worldwide. This would be a relief for stressed bond markets, and drag on dollar. European shares fell 0.2% at the opening of trading, while Nasdaq futures and S&P500 futures dropped 0.1-0.2% after hitting new highs overnight. The MSCI All Country World Index remained on course for a weekly gain of 1.7%. Gold was also on course for its fourth consecutive weekly gain and traded at near-record levels as investor concerns over global economic uncertainty persist. Stock markets in Asia have made significant gains. Chinese stocks reached a three-and-a half year high due to expectations of AI related earnings growth. While the U.S. Consumer Price Report showed a rise in prices, the markets were still focused on the weak job numbers from the previous week. Amelie Derambure is a senior portfolio manager of Amundi. She said, "Even though we may have weaker job numbers, the markets really focus on the Fed's impact, which will give growth a boost in the future." Veronica Clark, a Citi economist, said that the bank continues to expect 125 basis point Fed rate cuts in the next five meetings. The futures market shows a 93% probability of a quarter point cut to 4.00%-4.25 next week and a 77% likelihood of a half point cut. The yield on the benchmark 10-year Treasury note rose by 3 basis points to 4,043%. It had fallen below 4% on Thursday for the first since April. ECB - "IN A GOOD PLACE" The dollar index, which measures the greenback versus six other currencies, edged up 0.2% to 97.757. The dollar rose 0.5% against the yen, to 147.89. This was after Japanese and U.S. Finance Ministers released a joint statement on Friday reaffirming their commitment not to target currency levels. The euro fell 0.1%, to $1.171725. It had received a modest boost on Thursday after the European Central Bank left rates unchanged and indicated that it was "in a good place" with its policy. Greg Fuzesi is an economist with JPMorgan. He said, "This indicates the Governing council is not inclined towards easing in the absence a significant growth shock." "We have therefore pushed back our call for the final rate cut to December from October." ECB sources said that the December meeting was the most realistic date to discuss whether another cut is needed to cushion the economy. The markets indicate that there is only a 1 in 6 chance of an easing in December. Britain's economy records Zero monthly growth In July, the data was in line with expectations, but showed a sharp decline in factory production, which weighed on sterling, which fell 0.3% to $1.3536. Gold prices rose 0.3% on the commodity markets to $3,644 per ounce. This is just a little bit below the previous record high of 3,673.95 set early in the week. The International Energy Agency forecast a record oil surplus for next year, as OPEC pumps more product. Brent crude was essentially flat at $66.38 per barrel. U.S. crude fell 0.1% to a price of $62.31 a barrel.
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Norway sovereign wealth fund excludes Eramet on ethical grounds
A spokesperson from Norges Bank Investment Management, the fund's operator said that Eramet, a French mining company, was excluded from its portfolio due to ethical reasons. According to data from the fund, as of 30 June, it held a stake in Eramet valued at $6.8 millions. Eramet didn't immediately respond to a comment request. The Council on Ethics of the fund, which is its ethics watchdog, recommended the divestment due to Eramet’s participation in Indonesia’s PT Weda Bay Nickel, where Eramet is the operator of mine. The Council on Ethics recommended that Eramet SA should be excluded. "There is an unacceptable risk the company may contribute to or be responsible for severe environmental damage, and serious violations of human rights by uncontacted indigenous people," it said in a press release. Separately, Indonesian authorities said that on Friday a special task force had seized hundreds of acres of land from the miner PT Weda Bay Nickel due to a lack of relevant forestry licenses. Indonesia has been cracking down against illegal mining in the country. Last week, President Prabowo said that over 1,000 such operations had already been identified. (Reporting and editing by Louise Rasmussen. Additional reporting by Guz Trmpiz, in Paris.
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EU Aluminium Producers Push for 30% Scrap Export Levy
The European Union’s aluminium industry is calling on the European Commission (EC) to impose a duty of about 30% on scrap metal exports to prevent it from flooding out of Europe and leaving local producers short. According to the industry group European Aluminium, EU aluminum scrap exports will reach a record 1,26 million metric tonnes in 2024. This is around 50% more than it was five years ago. The majority of these scraps are headed to Asia. According to the EU industry, since then, the situation has worsened because of President Donald Trump’s import tariffs. These were set at a 50% rate for aluminum but only a 15% rate for scrap. This has led to a rise in scrap imports from the United States, and a decrease in exports. Asian buyers are now more focused on EU supplies. Paul Voss, director general of European Aluminium, said that European companies are unable to compete with Asian buyers who can pay more due to lower standards in terms of labour and environment and subsidies. He said: "It is perfectly understandable for scrap traders to prefer selling to the highest bidder. But it is the role of the public policy to correct this kind of market failure in order to protect Europe’s strategic interests." European Aluminium and Eurofer (which represents the steel industry) have met with the Commission in order to press for the export tax. The EU executive started monitoring exports in early July, and will decide if any action is needed by the end third quarter. Recycling aluminium is 95% more energy efficient than mining bauxite to produce metal. European Aluminium reported that European companies invested 800 million euros (821 million dollars) to increase the recycling furnace's capacity to 12 millions tons. Several countries outside the EU limit exports of metal scrap. According to GMK Center, 48 countries, including India, China and South Korea, restrict the export of ferrous scrap. Steel sector says that it is important to keep scrap within Europe, but it also has immediate concerns. These include a new system of curbing finished steel imports which the Commission will announce soon. However, scrap dealers in Europe oppose export restrictions. The recycling industry group EuRIC has said that scrap exports are a result of low demand at home and an insufficient capacity for mixed scrap, such as scrap from shredded cars. Reporting by Philip Blenkinsop, Editing by Joe Bavier.
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Iron ore to gain for the third week in a row on better China demand and supply problems
Iron ore futures were in a range on Friday and expected to rise for the third week running, helped by an improving demand from China, the top consumer, and concerns about supply over Guinean projects. However, higher ore and metal inventories limited gains. The day-traded contract for January iron ore on China's Dalian Commodity Exchange closed 0.06% lower, at 799.5 Yuan ($112.29 per metric ton). The contract showed a weekly increase of 1.6%. As of 0810 GMT the benchmark October iron ore traded on Singapore Exchange had risen 0.54%, to $106.05 per ton. However, this is only a 0.54 percent increase from last week. After the end of the military parade on September 3, steelmakers began to resume production, which boosted iron ore prices. The average daily hot metal production, which is a measure of ore consumption, increased 5% from week to week, reaching a record high of 2,41 million tons on September 11th, according to data provided by consultancy Mysteel. Prices rose earlier this week as fears about the supply of oil from the Simandou project in Guinea grew after local reports that Rio Tinto wanted to build refineries locally. This could limit the amount of ore that can be exported. The sharp decline in shipments by Brazil, a major supplier in the first weeks of September, also helped boost bullish sentiment. Prices fell from their highs of Thursday due to the rising stocks of steel during the peak season for demand in September. According to Mysteel, this, along with an increase of 0.2% in iron ore portside inventories from week-to-week, limited the weekly price increases. Coking coal and coke both saw increases of 0.88% and 0.43 %, respectively. The benchmarks for steel on the Shanghai Futures Exchange have gained ground. Hot-rolled coils rose by 0.66%. Wire rods increased by 0.06%. Stainless steels climbed by 0.43%.
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South Sudan opposition claims government is trying to enforce the "one tribe rule"
South Sudan's Opposition has accused the Government of trying to enforce a "authoritarian Control and One-Tribe Rule" after First Vice president Riek Machar, who was suspended for orchestrating militia attacks, was charged. Machar's SPLM -IO party has rejected the charges brought against him, along with 20 other individuals. These included murder, treason, and crimes against humanity. They were accused of participating in raids in the northeast by the White Army militia. Machar’s house arrest under the order of March has sparked international concerns about a possible resurgence of the devastating civil war that raged between his Nuer ethnic forces and Dinka fighters loyal his long-time rival, President Salva Kiir. Kiir served as a member of the unity government that was formed to end that war. However, their relationship remained strained. The charges were fabricated in order to undermine the (peace accord), marginalize Dr. Machar, and the SPLM-IO and establish total government control," Machar’s SPLM-IO said late Thursday night shortly after the Justice Ministry announced the charges. Analysts say that Kiir is trying to replace Machar, his closest ally, with Second Vice President Benjamin Bol Mel. He was sanctioned in the U.S. because of suspicions he had received preferential treatment when securing contracts. Joseph Szlavik told the Washington Post last month that South Sudanese officials had asked for the lifting of these sanctions in recent bilateral talks. Szlavik stated that these conversations also included the possibility of sending more deportees from the United States to South Sudan, following the arrival last July of eight men - including seven from a third country. Nairobi Newsroom, Hereward Holland and William Maclean (Reporting)
Fears for US economy drive tech-led global stock depression
International stocks dropped sharply on Friday, with richlyvalued tech groups taking much of the pain, as financier anxiety about a U.S. economic slowdown sent out shockwaves through markets already rattled by downbeat profits updates from Amazon and Intel.
With thin summertime trading likely exaggerating relocations,
a depression that began in Asia with a 5.8% drop for Japan's. Nikkei share index, its greatest day-to-day fall since the. March 2020 COVID-19 crisis, rippled through Europe and was set. to continue Wall Street later on in the day.
MSCI's broad gauge of worldwide stocks dropped. 0.8%, Europe's Stoxx share index fell 1.8% and futures. trading suggested Wall Street's S&P 500 would open 1.4% lower .
The VIX step of U.S. stock exchange volatility, understood. as Wall Street's worry gauge, increased to its greatest reading given that. April and U.S. Treasuries rallied as traders put into. the benchmark financial obligation securities considered as havens.
The sell-down followed a softer than expected U.S. factory activity survey on Thursday and came ahead of Friday's. regular monthly U.S. non-farm payrolls report, which economic experts anticipate. will reveal task growth dropped to 175,000 in July from 206,000 in. June.
The U.S. Federal Reserve has kept benchmark loaning. expenses at a 23-year high of 5.25% -5.50% for a year and some. analysts think the world's most prominent central bank may. have kept monetary policy tight for too long, risking a. economic crisis.
The historic experience is that turnarounds in the. labour market can occur quickly and completely which fairly. moderate increases in joblessness have been enough to set off. economic crises in the United States, SEB US economist Elisabet. Kopelman said.
Cash markets on Friday priced a 31% chance of the Fed,. which is commonly expected to cut rates in September and November,. executing a jumbo 50 basis points cut next month to guarantee. against a recession.
That does feel like we have beat the gun, Fidelity. International fixed earnings manager Shamil Gohil said.
He added, however, that will also be expecting a. rise in the joblessness rate which will offer us hints about a. weaker labour market and as a prospective recessionary signal.
Shares in U.S. chipmaker Intel toppled more. than 20% lower in pre-market trading on Friday after the group. suspended its dividend and exposed plans to cut 15% of its. workforce.
Expert system chipmaker Nvidia, one of. the greatest factors to the tech rally, dropped 3%. pre-market.
European tech stocks swooned 4% lower.
Nvidia, up more than 700% because January 2023, has actually left. lots of possession managers with an
outsized direct exposure
to the fortunes of this single stock.
Steven Bell, chief financial expert for EMEA at possession manager. Columbia Threadneedle, stated that while investors were trimming. big tech positions to rebalance their portfolios the U.S. was. not about to contract.
Personally, I'm not believing I need to run for the. hills, he stated.
This is a downturn, not an economic crisis. And the background. of lower rates of interest, lower inflation and genuine wages rising. because inflation is falling faster than wage growth, all of. that's quite favorable.
Haven buying went full throttle on Friday, however. The 10-year Treasury yield was 4 bps lower on the. day 3.978% on Friday after dropping as much 14 bps over night. Bond yields fall as rates of the securities rise.
The two-year yield, which normally shows. near-term rates of interest expectations, touched its most affordable because. May 2023 before bouncing slightly greater to 4.165%.
The 10-year German bund yield, a criteria for euro zone. financial obligation expenses, fell 5 bps to 2.201%.
In forex markets, the yen added 0.4% to 148.8 per. dollar to extend a rapid recover for the deteriorated. currency, offered some relief today by the Bank of Japan. raising interest rates to levels unseen in 15 years.
Sterling was on track for a 1% weekly drop against the. dollar as traders speculated that the Bank of England. would follow its first rate cut of this cycle on Thursday with. another in November.
Commodity markets broadly displayed international development fears as. gold added 0.7% to $2,464 an ounce and Brent petroleum. , although somewhat up on the day at $79.70 a barrel,. headed for a 4th succeeding weekly loss.
(source: Reuters)