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Officials say that two Pakistani towns are at risk of flooding if the river barrage collapses.
Officials warned that the eastern Pakistani towns of Chiniot & Hafizabad could face catastrophic flooding if a barrage on a major upstream river collapses after heavy rains have swollen it to capacity. India and Pakistan, both nuclear-armed neighbors, are fighting torrential rains caused by monsoons. These have led to flash floods and flooded rivers, resulting in 60 deaths so far this month, while the death toll for Pakistan is 805 since June. The Indian government is not likely to be able to ignore any flooding that occurs in India. Relations between India and Pakistan are already tense after a short conflict in May, which was the worst in decades. The Chenab River in Pakistan's vast province of Punjab was on the verge of bursting through a concrete barrage that controls flows at Qadirabad, siphoning water into an irrigation canal network. A technical expert with the National Disaster Management Authority said that "it is a situation of crisis", adding that the collapse could wipe out the towns which are home to over 2.8 million people. The official who requested anonymity because he wasn't authorised to talk to the media said, "Under constant supervision by experts and administration the water level is receding but it is not yet beyond danger levels." India released excess water from its dams this week, which flooded river flows in Punjab province, the breadbasket of its neighboring 240 million people. The Pakistani authorities said that more than 210,000 villages were evacuated near the rivers Ravi Sutlej Chenab, which flow into India from the north of Jammu. Heavy rains in the region killed 60 people. India releases excess water from its dams if they become too full. The excess flows into Pakistan and is accompanied by warnings issued from New Delhi. It calls this a humanitarian action. Pakistani officials confirmed on Thursday that India issued its third flood alert since Sunday. This time, it was for the Sutlej river, while the previous warnings were about the Ravi. The Indian water resources ministry didn't immediately respond to an inquiry about the issue. The provincial disaster management authority reported that more than 900,000.00 cusecs of water were passed through Qadirabad's distribution system on the Chenab River, which is 100,000 cusecs in excess of the structure's capacity. A cusec is the flow of volume equal to 1 cubic foot or 28 cubic litres every second. Authorities blew part of the riverbank on Wednesday to release water before it reaches the barrage. Marriyum aurangzeb, senior minister of the Punjab government, confirmed that 12 people were killed in Punjab this week. Aurangzeb said, "We will meet this challenge as one nation," standing by the Ravi's swollen banks. There is no reason to panic. Indus River - the waters of Pakistan’s eastern rivers combine with those of the northern rivers of Punjab to form the Indus, which flows through Sindh and then into the sea. Forecasters expect the downpours will subside by Thursday. Clarence Fernandez, Clarence Shahzad and Asif Shazad (Editing)
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Investors look at US inflation data as they continue to watch gold.
The dollar weakened on Thursday and investors were waiting for the U.S. Inflation data on Friday to get a clue about the Federal Reserve policy. As of 0851 GMT spot gold rose 0.1% to $3,399.60 an ounce after reaching $3,401.73 earlier in the session, its highest level since Aug. 11. U.S. Gold Futures for December Delivery edged up 0.2% to $3,456.20. The dollar index fell by 0.1% against its competitors. Investors await the release on Friday of the Personal Consumption Expenditures Price Index (PCE), the Fed's preferred measure of inflation. The economists polled expect the PCE index to increase by 2.6% in July. This is the same as the rise from June. Market consensus indicates that the PCE inflation reading for July will be higher than last month's, which is already factored into prices. "A surprise on the upside will likely strengthen the dollar, increase Treasury yields and weigh down gold prices," said Ricardo Evangelista senior analyst at ActivTrades. The opposite outcome could fuel the expectation of a Fed that is more dovish, softening and supporting precious metals. According to CME FedWatch Tool, the markets expect that there is a greater than 87% probability of a rate cut of 25 basis points at next month's Fed policy meeting. Gold that does not yield is usually a good investment in an environment with low interest rates. John Williams, the New York Fed Bank president, said that rates may fall at some stage in the future. However policymakers must gauge data to come. Traders also keep an eye on the moves of U.S. president Donald Trump to assert control over Fed. Trump announced earlier this week that he would be firing Fed Governor Lisa Cook. "Many view the dispute as a danger to the Fed's credibility and independence, which supports the precious metal," stated Evangelista. Silver spot was down 0.5% to $38.82 an ounce. Platinum fell 0.1% to 1,345.75 while palladium rose 0.4% to $1,000.29. (Reporting by Ishaan Arora in Bengaluru; Editing by Harikrishnan Nair)
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Spot prices are affected by the forecast of higher renewables and a weaker demand
On Thursday, prompt electricity prices in Europe's wholesale market fell amid forecasts of increased renewable energy generation and a softer demand. "The signal for Germany is bearish, driven by a decrease in consumption and a noticeable rise in wind- and solar-supply," said LSEG Analyst Xiulan She. By 0800 GMT, the German baseload day-ahead power had fallen 20% to 96.0 Euros ($112.39) per megawatt hour. The French equivalent baseload contract for Friday delivery was down 38.4%, at 38.5 Euros/MWh. LSEG data indicated that the German wind power production was expected to increase from 5.8 gigawatts to 9.3 GW on Friday, while in France it was expected to go up to 11.4 GW. In both countries, solar power production increased by 3.6 GW during the same time period. The French nuclear capacity remained at 75%. The power demand in Germany is expected to drop to 52.2 GW by the weekend, a loss of 500 MW per day, while in France it will reach 43.2 GW with a 300-MW decline. The German baseload for the year ahead fell 1.7%, to 83.4 Euros/MWh. Baseload for 2026 in France was down by 1.0% to 59.7 Euros/MWh. Benchmark European carbon permits fell 0.7%, to 71.71 Euros per metric ton. Analysis of EPEX SPOT data by renewables company 1Komma5 revealed that the number of trading sessions this year where European spot power prices are negative (meaning in scenarios of overproduction, the seller pays to place the delivery volume with the buyer) totaled 457 as of August 26. The value of the products sold by 1Komma5, a company that sells photovoltaics and home-storage battery systems, as well as heat pumps, electric car chargers and electric car chargers in addition to smart meters, is exactly what the full-year 2020 will be worth. According to a monthly GfK survey, the German consumer's sentiment is likely to decline for the third consecutive month in September.
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Prices fall in Europe as LNG and wind supply offset the lower Norway flows
Dutch and British gas wholesale prices fell early on Thursday, as wind energy generation reduced gas-for power demand. Increased liquefied gas arrivals also offset the reduction in Norwegian supplies. LSEG data show that the benchmark Dutch front-month contracts at TTF hub were down 1.32 Euros at 31,23 Euros per megawatt hour or $10.63/mmBtu by 0742 GMT. This was the lowest price for a whole week. The British gas front-month contract fell by 2.55 pence, to 78.21 pence/therm. Meanwhile, the intra-day contract was down by 2.65 pence. Daniel Hynes is a senior commodity strategist with ANZ. He said that ship tracking data showed an increase in imports of liquefied gas in certain parts of Europe this week. He added that "this will help offset Norwegian flow, which is dipping because of seasonal maintenance." Hynes stated that wind generation is expected to also increase in Northwest Europe, which will ease the demand for gas. LSEG data shows that the non-local distribution zone's gas demand, which is mainly power stations and big industries in Northwest Europe will drop from 2,206 gigawatts/day on Thursday, to 1,692/GWh by Friday. LSEG analyst Saku Jussla stated that the European market is comfortable with current conditions, with their looser storage goals and abundant LNG supply despite Norwegian maintenance ramping-up. Data from infrastructure operator Gassco shows that the number of Norwegian gas exports to Europe has dropped from 281 mcm/day to 273 mcm/day since Wednesday. Gas Infrastructure Europe's data shows that EU gas storage facilities were 76.4% filled last year, compared to 92% around the same time last. The benchmark contract on the European carbon markets was down 0.35 euros at 71.89 euro per metric ton. Nora Buli, reporting from Oslo; Barbara Lewis, editing)
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Iron ore reaches two-week high in China as it pushes for a reduction in steel production
Iron ore futures prices hit a 2-week high on Friday, thanks to China's efforts to reduce steel production as it combats overcapacity. The contract for January iron ore on China's Dalian Commodity Exchange grew 1.74% to 790.5 Yuan ($110.51) per metric tonne, its highest level since August 14. The contract is up 1.5% in August. As of 0712 GMT the benchmark October iron ore traded on Singapore Exchange was also up 1.5%, at $104 per ton. This is its highest since August 14. The price has increased by 4% this month. According to a document that was reviewed by a source familiar with the issue, China is planning to reduce its steel production from 2025 to 2026. Analysts believe this will improve the profits of steel mills and increase their ability to absorb rising raw material prices. The prices of key steelmaking materials were also supported by the expectation of improved demand following production restrictions in Tangshan in Hebei Province, a major Chinese production hub. Steelmakers in Tangshan have been asked to reduce production to help curb air pollution before a military parade in Beijing on September 3, which will commemorate the end World War II. "Hot Metal output will likely increase after this round ends." Ore prices were also supported by the expectation that the U.S. Federal Reserve would cut interest rates in September, said Qingwei Xie of consultancy Shanghai Metals Market. The other steelmaking materials were mixed. Coking coal increased by 0.9%, while coke decreased by 0.51. The Shanghai Futures Exchange saw a rise in most steel benchmarks. Rebar was up 0.55%, hot-rolled steel coils were up 0.83%, and wire rod was up 1.08%. Stainless steel fell 0.19%. Baoshan Iron & Steel Co, China's largest listed company, has warned of increasing pressure on exports due to trade protectionism.
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South Korea Minister says it has reached agreement with the US on nuclear fuel reprocessing
Cho Hyun, South Korean Foreign Ministry said that following the summit between U.S. president Donald Trump and South Korean president Lee Jae Myung earlier this week, both countries agreed to discuss nuclear reprocessing. Cho, in an interview broadcast live on television, said: "We run 26 nuclear power stations and buy and bring in fuel every time. We feel the need to be able to reprocess and make our own fuel using concentrates." "Cooperation with the U.S. will be essential in order to achieve this." We must change the nuclear agreement or use another method within the agreement between the countries. It is therefore very significant that we have decided to start discussions in this direction. A bilateral agreement prohibits South Korea from reprocessing spent nuclear fuel, which could be used to create nuclear weapons. Foreign Minister Cho said that South Korea is not interested in nuclear weapons, but rather industrial and environmental purposes. Cho said on Thursday, "Any talk of wanting to have our own nuclear weapons or having nuclear capabilities via revision (of the accord) would be something the U.S. couldn't accept in terms overall nuclear nonproliferation." Reporting by Joyce Lee, Hyunjoo Ji and Ed Davies.
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Top analysts and miners say that China has capped coal production in order to maintain prices.
According to an official from a major mining company and analysts, China has curbed coal production after an unexpected increase in supply during the first half of this year, which weighed down on prices. In July, China's production fell to its lowest level for over a month. In the first half of this year, it had increased by more than 5%. Prices in some areas of the country fell nearly 30%. Analysts say that the country increased inspections in July, to ensure that plants maintained their approved production capacity. An official of China Coal Energy, China's largest coal miner, said to analysts that the increase in supply has exceeded expectations, and this has caused prices to fall. "We have seen restrictions and regulations on production." Mysteel, a Shanghai-based commodities consulting firm, reported on Wednesday that 54 of the 153 mines in Shanxi with a total production capacity 61.1 millions metric tons annually have either suspended or reduced production. Shanxi, China's most coal-producing province. Mysteel cited China’s "anti-involution campaign" and inspections in multiple provinces. Involution is a term used to describe the alleged unsustainable competition between Chinese companies. The slogan "anti-involution" is used to reduce industrial overcapacity. Galaxy Futures analysts stated on Thursday that when prices fall below the cost level, mines reduce investments and upgrades leading to safety concerns. The National Development and Reform Commission and the Energy Regulator did not respond immediately to any questions. Analysts say that regulators have recently restricted production due to concerns about an accident that could make a bad impression before a military parade on September 3, marking the end World War Two. Mysteel reported that the Wanbolin mine, which produces 5 million tons per year in Shanxi, Taiyuan, was shut down on Wednesday for safety concerns. (Reporting and editing by Harikrishnan Nair; Colleen howe)
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Asia markets are rocky after Nvidia's drop, but China chipmakers blow up!
The Asian stock market experienced a volatile session Thursday, as concerns over the future of artificial intelligence leader Nvidia’s China business hit regional suppliers while sparking gains for its Chinese competitors. The MSCI broadest Asia-Pacific index outside Japan fluctuated between gains and losses. It was last down by 0.4% as U.S. Equity Futures were pulled lower by a 3.1% drop in the shares of the chip manufacturer, which is now the most valuable company in the world. Charu Chanana is the chief investment strategist for Saxo, a Singapore-based brokerage firm. She added that "we should expect some spillover" even though it's unlikely to harm investor confidence. The cleanest beta for Nvidia is from Asian chipmakers, especially those in Korea and Taiwan. They will feel the drag. Early European trades saw pan-regional futures flatten out, while German DAX Futures rose 0.1%, and FTSE Futures rose 0.1%. The European single currency remained unchanged at $1.1642, maintaining a three-week streak of gains that pushed its gains for this month up to 2%. Traders lowered their expectations about the impact on French government borrowing rates due to the deepening crisis in the country. After Nvidia reported its results, S&P 500 futures dropped 0.1%, while Nasdaq's futures tumbled by 0.3%. Investors' concerns about Nvidia were centered on its China operations, which were caught in the middle of the trade war between Washington, DC and Beijing. Goldman Sachs analysts wrote in a report that they expect the stock price to drop modestly after a quarter in line and guidance, against the backdrop of high expectations going into the conference call. Management noted that no H20 products were shipped to China during the quarter. Mark Matthews of Bank Julius Baer's Asia Research Department in Singapore, who is the head of research, expressed concern that the data centre revenues, at $41.1 billion, fell short of analyst estimates of $41.3 billion. He said, "It was minor but it is strange for this company to miss." Taiwan Semiconductor Manufacturing Company fell 2.5% and Samsung Electronics dropped 1%. Nvidia's Chinese rivals surged. SMIC gained as much 9.3% and Cambricon Technologies shares, which almost tripled in value since mid-July added as much 8.2%. These two chipmakers boosted the STAR 50 Index of Chinese Growth Stocks to a gain of up to 5%. After Kyodo reported that Japan's chief trade negotiator Ryosei Acazawa had cancelled his planned trip to the United States where he would have been expected to finalize the details of the agreement reached last month, Japanese stocks fluctuated from gains to losses. The Nikkei was up last 0.7%. The shares of Mitsubishi Corp rose up to 3.2% after Warren Buffett’s Berkshire Hathaway announced that it had increased its stake. The Bank of Korea held rates at 2.5% as economists had expected. Hong Kong shares fell, with the Hang Seng Index dropping 0.9%. Meituan shares dropped as much as 11,4% after the Chinese food-delivery giant reported a decrease in profit for the second quarter on Wednesday. The dollar is on the defensive in the currency market as traders bet more heavily that interest rates will drop next month. This follows the recent pivot of Federal Reserve Chair Jerome Powell to a more dovish stance, and President Donald Trump's move to take control of the largest central bank of the world. Trump announced earlier this week that he was firing Federal Reserve Governor Lisa Cook. This caused some investors to worry about the Fed’s independence. Cook's attorney said that she would file a suit against the White House. Trump pressed the Fed for lower interest rates in his first term as president. He has intensified this campaign in recent years while attempting to appoint key positions at the U.S. Central Bank. The president demanded a rate cut of several percentage points, and he threatened to fire Powell. He has since backed off from this threat. The yield on the benchmark 10-year Treasury note fell to 4,2227% from its U.S. closing of 4,238% on Tuesday. According to CME Group’s FedWatch tool, the market currently prices a probability of 88.7% that a 25 basis point rate reduction will occur at Fed's meeting on 17th September. This is up from 61.9% one month ago. The dollar fell 0.2% to 147.135 against the yen. Brent crude dropped 0.8% on the commodities market to $67.49 a barrel. Gold prices were slightly lower. Gold was down 0.2% to $3391.60 a troy ounce.
Morning bid Europe-Nvidia kills buzz as profits are merely amazing, not legendary
Gregor Stuart Hunter gives us a look at what the future holds for European and global markets.
Tech stocks have fallen after Nvidia announced earnings that would make any CEO kill for.
The chip designer, a leader in AI, beat analysts' expectations and forecast revenue for Q3 that was higher than Wall Street predictions. A miss on data center revenue and concerns over China forecasts caused its shares to fall more than 3% after-hours.
Kyle Rodda is a senior market analyst for Capital.com. He said that Nvidia's results were not perfect, but they had to be free of flaws. The stock was trading at a high price, so any bad news would be punished.
After two days of gains that helped push U.S. stocks to record highs, S&P500 e-minis and Nasdaq eminis both fell by 0.1% after Nvidia’s results. MSCI's broadest Asia-Pacific share index outside Japan fluctuated between gains and losses, with the last one being down by 0.3%.
Spillover
As the chill spread across the Asian tech industry, Taiwan Semiconductor Manufacturing Co fell 1.7% and Samsung Electronics dropped 0.7%. This may give a hint as to what Dutch chipmaker ASML can expect in the European session.
Nvidia's Chinese rivals surged. SMIC gained 8.3%, and Cambricon Technologies added another 7.1%. The company announced on Wednesday that it had turned a profit. Both chipmakers pushed up the STAR 50 Index of Chinese Growth Stocks by as much as 5%.
Reducing Expectations
The yield on 30-year French bonds fell from its highest level since November 2011, as traders reduced their expectations that the political crisis in France would increase the cost of borrowing for the government.
The Nikkei stock index rose 0.6% after Kyodo reported that Japan's chief trade negotiator Ryosei Acazawa had cancelled his planned trip to the United States to finalize the details of the trade agreement agreed last month.
The following are key developments that may influence the markets on Thursday.
* Earnings: Pernod Ricard, CD Projekt, Brunello Cucinelli
* Eurozone data: Money-M3 Annual Growth for July
* August Business Climate, Economic, Industrial, Services and Consumer Confidence.
(source: Reuters)