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Stocks and the euro slump as ECB remains steady, US inflation increases
The euro and the dollar were largely unmoved by the European Central Bank's decision to keep interest rates unchanged and the U.S. inflation figures that showed a slight increase. The ECB held its rate at 2% as expected. However, with the ECB reducing its inflation forecasts during its press conference and Christine Lagarde at the helm of it, traders were looking for any indication of when another rate reduction might be coming. The euro moved a fraction lower to $1.1672, after soaring nearly 13% against the dollar in this year. Bond vigilantes have not yet been able to push France's politically-strained borrowing costs above Italy. The headline rate for August U.S. Consumer Price Inflation was 2.9%, the highest since January. However, the core measure remained at 3.1%. Stock markets mostly shrugged off the news as it was in line with expectations. Wall Street futures continued to price in more record highs on the S&P 500, Nasdaq and Dow after the 36% jump in Oracle shares Wednesday was the latest driver. The pan-European STOXX 600 rose 0.4% ahead Lagarde. Benoit Begoc, ABN AMRO's strategist, said that while the ECB was widely expected to maintain rates in the near future, it is important for Lagarde to keep the door open. "I'm wondering why you don't cut rates more." Begoc stated. Begoc said. Oracle's U.S. surge helped Asia overnight, where Japan's, Taiwan's and South Korea’s main stock exchanges also achieved record highs. Germany's 10-year Bond yield fell to 2.63% as Lagarde began to speak. It had reached 2.80%, its highest level since March last week. Oil prices fell 1.2% on the commodity market after three consecutive days of gains. Poland's downing a suspected Russian drone sparked new talk of sanctions on Wednesday, while Israel had attacked Hamas leaders in Qatar the previous day. Gold, the safe-haven metal, also dipped from recent records and copper, the bellwether of metals took a break from its 20%+ rally since U.S. president Donald Trump's tariffs on trade shook markets worldwide in April. TRADERS BET ON TRIO OF FED CUTS The Federal Reserve is expected to cut interest rates next week, despite the higher U.S. data on consumer prices. Recent signs of weakness in employment markets have led many to expect this. Wall Street futures point to further gains in fractions when the markets return at record levels soon. Oracle's 36% gain on Wednesday was the largest one-day increase for the 48-year old tech giant since 1992. Investors now fully price in a quarter point move by the Fed during next week's meetings, with an 8 percent chance of a cut of 50 basis points. Katy Stoves is an Investment Manager with Mattioli Woods. She said that despite the modest increase in inflation, the market expects a rate cut of 0.25% next week. Turkey's Central Bank was also in the spotlight after it cut interest rates by more than expected 250 basis points amid growing concerns over a crackdown on the political opposition of the country and recent higher-than anticipated inflation. The foreign exchange market was relatively quiet, with little movement in the U.S. Dollar and the six-currency dollar index barely above its seven-week low. The 10-year Treasury yields remained at 4.03% after falling 4 basis points Wednesday following the PPI data. A solid 10-year note sale also helped to ease investor concerns about long-term U.S. government debt. The Treasury's sale of $22 billion in 30-year bonds, which will take place on Thursday, is a more accurate gauge. The 30-year bond yield remained at 4.68% after falling more than 30 basis point since briefly topping 5% last week.
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Namibia will boost its sulphuric production as the critical mineral output increases
Namibia will increase its production of sulphuric acids in response to the critical rise in mineral output. Vedanta and Green Metals Refining announced plans to establish and revive plants on Thursday. The extraction of metals such as uranium and copper is a common process. Namibia, which is the third largest producer of uranium in the world, has eight critical minerals projects that are set to place it at the forefront for global green energy initiatives. Green Metals Refining, based in London, plans to invest $59 million for the first phase of an acid plant that will be able to produce 175,000 tons of sulphuric acids a year. In a Thursday statement, the company stated that it expects to increase annual production to 720,000 tonnes. Derk Hartman, CEO of Green Metals Refining, said that Namibia is a net exporter of sulphuric acids and has a large pipeline containing acid-consuming projects. We have therefore established a compelling case for local metals projects by third parties. The company plans to build a sulphuric-acid plant in Walvis Bay port, which will supply the country's copper and uranium mines. Both plants should be operational by the end 2027. Vedanta announced this week that it will recommission its Skorpion Zinc operations sulphuric plant within the next 4 to 6 months, to produce approximately 1,000 tons of sulphuric acids per day Since 2020, the facility has been on care and maintainance.
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Slovak leader Fico sets out conditions to support more Russia sanctions
Robert Fico, the Prime Minister of Slovakia, said that Slovakia will not support any more European Union sanctions towards Russia until it receives EU proposals aligning climate targets to carmakers' and heavy industries' needs. Fico demanded also that measures be taken to reduce electricity prices across the EU. The EU is currently debating the 19th package in its sanctions against Russia for its invasion of Ukraine. EU diplomats said that a new package would likely include additional listings of Chinese companies and Russian banks, as well as vessels from Moscow's "shadow fleet" which evades sanctions. They also predicted a ban on Russian oil transactions. Fico has long maintained that sanctions don't work. He has met with Russian President Vladimir Putin on three occasions since last year and has broken ranks among European allies because of his pro-Moscow position. Fico stated on Thursday that "he will not support the adoption of another package, until the Commission presents realistic proposals which align the demands of climate targets to the needs of car production, not just in Slovakia, but also with the heavy industry's needs". After meeting the EU Council President Antonio Costa, he said: "I won't support any other package until the European Commission makes realistic proposals about electricity prices in Europe." Fico held up temporarily the last package of sanctions, demanding guarantees to cover potential losses resulting from a separate EU-wide plan that would end all gas imports and oil exports from Russia by 2028. How many sanctions do we need to adopt before Russia changes its approach to war? Fico said. In an effort to cripple Russia's economy, the West has imposed sanctions worth tens and thousands of dollars on Russia for its three-and-a-half-year war in Ukraine and its 2014 annexation Crimea. Fico also said that the EU should not provide military aid to Ukraine, but instead work for peace. (Reporting and editing by Jan Lopatka, Jason Hovet)
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The price of copper drops from $10,000 to $9,000 on the back of a stronger dollar and uncertainty about tariffs
The copper price fell on Thursday. It climbed above $10,000 per metric ton, but then retreated under the pressure of a stronger dollar and lingering uncertainty about how tariffs would affect demand. After touching $10,015, the price of three-month copper at the London Metal Exchange dropped 0.3% to $9.983 per ton during official open-outcry trades. This was the second consecutive session that it moved above $10,000. Nitesh Sha, a commodities strategist at WisdomTree, said: "I believe the news on copper markets is still quite positive, but the dollar has firmed up a little this morning and added some headwinds to prices." Dollar index remained steady as traders awaited important U.S. consumer prices data to get a hint on Federal Reserve's interest rate-cutting path. The strong dollar increases the cost of commodities in other currencies for those who use it. Shah continued, "Miners have experienced more disruptions in their production than expected. This is combined with the fact capex for copper mines just aren't enough to keep pace with metal demand growth." After an underground incident, Grasberg, one of the largest copper mines in the world, temporarily halted its mining operations this week. The Shanghai Futures Exchange's most traded copper contract gained 0.6%, to 80,130 Yuan ($11251.37) per ton. Since March, when it reached its highest level in over eight months at $10,0164.50, copper has struggled to break through $10,000 several times. Shah said that many investors were waiting to see whether U.S. Tariffs would dampen the demand as expected. He said that the situation was more complex and that the overall effect could be that the metal demand is not really affected by all the other stimuli. Other metals include LME aluminium, which rose by 0.9% to $2.649.50 per ton, and tin, which gained 0.1%, to $34,650. Zinc fell 0.3%, to $2.879, while lead dropped 0.1%, to $1.985, and nickel, down 0.5%, to $15,065. Click here to see the top metals stories ($1 = 7.1218 Chinese Yuan) (Reporting and editing by David Goodman).
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Sources say that the Indian court has dismissed Asian Paints' appeal against the antitrust investigation.
Six people with knowledge of the proceedings confirmed that an Indian court dismissed Asian Paints' request to halt a current antitrust investigation against the company on Thursday. The Competition Commission of India has opened an investigation into Asian Paints. This paints manufacturer, with a 52% share of the market, was investigated after officials found that a complaint by Birla Opus, the biggest paints producer in India, had merit. Birla Opus claimed that Asian Paints abused their dominant position by giving discounts and incentives for dealers. Asian Paints tried to end the inquiry by filing a case at the High Court of Mumbai in July, arguing CCI officials had damaged the company's reputation by publishing and then deleting allegations made against its CEO in the investigation order. Six sources said that the High Court dismissed the company’s claim in a short hearing on Thursday. A detailed order would be issued later. One source said that the court found no merit in Asian Paints' complaint. Asian Paints has not responded to our request for a comment. CCI and Birla Opus - the paints division of Aditya Birla Group, Grasim Industries led by billionaire Kumar Mangalam Birla – also failed to respond to requests for comments. Paints are a profitable business in India. The country is one of the fastest growing economies on the planet. Elara Capital data show that Birla has eroded Asian Paints dominance since its launch in 2024. The company has grown rapidly, reaching a market share of nearly 7% by March. In its initial review, the CCI found that Asian Paints had imposed unfair conditions to dealers. It called this "exploitative behavior".
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Russell: Crude oil will be driven by geopolitics and mismatch in supply-demand over the long-term, not by crude oil itself.
Two long-term shifts will affect the global crude oil markets, including how cargoes are transported and priced. First, it is a question of supply and demand. The vast majority of growth in demand comes from Asia while the growth in supply comes primarily from Americas outside the United States. Second, energy markets are increasingly influenced by political factors. This increases the risk that large blocks of supply will be cut off from the demand centers. As Europe has seen in its decision to stop buying Russian oil after Moscow's invasion into Ukraine. The oil market will be forced to adapt to these two factors, including longer vessel journeys, the need to obtain suitable crude for refinery configurations, and pricing new flows. Analysts from Argus media presented a presentation at this week's APPEC oil meeting in Singapore that highlighted the shift to new production coming out of Americas. Argus reported that crude from the Americas represented 85% of the incremental supply globally from non-OPEC non-OPEC from 2024 until 2030. This amounted 3.63 million barrels a day (bpd). The United States is expected to increase its output only modestly in the coming years, despite being the largest oil producer in the world. Canada, Brazil and Guyana are the largest contributors, followed by Argentina, Suriname and Suriname. Mexico's contribution is expected to decline as the fields mature. Argus reported that the East of Suez market is the most likely to see a demand increase, with India expected to lead the way with a gain of 2,000,000 bpd between 2024 and 2030. China, on the other hand, is expected to lose 100,000 bpd due to its rapid electrification of its fleet. Argus predicts that oil demand will rise by 1 million bpd from 2024 to 30 in the Middle East and Africa, as well as by 600,000 bpd for Latin America. The East of Suez market is expected to grow at 90%, which is the most important thing. According to commodity analysts Kpler, there is evidence that flows are increasing from the Americas towards Asia. Volumes reached a record quarterly high of 4,09 million bpd during the period of April to June. The second quarter saw an increase of 3.6 million barrels per day (bpd) compared to the first. This meant that Asia's seaborne oil imports were about 16% derived from oil imported from the Americas. CHALLENGES It's reasonable to assume that moving crude oil from the Americas into Asia, even though it will cost more, is feasible. The new grades are more difficult to deal with, as they tend to be lighter and sweeter with the exceptions of Canada's heavy oil. There will likely be an excess of sweet, light crudes, at a moment when electrification is increasing and the demand for gasoline, which is the main product of such grades, is decreasing. How much oil will cost if more oil is moved from America to Asia? Will West Texas Intermediate (WTI), the benchmark for light crude, become more important than Brent? Or will cargoes be priced more based on the delivered to Asia basis instead? How will geopolitics affect crude markets in the long term? Donald Trump, the president of the United States, has made it very clear that energy is a tool he uses to achieve his political goals. He makes commitments to purchase U.S. crude oil and liquefied gas a key part of any trade negotiations he holds with other countries. While this could boost the purchases of U.S. oil by countries who have signed deals, like Japan and South Korea; it will also mean that countries without an agreement, like China and India, would likely shun U.S. fuel. Although crude markets are free of politics, there is a good chance that they will become more polarised over the next few years. Importing nations may be forced to choose between Trump-approved suppliers and those who he does not approve. Trump's ability to change allegiances quickly could complicate oil flow while he is in office. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, who is also an author. (Editing by Stephen Coates).
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Trade sources predict that the supply of Saudi crude oil to China will surge in October.
Saudi Arabian crude oil exports will surge to China in October following a steep drop in prices, according to several sources. A tally of the allocations made to Chinese refiners revealed that Saudi Aramco, the state oil company, will ship 51 million barrels in October. This is about 1.65 millions barrels per day. The October plan is comparable to the 1,43 million bpd allotted in September, and the volume in August was the highest in April 2023. Sources said that the top Asian refiner Sinopec and Hengli Petrochemical were planning to increase Saudi crude exports next month. Aramco didn't immediately respond to an inquiry for comment regarding its allocation in October to China. Aramco reportedly spoke with Asian buyers at the APPEC Conference in Singapore this week, encouraging them to buy more crude oil in October in order to regain market share. The price of its flagship Arab Light crude for Asia in October was set at $2.20 per barrel over the average Oman/Dubai, a drop of $1 from the five-month high reached in September. The price reduction followed a decision made by the Organization of Petroleum Exporting Countries (OPEC+) and its allies, led by Russia, at the weekend to increase production by 137,000 barrels a day in October. Since April, the group led by Saudi Aramco, which pumps half of all world oil, has already increased production by 2.5 million barrels per day, or 2.4%.
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Uganda's growth averages 8% per year over the past five years, boosted by oil
The Finance Ministry said that Uganda's economy will grow at an average of 8% per year over the next five-year period, mainly due to investments in the petroleum sector and other sectors, such as transportation. The Ministry of Finance, citing Finance minister Matia Kasaija, said that the start-up of crude oil production is expected around mid-2026. This will push the growth to double digits for the fiscal year 2026/27. Last year, the International Monetary Fund predicted that Uganda's economic growth would reach double digits due to oil production. It is the first forecast of this kind by the government. Kasaija said this while presenting the budget strategy for the fiscal year that begins in July of next year. The economic growth for the year 2026, ending in June, is expected to be 7%. Minister said that the following year the government would prioritize investments in oil, gas, transportation infrastructure, electric power and industrial parks, among other sectors. East Africa is estimated to have 6.5 billion barrels in crude oil reserves located in the Albertine Rift Basin. China National Offshore Oil Corporation and France's TotalEnergies, two developers of offshore oil fields, are drilling wells and building an export pipeline in preparation for the planned start of production. (Reporting by Elias Biryabarema; Editing by George Obulutsa, Alexandra Hudson)
Stocks and the euro tread water before ECB and US Inflation data
The dollar continued to rise on Thursday as traders awaited the European Central Bank’s latest interest rate announcement and new U.S. Inflation data.
Overnight, high-flying technology shares helped Japan, Taiwan and South Korea reach record bourse peaks. Europe had a steady day ahead of the ECB's second delay in a line in its 2% rate for the euro zone after lunch.
Most traders kept their powder dry, awaiting the closely-watched U.S. consumer inflation data.
The euro was hovering at $1.1690, having risen nearly 13% against the dollar in this year. Bond vigilantes had not yet been able to push France's politically stressed borrowing costs above Italy.
Benoit Begoc, ABN AMRO's strategist, said that while the ECB is widely expected to keep rates the same this meeting, it will be interesting to see if they leave the door open for more cuts. They may also release a new set of economic projections.
"I'm wondering why you don't cut rates more" Begoc stated. Begoc said.
The pan-European STOXX600 edged up by 0.3% ahead of the 1215 GMT ECB announcement and the 1245 GMT Press Conference. Germany's 10-year Bond yield dropped to 2.65% from 2.80% a week ago, its highest level since March.
Oil prices dropped on the commodity market after rising more than 1% Wednesday, when Poland shot down suspected Russian drones. This sparked new talk of sanctions just a day after Israel targeted Hamas leaders in Qatar.
Gold, the safe-haven metal, dipped from recent records and copper, the bellwether of the metals market took a break from its 20%+ rally since U.S. president Donald Trump's tariffs on trade shook markets worldwide in April.
TRADERS BET ON TRIO OF FED CUTS
Wall Street futures predicted that the S&P 500, Nasdaq and S&P 500 would continue to rise after the recent record-breaking jump of 36% in Oracle's shares.
Money markets also priced in a greater chance of Federal Reserve cutting interest rates three times this year.
Investors are fully pricing in a move of one quarter point from the Fed during next week's meetings, with an 8 percent chance of a cut of 50 basis points.
The consumer price index for August is expected later. The poll predicts that the headline CPI will rise by 2.9% compared to a year ago, which is the largest increase since January. However, the core CPI measure will likely remain at 3.1%.
Julien Lafargue is the chief market strategist of Barclays Private Bank. He said that investors will likely maintain a dovish view unless CPI shows a significant upward shock.
This shift in inflation dynamics may prove crucial for the U.S. Fed. It now faces less constraints to pursue a more aggressive cycle of rate-cutting.
Overnight, Nikkei, the Japanese stock market index, gained 1.2%, a new record, as energy, tech and utilities companies soared. South Korean shares increased by 0.9%.
In Tokyo. SoftBank gained almost 10% following the explosive gains of its Stargate Project Partner Oracle. This 36% gain was the largest one-day increase since 1992 for 48-year-old technology giant.
The foreign exchange market was relatively quiet, with little movement in the U.S. Dollar and the six-currency dollar index barely above its seven-week low.
The 10-year Treasury yields increased by 2 basis points, to 4.0531%. They had fallen by 4 basis points after the PPI report on Wednesday and a strong 10-year note auction eased investor concerns about long-term U.S. government debt.
The Treasury's sale of $22 billion in 30-year bonds, which will take place on Thursday, is a more accurate indicator. The 30-year yield increased 2 basis points to 4.7028%. It has dropped more than 30 basis point since briefly topping 5% last week.
(source: Reuters)