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Copper prices fall on strong dollar while traders wait for Fed rate decision
The price of copper fell for the second consecutive session on Tuesday. This was due to a strong dollar and increased bets that interest rates would rise by the Federal Reserve, which could reduce demand for industrial metals. Benchmark 'three-month' copper on the London Metal Exchange fell 0.5% to $13,663.50 a metric ton at 0910 GMT. It had fallen as much as 0.8% in the morning. The 50-day moving mean of the contract was supporting around $13,570. Sucden Financial, a brokerage firm, said in a report that "Overall we expect base metals to remain supported when individual supply stories still are positive." The Fed's decision and important U.S. statistics later this week will be key indicators of whether or not the rally is a success. The dollar remained near a four-week high. The dollar remained near its four-week high. The dollar's strength can make metals denominated in dollars more expensive to holders of other currencies. The market awaited the Fed's meeting on Wednesday. This was especially true in light of the recent relief in oil prices following a lull between the U.S. According to CME FedWatch, 62% of market participants believe that the Fed is likely to keep interest rates at their current level. 38% expect a minimum 25-basis point hike. This is up from just 16% one week ago. The higher rates could dampen economic activity and reduce demand for copper. The LME's copper stocks are still tight despite the drop to 268,775 tonnes, their lowest level since March. Cash-to-three month?spread backwardation The price of a ton was $30 after reaching $44.50. This is the highest it has been since January. This indicates a tight supply in the near future. Aluminum prices fell 0.5%, to $3,151.50 a ton, despite the fact that stocks at LME-registered storages increased. The number of people who are unable to work has fallen to the lowest level in this century. Lead was unchanged at $1,890. Zinc fell 0.9%?to $3577.50. Nickel dropped 0.9% to $17.055. Tin lost 1.3% to $43,580. (Reporting and additional reporting by Solomon Cefai, Editing by Varun HK, Mrigank dhaniwala, Jan Harvey).
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The chip market is on a downward spiral as world stocks fall to a one-month low
Investors dumped chipmakers over concerns about Chinese competition, and the funding of the AI boom. Meanwhile, rising odds?of an interest rate increase in the U.S. as soon as this week further dampened mood. Asian chipmakers were 'at the 'heart' of Tuesday's sale. South Korea's KOSPI plunged more than 10%, hitting a three-month high. This triggered a circuit breaker on its way down, as it headed for its biggest monthly drop on record, surpassing the declines experienced during the Asian Financial Crisis in 1997. The index's value had tripled over the past 12 months, but has lost more than a quarter of that value since its peak. Shares of SK Hynix, Samsung Electronics, and other companies that are facing extra pressure on a market that is transforming due to leverage, have suffered losses in excess of 12%. Their stratospheric rise has slowed down in a hurry. Wall Street was set to open with a weaker opening as Nvidia's and Micron Technology’s shares dropped?in the premarket trading. Nvidia's shares fell 5% overnight, after The Wall Street Journal reported that the company is in discussions to provide $250 billion worth of financing guarantees for OpenAI in a massive data center project. Positive earnings reports from Unilever, Mercedes-Benz and other companies helped to offset losses in technology shares. The MSCI All Country World Price Index fell by 0.5%, to its lowest level since June 29. "You've seen hyperscalers not participating in AI because they are worried about cost and leverage. We're now seeing concerns about the profitability of the semiconductor industry, especially in Asia," Dorian Carrell said, Schroders' head of multi-assets income. The AI story is still evolving, but this kind of growth rate (in profit) is rarely sustained. We believe that the market is healthy in questioning these issues. The Information reported that China had begun producing its own immersion deep ultraviolet machines, which are used to make chips. ASML has long been the dominant supplier of this tool. ASML's shares fell 8.5% on Monday. CXMT, China's largest memory manufacturer, raised $8.6 Billion on Monday. It ended its first session as the most valuable Chinese company. OIL SLIDES AND US RATE IS UP EYED Brent crude oil futures continued their nearly 9% drop on Monday, dropping more than 3% at $85.55 per barrel as hostilities between Iran and the U.S. cooled following Washington's sudden suspension of airstrikes on Saturday. Donald Trump stated on Monday that the United States was having "good discussions" with Iran, and that there is a possibility of a deal. The break in fighting on Monday pushed benchmark 10-year U.S. Treasury rates down?by approximately 4 basis points?to 4.64%, but shorter-term interest rates barely moved. The markets have estimated that there is a 35% probability of a Federal Reserve rate hike by 25 basis points this Wednesday. Thierry Wizman is a currency and rates analyst at Macquarie Group. He said that the U.S.-Iran conflict, which has pushed up the price of crude, will continue to be the'most important' factor in determining what happens to the global economic outlook... and by extension what determines the central bank policy forecasts at the'margin. We expect the Fed to tighten its bias this week. The dollar was supported by the expectation of a hike sooner rather than later, keeping the euro at $1.1370. The yen was trading at 163.83 against the dollar. This is barely above a four decade low. Markets are worried that Japan will intervene in the currency pair, especially if it holds rates this week. Wizman said that if BOJ communication was not hawkish, and USD/JPY continues to rise, traders can expect an official response. This could include verbal interventions, rate checks or direct FX market interference, possibly on Friday. (Reporting and editing by Tom Westbrook, Sruthi Shakar, Amanda Cooper, Saad Saeed and Anil D’Silva).
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Sources say that the Russian Tyumen oil refinery stopped operations on July 25, after a drone attack.
Two industry sources confirmed on Tuesday that the?Tyumen?oil refinery in western Siberia stopped oil processing on 25 July following an attack by a Ukrainian drone. The domestic fuel market has been experiencing a worsening shortage since May when Ukraine intensified its attacks on oil refineries to undermine Russia's military efforts. Local Russian authorities said on Saturday that an 'Ukrainian drone attack' sparked the fire at a refinery located more than 2,000 kilometers (1,200 miles), from Ukraine. Sources said that following the attack, a diesel hydrotreater as well as a unit for producing high-octane gas caught fire. The sources declined to give a timeframe for when the refinery could be back in operation. RI-Invest?which owns?the refinery?did not immediately respond?to a request for a comment. The refinery's nominal capacity is around?9 millions metric tons annually, or 180,000 barrels a day. According to estimates, it processes approximately 6 million?tons crude oil annually and produces?about 0.5million?tons gasoline and 2.8million tons diesel. (Reporting and Editing by Jan Harvey).
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The Fed's rate decision is in the spotlight as gold falls against a dollar that remains firm
Investors waited for the Federal Reserve to announce its policy decision at the end their two-day meeting in this week. They wanted insight into the direction U.S. rates will take. Spot gold dropped 0.8% at $4,042.29 an ounce as of 0843 GMT. U.S. gold contracts for August delivery fell 0.8%, to $4.042.80. "Gold has held to a very tight range since late June based on the support in $4,000 region, which suggests at some stage there will be a breakout," said Rhona Connell, StoneX's head of market research. Connell said: "Fundamentally the physical markets are still very quiet, while professionals are contorting over the interaction between interest rates, oil and the dollar. All of these are important drivers." The U.S. Dollar held at an all-time high on Tuesday, making bullion priced in greenbacks?expensive to buyers abroad. Donald Trump, the U.S. president, said on Monday that Washington is having "good discussions" with Iran, and that there was a possibility of a resolution to their conflict. He warned, however, that if the talks failed, strikes would be resumed. The oil prices fell on Tuesday and hovered around their one-week-low amid?hopes of a resolution to the U.S./Iran conflict. The Federal Reserve is expected to raise interest rates due to the rising energy prices. Gold is often seen as a hedge to inflation. However, due to its non-yielding nature, it loses some of its appeal when interest rates rise. Trump said on Monday that the U.S. must have the lowest interest rate in all of the world. According to the CME FedWatch Tool, market participants are preparing for tomorrow's?Fed decision on interest rate. About 34% of participants anticipate a 25 basis-point increase. Also, traders have priced in a 79% probability of an interest rate increase at the September meeting of the central bank. Silver spot fell by 1.4%, to $57.56 an ounce. Platinum dropped 0.8%, to $160776. Palladium was down 1.5%, to $1272.71. (Reporting by Sukanya Mitra in Bengaluru; Editing by Vijay Kishore)
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TotalEnergies and Eni approve Cyprus Gas Field for LNG startup in 2028
TotalEnergies announced on Tuesday that France's TotalEnergies, and Italy's Eni, have 'approved' the development of 'the Cronos gas field' in Cyprus, which will supply Europe with natural gas liquefied. Production is expected to begin in 2028. The two companies will share the 2.8 million tons of LNG expected to be produced by the field. After losing their access to Russian gas and oil in 2022, the European countries are now focusing on their own resources. Cronos is the name of a large?natural gas find in Block 6 in Cyprus' exclusive economic zones in the Mediterranean Sea. It was discovered by Eni and TotalEnergies in a joint venture. The project, estimated to contain more than 3 trillion cubic feet of gas, will pipe and process reserves at Eni's facilities in Egypt for export to Europe via the Damietta?terminal. Cronos, as Cyprus' first gas project, will help develop a regional gas hub in the Eastern Mediterranean by leveraging Egypt’s infrastructure, said TotalEnergies CEO Patrick Pouyanne. He added that "this new gas route will help Europe to be more secure in terms of its energy supply by diversifying the LNG sources." Reporting by Hugo Lhomedet, Gdansk; Francesca Landini, Milan; America Hernandez, Paris. Editing by Milla Nissi-Prussak, and Louise Heavens.
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Japan's Kyushu region is hit by a major earthquake
A quake with a preliminary magnitude of 7.1 hit Japan's southern Kumamoto Prefecture on Tuesday. It knocked out the power to thousands of homes, stopped rail services, and triggered warnings about tsunamis and aftershocks. The area where the quake occurred is home to many companies, including Sony, the world's biggest contract chipmaker. Sony's spokesperson confirmed that the company is?checking on the situation. TSMC didn't immediately respond to a?request for comment. The Japanese government has issued emergency earthquake alerts for Kumamoto and Nagasaki prefectures as well as Kagoshima and Fukuoka. These are all located on Japan's southern Kyushu Island. The Japan Meteorological Agency said that a tsunami warning was issued for a wave measuring 1 m (3.2 feet). Japan is one the most earthquake-prone nations in the world, with an earthquake occurring every five minutes. Japan, located along the "Ring of Fire", a series of volcanoes and oceanic trenches that partially surround the Pacific Basin region, is responsible for about 20% of all earthquakes of magnitude 6 or higher in the world. According to an official count, a massive earthquake that struck Kumamoto ten years ago killed 275 and injured 2,739 people. Kyushu Electric Power reported that 40,000 homes lost power due to the quake. JR Kyushu, a railway company, said it suspended all services including bullet trains. The nuclear regulating authority in Japan said that there were no irregularities at the nuclear power stations. (Reporting and writing by Anton Bridge, Kantaro Kommiya and Mariko Katsumura; editing by Chang-Ran and Kate Mayberry; Writing by John Geddie)
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Major Gulf bourses are in red as they await Fed decision and Iran talks
The major Gulf stock markets fell in early trading on Tuesday as investors awaited U.S. Federal Reserve policy decisions and developments in the Iran Conflict, although ongoing corporate earnings provided some support. The majority of Gulf?Cooperation Council nations,?including?UAE?, have their currencies pegged against the U.S. Dollar and closely follow the Fed?s policy, exposing them to the direct effect of monetary tightening on the world?s largest economy. The Fed ends its two-day session on Wednesday. CME FedWatch?shows that 62% of policymakers are likely to keep rates the same, and 38% are expecting a minimum 25-basis point increase. This is up from 16% one week ago. The markets are also pricing in an 81% probability of a rate increase at the meeting scheduled for September. Donald Trump urged the Fed on Monday to lower rates. He argued that the United States should have the lowest borrowing costs in the world. Saudi Arabia's benchmark stock index fell 0.4%. This was due to a 0.6% drop in the oil giant Saudi Aramco, and a 1.2% decline in Saudi Arabian Mining Co. Yemen's Iran aligned Houthi group said that it had attacked several crude oil transportation and supply facilities linking eastern Saudi Arabia with Yanbu, an important Red Sea oil export hub. Zain Saudi Arabia, however, saw its share price rise by 1.4% after it reported a profit increase of more than 60% in the second quarter. Dubai's main stock index fell?0.5% due to a 1.5% drop in the sharia compliant lender Dubai Islamic Bank. Alpha Dhabi Holding, a major Abu Dhabi-based company, lost 0.8%. Fertiglobe, a?fertilizer company, reported a sharp rise in its quarterly profit. The Qatari Index was down by 0.1%. Trump warned that the U.S. would resume strikes if negotiations fail. He said that Washington was having "good talks" and that a possible deal to end the conflict with Iran was in sight. Iran said it would retaliate if any more attacks were made. (Reporting and editing by Andrei Khalip in Bengaluru. Ateeq Sharif is based in Bengaluru.
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Copper prices fall as bets on rate hikes weigh down on demand
The copper price fell on Tuesday as investors assessed a possible pause in the 'U.S. Strikes?on Iran. By 0700 GMT, the benchmark three-month price of copper at the London Metal Exchange had fallen by 0.4% to $13,678 per metric tonne. The Shanghai Futures Exchange's most traded copper contract fell 0.13% to 104,810 Yuan ($15.487.03) per ton. The market awaits the outcome of the U.S. Federal Reserve's meeting on Wednesday and weighs the impact that a reduction in oil prices will have after the lull between U.S.-Iran fighting. Analysts from Chinese broker Galaxy Futures stated that "as tensions between the United States and Iran ease, crude oil prices have fallen. However, expectations of more Federal Reserve rate increases?have increased." According to CME FedWatch, 62% of market participants believe that the Fed will keep interest rates steady, and 38% expect a minimum 25 basis point increase. This is up from just 16% one week ago. Copper market fears that higher rates will dampen economic activity and reduce demand. Red metal has benefited from the expectation of increased demand for AI infrastructure, electric vehicles and electrification. Stock markets that are jittery also weigh. On Tuesday, chipmakers led Asian stocks?down? on concerns about funding requirements of the AI boom. Galaxy Futures analysts stated that "with the?market entering into a week of heavy earnings reporting, sentiment remains fairly cautious." Aluminum was up by 0.19% at the SHFE and down by 0.44% at the LME. Total stocks in LME registered warehouses On Monday, the lowest level since 1998 was reached. Other?LME Metals: Zinc lost 0.43%;?lead fell 0.16%; nickel dropped 0.71% and tin lost 1.56%. On the SHFE, zinc fell 0.3%, while lead was unchanged, nickel dropped 1.35%, and tin declined 1.33%. $1 = 6.7676 Chinese Yuan Renminbi (Reporting and editing by Varun H. K. and Mrigank. Dhaniwala).
Stocks fall with safe haven possessions in need, growth concerns in focus
MSCI's international equities gauge and oil costs fell on Wednesday while safehaven possessions Treasuries and Japan's yen remained in need as mixed batch of economic data drove issues about slowing growth.
Crude oil futures settled lower for the third day in a row, including a more than 4% loss on Tuesday.
In U.S. Treasuries, yields fell and the closely seen yield curve in between two-year and 10-year notes turned positive after information showed that U.S. job openings was up to a 3-1/2- year. low in July.
On Tuesday, Wall Street stock indexes registered their. most significant daily percentage drops because early August as financiers. took revenues while weak U.S. manufacturing data did little to. boost danger hungers.
On Wednesday, the S&P 500 was last down after. spending the early morning flitting in between red and green as investors. waited anxiously for the remainder of the week's data. Thursday will. bring a reading on the U.S. services market with unemployed. claims data.
Friday's fiercely expected August report for nonfarm. payrolls is expected to supply the clearest clues regarding the. health of the U.S. economy and whether the Federal Reserve will. cut interest rates this month by a quarter or a half a. percentage point.
In a historically weak month for stocks, financiers are. acting more cautious and more worried about the growth outlook. than the inflation outlook, stated Anthony Saglimbene, chief. market strategist at Ameriprise Financial in Troy, Michigan.
Wednesday's information was a variety. A Commerce Department. report showed brand-new orders for U.S.-manufactured items increased. more than anticipated in July, boosted by defense airplane. But. demand elsewhere was moderate with borrowing expenses high.
U.S. job openings in July dropped to their least expensive level. since January 2021, recommending the labor market was slowing. and leading traders to contribute to bets that the Fed will provide a. half-a-percentage-point cut in rates at its meeting this month.
The setup is changing. Perhaps three-four months earlier, markets. would feel good about a 50 basis point cut. Now a 50 basis point. cut would signal that growth is slowing more than expected and. that the Fed is behind the curve, stated Ameriprise's Saglimbene.
Likewise on Wednesday, Atlanta Federal Reserve President Raphael. Bostic stated the U.S. central bank need to not keep rates of interest. too expensive a lot longer or it risks damaging employment too much.
On Wall Street at 2:54 p.m. (1854 GMT) the Dow Jones. Industrial Average fell 47.42 points, or 0.12%, to. 40,889.51; the S&P 500 lost 16.20 points, or 0.29%, to. 5,512.73; and the Nasdaq Composite lost 61.41 points, or. 0.36%, to 17,074.89.
MSCI's gauge of stocks around the world fell. 5.44 points, or 0.66%, to 814.03. Earlier in the day, Europe's. STOXX 600 index closed down 0.97%.
In forex markets, the dollar eased against a lot of. major currencies after the July U.S. job openings information slanted. the chances even more in favor of larger U.S. rate cuts while the yen. benefited from a safe haven quote.
The dollar index, which measures the greenback. against a basket of currencies consisting of the yen and the euro,. fell 0.32% to 101.37.
The euro was up 0.28% at $1.1074 while versus the. Japanese yen, the dollar compromised 1.05% to 143.94.
Stock exchange instability and dropping U.S. yields have actually made. the yen a strong performer, stated Marc Chandler, primary market. strategist at Bannockburn Global Forex.
In Treasuries, the yield on benchmark U.S. 10-year notes. fell 7.6 basis points to 3.768%, from 3.844% late on. Tuesday. The 2-year note yield, which usually moves. in step with rates of interest expectations, fell 11.4 basis points. to 3.7745%, from 3.888% late on Tuesday.
A carefully watched part of the U.S. Treasury yield curve. determining the gap between yields on two- and 10-year Treasury. notes, seen as an indication of economic. expectations, was last at an unfavorable 0.9 basis points.
The huge event of the week is available in the type of Friday's. payrolls print, stated Ian Lyngen, head of U.S. rates method at. BMO Capital Markets in New York City. That's to a big extent going. to offer us the plan for what to expect from the Fed. The. employment information is now overshadowing inflation as the most significant. risk to near-term policy expectations.
Crude oil prices fell on pessimism about need in the. coming months as unrefined producers offered mixed signals about. supply boosts. Dull data from the U.S. and China have. added to persistent expectations for a weaker global economy.
U.S. crude settled down 1.6% at $69.20 a barrel while. Brent settled at $72.70 per barrel, down 1.4%.
Gold prices reversed course to gain ground with assistance from a. softer dollar and lower yields after the weak data on U.S. task. openings. Area gold added 0.05% to $2,494.07 an ounce.
(source: Reuters)