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Gold reaches record highs on Fed rate-cut betting, US-China Trade woes
Gold reached a new high on Wednesday just below the $4,200 per ounce mark, boosted by expectations for further U.S. interest rate cuts. Meanwhile, renewed U.S. China trade concerns also increased demand for safe havens. As of 0604 GMT spot gold was up by 1.1%, at $4,185.59 an ounce. It had earlier reached a session high of $4193.38. U.S. Gold Futures for December Delivery gained 1%, to $4204.30. The U.S. president Donald Trump announced on Tuesday that his administration would produce a list on Friday of "Democrat programs" which will be closed due to the federal government shut down. Matt Simpson, senior analyst at StoneX, said that the U.S. shutdown and Jerome Powell's dovish remarks have been two of the most recent reasons why gold prices are on an upward trend. Federal Reserve Chair Jerome Powell stated that the U.S. labor market was subdued. However, the economy may be "on a slightly firmer trajectory than anticipated." Powell said that interest rate decisions will be taken "meeting by meeting", balancing the labour market's weakness against persistent inflation above target. Investors have priced in the near certainty of a Fed rate cut of 25 basis points in October and December. Bullion is more likely to perform well when interest rates are low and there is political and economic uncertainty. Gold has gained 59% in the past year, mainly due to geopolitical and financial uncertainties, central bank purchases, a de-dollarisation trend, and strong exchange-traded funds. Simpson added that "this rally has become a momentum trading, where traders pile into the market to chase away prices." Trump stated that Washington is considering cutting off some trade relations with China, such as in the cooking oil sector. On Tuesday, both countries started imposing port fees tit for tat. The International Monetary Fund increased its global growth forecast for 2025, citing better than expected tariff and financial conditions. However, it warned that renewed U.S. China trade tensions may curb growth. Silver climbed 1.9% to $52.43, following the gold rally and tightening of supply on the spot market. Palladium and platinum both rose by 0.8%, to $1,537.19, respectively. (Reporting and editing by Sherry Phillips, Subhranshu Sahu, and Ishaan Aroor in Bengaluru).
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The Chinese Communist Party holds a plenary on its new five-year plan. What does it mean to you?
From Monday to Thursday, the elite Central Committee of China’s ruling Communist Party is holding a closed door meeting to discuss, amongst other things, its 15th five-year plan for development. This meeting is known as a Plenum and it's the fourth one since the Party Congress of 2022. What does it all mean? What is a plenum? Central Committee, the largest decision-making body of the party, holds seven plenums in between congresses. The fifth plenum is traditionally used to discuss five-year plans. The party will now be expected to review the 2026-2030 Plan during the Fourth Plenum, which takes place from October 20-23. This is due to a nine-month delay that was not explained in the third plenum. In order to prevent leaks, the plenum is traditionally restricted within the premises for the duration. The proceedings are kept secret until the meeting is over. Most Chinese journalists and foreign media are not allowed access. China will release a short report the day after the plenum concludes, outlining the main points of agreement - in this case, the scope of the five-year plan. No mention will be made of dissent to project unity within the party. Beijing may release more details a few days later, possibly in the week beginning October 27. However, it is unlikely that these will contain any specific costs or targets for new policies. The next five-year plans are likely to be approved by the parliament in March. What is a five-year plan? This is a blueprint for a strategic plan that defines the economic and social goals of a country over a period of five years, and guides national policy, investments and reform. This typically includes economic growth, industrial development, technological innovation and environmental protection as well as national security goals. China will have 15 five-year plans since adopting quinquennial policy cycles of Soviet style in 1950. Plans from the 1980s were seen as crucial in China's subsequent growth into the second largest economy of the world. These reforms opened the market, allowed for private ownership and helped integrate China into the global economy. In the 2000s and 2010, poverty reduction and a shift to an economy based more on domestic consumption rather than infrastructure investment and manufacturing were the main focus. China has declared victory in the fight against poverty. It is generally accepted, however, that China has failed to create a durable household demand. Will the plenum discuss other topics? Most likely. In the past, fourth plenums discussed party governance including personnel reshuffles and disciplinary measures. Diplomats, military personnel, and other observers are likely to pay attention to those who may rise or fall in rank, especially within the military, as a way of better understanding Beijing's thoughts. What's at Stake China's next five-year economic plan will be closely monitored to see how much it focuses on rebalancing the economy. Beijing is expected to use strong words in its efforts to increase consumption, according to most observers. Analysts say that in practice, the trade war between China and the U.S. will likely keep policymakers focused primarily on technological advancements and industrial upgrades, meaning resources will continue to flow mainly towards strategic investments and factories, rather than consumers. It could consolidate China's successes in developing world-leading sectors, like electric vehicles and green energy, while opening up new opportunities in other areas where it still trails rivals, like semiconductors or aviation. It also means that deflationary pressures will continue and debt will increase, as China's small contribution to global demand in comparison to its increasing stake in the manufacturing sector will keep tensions at a high. The plenum is held just days before the APEC Summit in South Korea where Donald Trump and Xi Jinping may meet. The plenum comes just days after Beijing tightened its export controls for rare earths. This prompted Trump to threaten triple-digit tariffs. Analysts say Beijing's five-year plans are not affected by short-term changes in diplomatic and trading relationships. Instead, Beijing bases its policies on protecting national interests during a time of increasing great power rivalry.
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Orlen offers $278 million to purchase all shares of Grupa Azolty Polyolefins
Orlen, a Polish oil refiner, has offered to purchase all the shares in Grupa Azoty Polyolefins. GAP is a petrochemical division of Grupa Azoty - a state-controlled chemical company. Orlen owns 17.3% GAP and said that its offer valued at $1.02 billion (about $278.20m) includes financing for GAP to continue restructuring debts and claims, as well as purchasing shares from other shareholders. Orlen and Azoty have been discussing the future of polymers, which Azoty's core business is losing money in, since 2024. The country's largest oil refiner announced earlier this year that it would not purchase more shares of Azoty’s polymer project. The companies did sign a memorandum on understanding for the sale of GAP's logistical assets. Orlen announced on Wednesday that its offer was valid until the end of this year and contingent upon the completion of GAP's restructuring process and the final settlement of contract for the construction of the polypropylene factory. Hyundai Engineering Co. and Korea Overseas Infrastructure & Urban Development Corporation are the contractors for the project which has been delayed.
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Wall Street Journal, October 15,
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. Stellantis plans to invest $13 billion in order to produce more Jeeps, Dodge SUVs, and pickups in the U.S. The global automaker calls this the biggest investment it has ever made. Grindr confirmed Tuesday that it had received a note from Ray Zage, and James Lu. The letter expressed an interest in exploring whether the dating app could be taken private. - MGM Resorts International is no longer looking to turn its slot- and electronic-game-focused Empire City Casino in Yonkers, N.Y., into a full-fledged casino with live games such as poker and blackjack. The U.S. Military is making its biggest push yet in modern nuclear power. A program will place small reactors at Army bases throughout the country, where power grids are strained and can't meet rising energy demand. Oracle's dual new chief executives defended their company's massive investment in new data centers. They said that it would offer businesses computing power and a bundle of services to make artificial intelligence more useful. Donald Trump, the U.S. president, said that U.S. assistance for Argentina depends on whether or not the ruling party of Javier Milei wins this month's midterm elections. (Compiled by Bengaluru Newsroom)
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Dollar eases, shares rebound as Fed cuts bets and reclaims spotlight
The global stock market recovered its losses on Wednesday thanks to dovish remarks from Federal Reserve chair Jerome Powell, and positive bank earnings in Wall Street. However, simmering U.S. - China trade tensions kept risk appetite at bay. Powell said that the possibility of further rate reductions was still open on Tuesday, and that the long-term effort of the central banks to reduce the size of their holdings could be nearing its end. Some viewed his comments as dovish. They lifted the markets and reaffirmed expectations for more easing in this year. By December, roughly 48 basis point worth of cuts will be priced into the market. Tom Kenny is a senior international economist with ANZ. He said that the Fed could announce its intention to end quantitative tightening at the upcoming FOMC meeting in October. We expect the Fed will cut 25bps at the FOMC meetings in October and December. The market was also supported by solid earnings from U.S. banks and an upward revision to the International Monetary Fund’s global growth forecast for 2025. Earlier in the week, the market had been slammed on signs of renewed tension in U.S. China trade relations. The Nikkei rose 1.5%, after a 2.6% drop in the previous session. Nasdaq Futures gained 0.31%, while S&P500 futures increased by 0.26%. Even so, the sentiment was fragile. On Tuesday, U.S. president Donald Trump said that Washington would consider terminating certain trade ties with China. This included in relation to cooking oils. Both the U.S.A. and China have begun charging extra port fees to ocean shipping companies that transport everything from holiday toys, to crude oil. The markets have been thrown into turmoil in recent sessions due to a rapid escalation of the U.S. China trade war. Trump announced an additional 100% duty on Chinese goods as a retaliation against Beijing's dramatic expansion of export controls on rare Earths. It does indicate that a lasting ceasefire is unlikely to be achieved easily. It's also a good reminder that the market needs to be aware that they are shooting these arrows, and then walking them back," said Tony Sycamore. U.S. trade representative Jamieson Greer said separately on Tuesday that the timing of additional tariffs of 100% on China's exports to America depends on whether they kick in November 1, or earlier, but acknowledged that Beijing might find it difficult to find a way out. Hong Kong's Hang Seng Index rose 1.2% on the back of the regional rally, while China's CSI300 Blue-chip Index bucked trend and fell a mere 0.03%. The data released on Wednesday shows that deflationary pressures persist in China. Both consumer and producer prices fell in September. This supports the need for additional policy measures, as trade tensions and a prolonged slump in the property market weighs on confidence. POLITICAL UNCERTAINTY The political landscape in Japan is riven with uncertainty as the country's parliament's scheduling committee has failed to reach an agreement on the holding of a vote on the next premier on October 21, according to Kyodo News Agency. Sebastien Lecornu, the French Prime Minister, promised to delay a historic pension reform until 2027, a measure that would provide some relief for investors. EUROSTOXX50 futures gained 0.95% in Asia. FTSE and DAX were both up about 0.3%. Juan Perez is the director of trading for Monex USA. He said: "I believe that anything that can bring relief to the squabbles within the French Parliament is an absolute victory." The euro last traded at $1.1611 despite being largely insulated from France's political turmoil. The Fed's cut bets weighed on the currency market as the dollar fell 0.4% to 151.23 yen and 0.16 % to 0.8000 Swiss Franc. The sterling rose by 0.22%, to $1.3349. Spot gold, meanwhile, continued its record-breaking run, and last rose 0.9% to $4,178.49 per ounce. This was helped by the geopolitical, economic, and expectations of a U.S. interest rate cut. Brent crude futures fell 0.37%, to $62.16 per barrel, and U.S. crude fell 0.31%, to $58.52 a barrel.
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Gold reaches record highs on Fed rate-cut betting, US-China Trade woes
Gold reached a new high on Wednesday just below the $4,200 per ounce mark, boosted by expectations for further U.S. interest rate cuts. Meanwhile, renewed U.S. China trade concerns also increased demand for safe havens. As of 0448 GMT the spot gold price was up 0.9% to $4,178.15 an ounce after reaching a session high of 4,186.68. U.S. Gold Futures for December Delivery gained 0.8%, to $4197.50. The U.S. president Donald Trump announced on Tuesday that his administration would produce a list of "Democrat programs" on Friday, which will be closed due to the federal government shutdown. Matt Simpson, senior analyst at StoneX, said that the U.S. shutdown and Jerome Powell's dovish remarks have been two of the most recent reasons why gold prices are on an upward trend. Federal Reserve Chair Jerome Powell stated that the U.S. labor market was subdued. However, the economy may be "on a slightly firmer trajectory than anticipated." Powell said that interest rate decisions will be taken "meeting by meeting", balancing the labour market's weakness against persistent inflation above target. Investors have priced in the near certainty of a Fed rate cut of 25 basis points in October and December. Bullion is more likely to perform well when interest rates are low and there is political and economic uncertainty. Gold has gained 59% in the past year, mainly due to geopolitical and financial uncertainties, central bank purchases, dedollarisation trends, and strong exchange-traded funds. Simpson added that "this rally has become a momentum trading, where traders pile into the market to chase away prices." Trump stated that Washington is considering cutting off some trade relations with China, such as in the cooking oil sector. On Tuesday, both countries started imposing port fees tit for tat. The International Monetary Fund increased its global growth forecast for 2025, citing better than expected tariff and financial conditions. However, it warned that renewed U.S. China trade tensions may curb growth. Silver rose by 1.4% to $52.17 after hitting a record of $53.60 Tuesday. This was due to the gold rally and tightening supplies on the spot market. Palladium rose by 0.2%, to $1,528.68, while platinum gained 0.7%, to $1648.80. (Reporting and editing by Sherry Phillips, Subhranshu Sahu, and Ishaan Aroor in Bengaluru).
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The MORNING BID brings Europe-Fed to the forefront for now
Rae Wee gives us a look at what the European and global markets will be like tomorrow. Investors are choosing to ignore the simmering U.S. China trade tensions for now and instead take comfort from Federal Reserve Chairman Jerome Powell’s remarks that hint at future rate cuts. The global stock market was once again optimistic on Wednesday. European futures pointed to a sharply increased opening, following a volatile session yesterday due largely to the trade whiplash. Powell may be to blame for the market's reprieve. His comments on Tuesday reaffirmed expectations of more easing in the coming year and a possible end to the Fed’s balance sheet reduction. The dollar fell and gold extended its record run, with futures indicating that rate cuts of approximately 48 basis points will be implemented by December. The recent bouts of volatility in the market are a reminder that investor sentiment is still fragile. In their ongoing trade spat, China and the U.S. continue to fire volleys. The latest is Trump's threat to cut off some trade relations with Beijing in relation to cooking oils. Investors assume that the two sides are going to continue to push each other, but not to fight. U.S. trade representative Jamieson Greer said on Tuesday that it was up to China whether or not the increased tariffs would kick in by November 1, but admitted it could be difficult for Beijing find a way out. Politics is also an important issue around the globe. Local media reported that the Japanese parliamentary schedule committee couldn't agree on holding the vote to choose the next premier on October 21. This prolongs the uncertainty surrounding Sanae Takaichi, who is seeking to become Japan's first woman prime minister. In France, the focus will be on the next steps for the government after French Prime Minister Sebastien lecornu announced that he would suspend a historic pension reform until the election in 2027. Earnings from Morgan Stanley and Bank of America are due in the afternoon on Wall Street. After their peers announced a set of solid results on Tuesday, expectations are high. The top U.S. banks predicted that business would continue to grow as equity markets surged in the last quarter, and the economy and consumers spending held steady despite the sweeping tariffs. The following are key developments that may influence the markets on Wednesday. French political developments Bank of America and Morgan Stanley Earnings Fed's Miran Bostic and Schmid talk Release of Fed's Beige Book
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Oil prices drop as the market focuses on excess supply and US-China trade tensions
The oil prices continued to fall on Wednesday as investors considered the International Energy Agency warnings of a surplus supply in 2026, and the U.S./China trade tensions which could reduce demand. Brent crude futures dropped 21 cents or 0.3% to $62.18 a bar by 0425 GMT. U.S. West Texas Intermediate Futures dropped 16 cents or 0.3% to $58.54 a bar. The previous trading session saw both contracts close at lows of five months. The International Energy Agency (IEA) said that the global oil market may face a surplus of up to 4 million barrels a day next year, a larger glut than its earlier predictions, as OPEC+ and its rivals increase production and demand remains sluggish. The market is focused on the excess supply amid mixed signals of demand. Emril Jamil is a senior oil analysts at LSEG. He said that ebbing geopolitical risk and escalating tensions in trade are adding to the pressure on prices. In the last week, the trade dispute between China and the United States, two of the largest oil consumers in the world, has re-emerged. Both countries have imposed additional port fees for ships transporting cargo between them. This will increase trading costs, disrupt freight flow and likely lower economic output. The focus will be on the recent escalation of trade tensions between China and the US, and the risks that this poses to the global economic system," said Tony Sycamore. Tensions have increased between the two world's largest economies after China announced last week a major expansion in rare earth export controls. U.S. president Donald Trump has threatened to increase tariffs on Chinese products to 100%, and tighten export restrictions of software from November 1. Yang An, an analyst at Haitong Futures, said that the current oil price is largely determined by the level of global oversupply as reflected in the changes in inventories. The weekly inventory report will give traders a good idea of the demand in the United States. A preliminary poll indicated that U.S. crude stockpiles were likely to have increased last week while gasoline and distillate stocks are likely to have decreased. Six analysts surveyed by estimated that on average crude inventories increased by around 200,000 barrels during the week ending October 10. The American Petroleum Institute's weekly industry report is due at 4:30 pm EDT (2030 GMT), and the U.S. Energy Information Administration will release its data at 10:30 am EDT (1430 GMT), on Thursday. The delay is due to Monday's Columbus Day/Indigenous Peoples' Day. Sam Li reported from Beijing, and Jeslyn Leh in Singapore. Sonali Paul and Christian Schmollinger edited the report.
Stocks rally in relief after Trump suspends tariffs
On Thursday, global stocks rose, the dollar recovered its footing and the manic bond saleoff stabilized after U.S. president Donald Trump announced he would temporarily reduce the heavy duties he just imposed on several countries.
After a market crash that wiped trillions from global stocks, and sent U.S. Treasury Bonds and the dollar tumbling, Trump announced on Wednesday a 90-day suspension of many of his new duties in an unexpected reversal.
Overnight, Wall Street's "Magnificent 7" stocks soared again. Their market value grew by more than $1.5 trillion. S&P 500 Index and Nasdaq Composite Index posted their largest daily percentage gains for more than a decade.
The U.S. Futures market turned lower Thursday with Nasdaq futures dropping 0.7% and S&P500 futures down by 0.3%.
In the previous session, the dollar recorded its biggest one-day gain against the yen and the Swiss franc since five years. The dollar lost some of its gains on Thursday in Asia, reflecting market uncertainty about the longer-term outlook as well as the Sino/U.S. Trade War showing no signs of abating.
Khoon Goh is the head of Asia Research at ANZ. He said: "I believe the initial move was simply massive short covering, and this gave the world a little breathing space. Except for China. Because markets started to price the worst-case scenarios."
The markets are likely to figure out what to do next now that the dust is settled.
Investors in Asia were still elated by the temporary tariff relief. Japan's Nikkei soared by 8% while European futures jumped.
The DAX and EUROSTOXX50 futures each rose by about 8%. FTSE futures jumped 5.5%.
Trump's decision to reverse the tariffs on specific countries is not final. The White House announced that a 10% blanket duty will continue to be applied to almost all U.S. imported goods. This announcement does not seem to affect existing duties on steel, aluminium and autos.
He said he would also increase the tariffs on Chinese imports from 104% to 125%, which came into effect Wednesday.
China raised the additional duties on American goods to 84% on Wednesday and imposed restrictions against 18 U.S. firms, mostly in defense-related industries.
The Chinese equity market opened strong on Thursday with the CSI300 blue chip index up 1.6%. Hong Kong's Hang Seng Index rose 3.3%.
Wong Kok Hoong is the head of Maybank's equity sales trading.
The China + 1 route is still intact. "As the tariffs on the rest of world are 10% for 90 days and companies/businesses will have the time/alternatives necessary to adjust their supply chain routes."
The yuan's move painted a very different picture. It fell to its lowest level since December 2007, at 7,3518 per dollar.
The People's Bank of China set the midpoint, or the rate at which the yuan can trade within a 2% range, prior to the market opening. This is the lowest since September 11, 2023.
SELL BONDS
The steep drop in bond prices this week showed signs of slowing down on Thursday.
The benchmark 10-year Treasury rate dropped to 4.2889% after reaching a high of 4.515% in the previous session. It also rose by 13 basis points.
Fears of fragility on the world's largest bond market were reignited by a violent U.S. Treasury sale in previous sessions. The "sprint for cash" in COVID era was reminiscent.
Lawrence Gillum is the chief fixed income analyst at LPL Financial. He said that Treasury yields are continuing to rise because of "sticky inflation, a patient Federal Reserve, potential foreign buyer boycotts and hedge fund deleveraging."
The minutes of the Fed's March meeting were released on Wednesday. They showed that policymakers are not going to rush to cut interest rates because they believe higher tariffs will boost inflation. However, they also worry about Trump's trade policies affecting economic growth.
The markets are now pricing just 80 basis points in rate reductions by December. This is down from over 100 basis points earlier in the week.
Investors worried about the rising Sino-U.S. tensions caused oil prices to fall elsewhere.
Spot gold continued to climb, and it was up by 0.5% last at $3.097.52 per ounce.
(source: Reuters)