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Stocks continue to rise as markets assess the impact of US shutdown
Gold traded at near-record highs as investors digested potential ramifications from a U.S. shutdown. Meanwhile, a weak U.S. private labour market report strengthened bets that the Federal Reserve will cut rates. The prolonged shutdown of the U.S. federal government could delay or disrupt the release of important official data, such as those on inflation and employment. This would cloud the picture of the health of the largest economy in the world and the direction of interest rates. A Friday release of the monthly payroll report is unlikely. This brings into focus an ADP employment report from overnight that showed unexpected job losses in September. The traders are pricing in two quarter point Fed rate cuts before the end of this year. Kevin Thozet of Carmignac Asset Management, who is a member of the investment committee, said, "I hope that they can sort this quickly." He was referring to the shutdown in the federal government. Inflation data were also due before the next Fed meeting. He said, "It is like a man walking with a dog who has no sight." He added that while U.S. stock prices have done well, the dollar has weakened due to uncertainty over the credibility of U.S. financial institutions in general. SHUTDOWN ANGST HURTS DOLLAR AND BOOSTS GOLD On Thursday, the MSCI global stock index rose by about 0.3%, after European stocks reached a new record high of about 0.7%. Wall Street futures also rose between 0.2 to 0.4%. The tech shares in Asia rose earlier, contributing to the rise in regional stock indexes. This was partly due to news that South Korean chip giants Samsung and SK Hynix had signed partnerships with OpenAI data centers. Gold reached an overnight high of $3.895.09, as a combination of Fed easing and shutdown anxiety pushed it to a new all-time record. This also supported U.S. Treasuries by sending yields dramatically lower. Gold last rose 0.4% to $3,880. Overnight, the yield on two-year Treasury bonds fell to a new two-week low at 3.531%. It was last seen at 3.5429%. Michael Brown, Senior Research Strategist at Pepperstone, said: "As it is usually the case, new highs will likely beget more fresh highs. The momentum remains firmly with bulls and the fundamental argument for further upsides in PMs (precious Metals) is also a strong one." The U.S. Dollar Index, which measures the currency's performance against six major counterparts, has been stuck near an overnight low of 97.459, which was a new one-week low. It was last trading at 97.567 and down 0.2% on Wednesday's closing price. In remarks made at an industry conference, Bank of Japan Deputy governor Shinichi Uchida expressed confidence that the conditions were in place for another rate hike. The euro increased slightly to $1.1752 while the sterling remained largely unchanged at $1.34815. The oil prices fell on Thursday as concerns over an oversupply of the market continued to weigh. Brent crude futures dropped 0.4%, to $65.09 a barrel. U.S. West Texas Intermediate crude fell 0.4%, to $61.54 a barrel.
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Venezuelan students turn plastic waste into classroom desks
In the northwestern part of Venezuela, a local foundation has turned piles of broken furniture and discarded plastic into desks. El Zulia Recicla in the capital of Zulia, Maracaibo has so far refurbished 160 desks using plastic waste collected from students. The foundation does not build new furniture but instead repairs metal frames that are damaged and replaces the missing parts with molded panels manufactured in its workshop. The research director of the foundation, Nicolino Bácho, said: "We show that desks with damaged wood and falling apart can be restored." Already, 20 desks were delivered to Ramon Reinoso Nunez school, where previously students sat on the ground or used backpacks for chairs. Maritza Jaimis, the school's director, said: "We have a lot of desk issues. Theft and wear take their toll over time." She said, "We had hoped that they would take more but are grateful for the 20 restored ones." The foundation, which is partly funded by France's embassy, has a goal to provide 200 desks in 10 schools located in areas that are vulnerable. This initiative is part of a larger effort to raise awareness about the environment and reduce plastic pollution in the region. Mariela Nava, Efraino Otero and Mariela Nava report.
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Rugby Australia and New Zealand compete for Rugby Championship medals in Perth final
Australia and New Zealand will meet again on Saturday at the Perth Stadium, after a brutal battle at Eden Park. Both teams are hoping to claim, even temporarily, the Rugby Championship Trophy. South Africa will not be able to celebrate their victory, as they must wait until after the match against Argentina, at Twickenham, in order to win back-to-back championships. The prospect of a showdown between the two teams in Perth should not dampen the excitement. Perth's much improved hosts will be looking to give prop James Slipper a fitting send-off in his final and 151st international. Scott Robertson’s All Blacks will, on the other hand, be desperate to maintain their traditional dominance against their trans-Tasman competitors. New Zealand has already secured the bilateral Bledisloe cup with a 33-24 victory at Eden Park, but it will still want to end the Rugby Championship on a positive note after a sometimes sobering campaign. The All Blacks' record defeat in Wellington against a revitalized South Africa and their first ever loss in Argentina to the Pumas, made them seem like a fading superpower half way through the World Cup cycle. New Zealand's egos would suffer another crushing blow if they were to lose the match against Australia, who is their usual punching bag. Robertson and his team would also be under increased pressure. Joe Schmidt has made the Wallabies happier despite their losing record of 2-3 in this tournament. The Tides Turning for 2027 World Cup Hosts Schmidt's blowout losses in his first season as coach are just a year old, but they seem like a bygone era. The fans have been packed to their seats for home matches in this season, but they are more likely to be disappointed by the results than hopeful. Andrea Piardi's capricious officiating and a late yellow-card could have prevented Australia from leaving Eden Park with the Bledisloe and a chance to reclaim it for the first 23 years. They left with a feeling of being aggrieved and the 10th consecutive loss to the All Blacks. This may be useful for settling the score in Perth. Schmidt told journalists on Thursday that if we were to win this week we would finish at the very least second. "That's incredible when compared to the last season or even season before. I do believe there is growth in the team. I cannot guarantee it will be linear, but I can guarantee the effort. The additions of Will Skelton from France and Rob Valetini on the bench, after he missed Eden Park due to a calf injury, will make Australia stronger. Schmidt gambled that Tane Edmed, who had a shaky debut at the Sydney loss to the Pumas in his number 10 jersey in the absence of flyhalf James O'Connor after he was benched for a full match at Eden Park due to some costly mistakes with the boot. Robertson also has thrown caution out the window, dropping Billy Proctor at centre in favor of Quinn Tupaea. Leicester Fainga’anuku will be playing on the wings for the first time since the World Cup 2023. New Zealand appears as vulnerable as ever, which could make the Wallabies as dangerous as ever. (Reporting from Ian Ransom, Melbourne; Editing done by Ken Ferris).
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Nepal celebrations hollow for families mourning protesters
The homes of Chaulagains, a family that has lost a son in Nepal's worst civil unrest, are suffused with grief. Ganesh Prsad Chaulagain (53), who lost his 18-year-old son Shreeyam in the political turmoil which ravaged the Himalayan country last month, said: "Dashain should be filled with joy, but this is the first year that I feel only sadness." The capital of Nepal, Kathmandu, was filled with music and the smell of festive feasts as he spoke in the echoing quiet of his family's home. The student, a high schooler, was shot in the face on 8 September near Parliament after he participated in a peaceful protest against corruption that spiralled into two days of violence. Nepal is slowly recovering from the violence that was sparked by so-called Gen Z protests, which were sparked by young people angry at perceived political indifference and lack of employment. 74 people died in these protests and they brought in a new interim administration. It has been reported that "high velocity firearms" were used to fire "live bullets" at least 33 out of the 58 demonstrators who died in the anti-graft demonstrations. The Chaulagains, like many others in the mountainous Nepal, lived off a meager monthly income. In their case, it was less than $200. They made sure Shreeyam got an education and hoped he would find a job abroad, maybe in Germany, in order to reduce their financial burden. Nepal's median age is 25 years. However, a lack in employment has caused nearly a third its youth to leave their homes in search of work that will ensure economic security. Nepal's instabile politics has not made matters any easier, with 14 government changes in less than 20 years. Sushila Karaki, 73, former chief justice of the Supreme Court was appointed interim prime minister after the protests to prepare for the elections scheduled for March 5. However experts warn that the task will be difficult. The Chaulagains and relatives of those killed in the protests are now demanding that the government provide them with regular economic assistance, not just an one-time payment. The father of Shreeyam, who died in a car accident, said that Dashain would never be the same. (Reporting and editing by Clarence Fernandez in KATHMANDU, Sahana Bajiracharya from KATHMANDU)
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S&P 500 and Nasdaq Futures Advance on New Rate-Cutting Optimism
Futures linked to the S&P 500 index and the Nasdaq Index advanced early on Thursday. A day earlier, weaker than expected private payroll data had boosted hopes for rate cuts. Traders were bracing for a session with little data due to the U.S. Government shutdown. Investors are still sensitive to any sign of policy easing. Rate-cutting optimism has been a major factor in the recent rally, which has pushed equities up to high valuations. Investors are now relying on alternative data sources to fill the data vacuum left by the shutdown. This includes Wednesday's ADP National Employment Report which was weaker than anticipated. Arnim Wooder, global macro-strategist at Easterly EAB, said that it would likely strengthen those in the Fed policymaking panel who think the labor situation warrants at least another cut. The ADP report could be the last labor market data for some time. Traders interpreted the lower reading as sufficient to nudge the Fed towards a 25 basis point rate cut at the next meeting. Kyle Rodda is a senior financial analyst at Capital.com. He said, "It appears that the U.S. economic system needs further policy support." At 06:41 am. At 06:41 a.m. ET, Dow E Minis were down 26 or 0.06%. S&P 500 E Minis were up 11.25 or 0.17%. Nasdaq E Minis were up 92 or 0.37%. On Wednesday, the benchmark S&P 500 index and blue-chip Dow ended at record highs. The shutdown, which began on Wednesday, has already affected the weekly report on jobless claims, an important indicator of the labor market's health. This report was due to be released on Thursday. In the past, shutdowns of government agencies have not had a significant impact on equity market. Investors are looking for signs of monetary ease, and the data vacuum is a risk. Investors will also be analyzing the comments of Dallas Fed President Lorie Lo Logan on Thursday. Tesla's stock rose 1.6% ahead of the release of its quarterly delivery report. Shares of Lithium Americas, listed on the NYSE, fell 4.6% following a downgrade by Canaccord Genuity. Equifax and TransUnion credit bureaus fell 12.2% each and 11.3% respectively after FICO launched its program to allow mortgage lenders access to scores without having them rely on bureaus. FICO was up by 10.7%. Advanced Micro Devices rose 2.9% following a report that Intel had begun early discussions to include the chipmaker as one of its foundry customers.
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Czech billionaire Kretinsky sells Thyssenkrupp stake after JV plans fail
The Czech billionaire Daniel Kretinsky agreed to sell his 20 percent stake in Thyssenkrupp’s steel business and scrap plans for joint venture, according to a statement released by both parties. This could pave the way for an agreement with Jindal Steel. The sale of the stake ends long-running discussions about what could have been a German and Czech steel and energy giant. Discussions that have made no measurable progress since Kretinsky purchased a fifth in Thyssenkrupp Europe (TKSE) late last year. Thyssenkrupp shares, which had earlier reached a high of six years, briefly fell on the news, before recovering and trading 1.6% higher by 1042 GMT. Thyssenkrupp can now move forward with its talks with India's Jindal Steel International. Jindal Steel International last month made an indicative offer for the entire TKSE business, a volatile one that its parent had been trying to sell for years. The statement stated that Kretinsky’s EP Group “respects Thyssenkrupp's AG preference to focus on discussions with Jindal Steel International” and that the purchase price paid by Kretinsky’s EP Group to Thyssenkrupp to acquire the TKSE shares would be reimbursed. People familiar with the situation estimate the price at approximately 140 million Euros ($164 million). This news comes at a time when uncertainty is growing about the future of steelmaking in Europe. The sector is battling with low-cost Chinese imports, rising energy costs, and a delayed decarbonisation based on hydrogen of one of the most pollution industries. The EP Group of Kretinsky and Thyssenkrupp aimed to form a joint venture with TKSE that would be 50/50. However, the talks have proved difficult as powerful unions accuse the Czech businessman for refusing engagement. $1 = 0.8511 Euros (Reporting and Editing by Matthias Williams, Louise Heavens, and Matthias Steitz)
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Taiwan will continue to cooperate in further restrictions on Russian Energy Imports
Taiwan's government announced on Thursday it would cooperate if "international allies", imposed further restrictions on Russian imports of energy, following criticism from a group non-governmental organizations about the island's business relationship with Russia. Taiwan, along with the United States, major Western allies, and other countries, put broad sanctions against Russia in 2022 after its invasion of Ukraine, but it did not ban explicitly imports, which are a major source of hard currency for Russia. Taiwan's Foreign Ministry responded to criticism on Tuesday from a group NGOs, including the Centre for Research on Energy and Clean Air, about Taiwan's continued use of Russian naphtha. The ministry stated that the government would continue to work closely with the United States and other democracies. Taiwan said that if international allies place further restrictions on Russian products, whether energy or otherwise, it would actively cooperate. It would show its unwavering determination to fight aggression and defend international order. Taiwan's Economy Ministry, which is responsible for energy policy, stated in a separate press release that it "urges local enterprises to purchase petroleum products that meet EU regulations". The report noted that while state-owned companies had stopped importing Russian crude oil by 2023, private firms were not restricted from doing so. The ministry added that "as international sanctions continue evolving, it will examine further relevant control measures and communication with domestic manufacturers." Data from shiptracker Kpler shows that Taiwan imported 102,000 barrels of refined products per day in the first nine month this year. This is up from 76,000 barrels per days in 2024. The data shows that petrochemical feedstock naphtha is the main import from Russia. (Reporting and editing by Hugh Lawson; Additional reporting in Singapore by Florence Tan)
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Kretinsky sells Thyssenkrupp steel stake as JV plans falter
The joint statement from both parties revealed that the Czech billionaire Daniel Kretinsky sold his 20% stake in Thyssenkrupp’s steel unit, and scrapped plans to create a 50/50 joint venture. This could pave the way for an agreement with Jindal Steel. The sale of the stake ends long-running discussions about what could have been a German and Czech steel and energy giant. Discussions that have made no measurable progress since Kretinsky purchased a fifth in Thyssenkrupp Europe (TKSE) late last year. Thyssenkrupp can now move forward with its talks with India's Jindal Steel International. Jindal Steel International last month made an indicative offer for the entire TKSE business, a volatile one that its parent had been trying to sell for years. In the statement, Kretinsky’s EP Group said it "respects Thyssenkrupp AG’s preference to focus on discussions with Jindal Steel International". This news comes at a time when uncertainty is growing over the future of steelmaking in Europe, due to cheap Chinese imports and high energy costs, as well as a delay of hydrogen-based decarbonisation for one of the most pollution industries. Kretinsky’s EP Group and Thyssenkrupp aimed to eventually form a 50:50 joint-venture for TKSE. However, talks have been difficult as powerful unions accuse the Czech businessman's refusal to engage. (Reporting and editing by Matthias Williams; reporting by Christoph Steitz)
Markets in H1 - Down with the dollar and up with guns
Investors knew that after Donald Trump's radical election promises, markets would be bumpy in 2018, as he returns to lead the largest economy of the world. The dollar's dramatic drop was not predicted by anyone, but it has been a surprise to many.
Many key markets will look calm if you simply run through the numbers of the year without tracking their journey.
The VIX is barely moving, and world stocks are at records highs.
Look closer, and you'll see that all these markets have experienced extreme swings in the last six-month period - including the dollar.
The reserve currency of the world is down by over 10%. This is the biggest drop in the first half since the advent of free-floating currency in the early 1970s. Gold, on the other hand, has seen its largest rise in the last 25 years.
Vincent Mortier is chief investment officer of Amundi Asset Management, Europe's largest asset management company. He attributes this to Trump's "Big Beautiful" fiscal plan, which will keep the U.S. debt at $36.2 trillion and the deficit at 6-7 percent.
The U.S. dollar is expected to continue falling, but more slowly, according to Mortier.
The struggles of the "Magnificent 7" tech giants have also been eye-catching. The "Magnificent Seven" have been the cash cows of portfolios for many years. However, this year they have been left in dust by a 20% rise in Chinese competitors and a nearly 70% increase in European weapon makers.
Trump is also responsible for the latter action. Trump's signal that the U.S. would scale back Europe’s military protection forces the region, and other NATO member states to rearm.
The $140 trillion global bonds market was initially intrigued by Germany's historic proposal to overhaul its self-imposed credit brake in order to allow higher defense spending, but long-term U.S. borrowing costs and record-high Japanese interest rates have driven the majority of moves since.
Most people outside of the US will have lost money on benchmark U.S. bonds this year.
In May, the 30-year Treasury yields soared to their highest level since 2007, but they are now back down at 4.8%. Switzerland's interest rates were also lowered to zero in this month.
ARE YOU READY FOR A GREAT ROTATION?
Dollar's fall has also led to a 12.5% increase in the euro, a nearly 8% rise in the Japanese yen and a 13.5% increase in the Swiss franc. The dollar's slump has given emerging markets the chance to shine.
Trump's reengagement with Russian President Vladimir Putin helped the rouble soar by 40%. However, it is still heavily restricted by Western Sanctions and lags behind the cedi's 42% decline in Ghana's gold-producing country.
Eastern Europe's currencies, such as the Hungarian forint, Czech crown, and Polish zloty are all 13-17% stronger. Taiwan's dollar rose 8% in two days only last month, and Mexico's peso as well as emerging market currency debts are all enjoying double-digit growth for the year despite the trade war trauma.
Pramol Dhawan is PIMCO’s head of emerging markets portfolio management. He said that the capital shift from U.S. assets to emerging and other market assets was the largest in the past two decades.
"We still believe we are at the beginning of this."
The bottom of the FX list includes familiar currencies like the peso from Argentina and the lira from Turkey. The Turkish lira is down by nearly 11%, and a lot of this happened after the main political opponent of Turkish President Tayyip Erdoan was arrested in March.
As usual, Bitcoin has been volatile. Bitcoin soared almost 20% after Trump's election, then fell nearly 30% as his plans to create a U.S. crypto reserve were not well received. It has now spent the past three months clawing back all of that money.
The price of oil has also fluctuated. Oil prices have also fluctuated. In April, they fell 30% to under $60 per barrel after Trump's tariff plan fueled global recession fears. But this month, when Israel and the U.S. attacked Iran, it briefly rose above $80.
Good as Gold
Copper defied global economic worries and jumped 11%. However, it is the precious metals which have shone. Silver and gold are neck-and-neck, both up 24%. Platinum is up almost 50%, after a series of 10-year highs.
It won't leave much time to take a breather in the second half. Trump wants his "Big Beautiful Bill", which he calls the "Big Beautiful Bill", to be passed through Congress before Independence Day, July 4, while his global trade war ceasefire ends five days later.
As the deadline nears, and there has been little progress in establishing mutually agreed baseline levies, it is unclear how long the markets will remain numb.
(source: Reuters)