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Iron ore reaches a two-week high due to China's firm demand and reduced supply
Iron ore futures rose to their highest level in over two weeks on Wednesday, thanks to a strong demand from China's top consumer and a falling supply in the United States. The January contract for iron ore on China's Dalian Commodity Exchange closed the daytime session 0.76% higher, at 791.5 Yuan ($111.32), a metric tonne. It had earlier reached its highest level since November 3, at 797 Yuan. As of 0710 GMT the benchmark December iron ore traded on Singapore Exchange had risen 0.14%, to $104.55 per ton. It hit its highest level since November 4, at $104.95. Analysts and traders said that Chinese steel mills adopted a low inventory strategy for raw materials over the last three years, as their margins were squeezed due to falling steel prices during a prolonged property slump. This means that mills will need to return more often to the spot market in order to replenish their cargoes, improving spot liquidity which, to some degree, acted as a cushion during a price decline. Ge Xin is the deputy director of Lange Steel. As a result, the hot metal production remained at a relatively high level. Hot metal is a blast-furnace product that is used as a gauge to determine the demand for iron ore, while flat steel is usually used in manufacturing. The lower domestic supply also supports ore prices. Official data released on Tuesday showed that China's run-of mine, or raw ore which will be processed to concentrate and pellets, fell by 2.9% in October compared to the previous year to 84.03 millions tons. Analysts cautioned, however, that the potential for further price increases in ore may be limited. They cited high portside inventories as well as forecasts of a growing supply of seaborne goods. Coking coal and coke, which are used in the production of steel, both fell by 2.81% a 1.62% respectively. The Shanghai Futures Exchange has seen a decline in the steel benchmarks. The price of rebar fell by 0.49%. Hot-rolled coils dropped by 0.18%. Stainless steel declined 0.2%. Wire rod rose 0.55%. $1 = 7.101 Chinese Yuan (Reporting and editing by Ronojoy Mazumdar; Amy Lv, Lewis Jackson)
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Gold prices rise on risk-off sentiment ahead of Fed minutes and US jobs data
Gold prices rose Wednesday, as investors sought clues about the Federal Reserve’s interest rate path. They awaited the minutes of the Federal Reserve’s latest policy meeting. As of 0633 GMT, spot gold rose 0.5% to $4,089.59 an ounce. U.S. Gold Futures for December Delivery gained 0.6% per ounce to $4,090.30. Investors are now awaiting the minutes of the Fed's most recent meeting. These will be released in the afternoon, along with the September non-farm employment report due on Thursday, after the U.S. shutdown. The economists surveyed by expected the report to show employers adding 50,000 jobs in September. The number of Americans who received unemployment benefits reached a two-month-high in mid-October, according to data released on Tuesday. Tim Waterer, KCM Trade's Chief Market Analyst, said that the strong USD and uncertainty about the timing of the next Fed rate reduction has hampered gold's momentum. Gold has been viewed by investors as a safe play due to a recent bout of risk aversion, which has helped limit the decline. The dollar remained strong against its competitors. Gold becomes more expensive when the dollar is stronger. The global equity markets have been in a downward spiral this week. The S&P 500 is on a 4-day losing streak due to concerns over the valuations of AI stock. The U.S. Fed cut interest rates last month by 25 basis points. However, Chair Jerome Powell expressed caution about another rate reduction this year due in part to a lack of data. CME Group’s FedWatch tool shows that traders now expect a rate reduction at the Fed’s meeting on December 9-10. Gold that does not yield tends to perform well in low interest rate environments and times of economic uncertainty. Other metals rose in price as well. Spot silver increased by 1.3%, to $51.33 an ounce. Platinum added 0.5%, to $1.542.17. Palladium increased 0.8%, to $1.411.86.
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Japan's largest fire in 50 years destroys 170 buildings and kills one
On Wednesday, a fire destroyed more than 170 structures and claimed the life of one person in an area along the southern coast of Japan. Military and firefighting helicoptors were scrambling in a bid to put out this country's biggest urban fire in nearly half a century. Aerial footage broadcast by television stations showed the destruction of houses and thick smoke plumes rising from Saganoseki, a hilly district in Oita that overlooks a harbour famous for its Seki-brand premium mackerel. Local media reported that the flames also spread to nearby forested hills and an uninhabited island, more than one kilometer off the coast. This was likely caused by strong winds. Japan's Fire and Disaster Management Agency reported that the blaze began on Tuesday night and had burned 48,900 sqm - about the size of seven football fields. It forced 175 residents of the district - located 770 km (478 mi) southwest of Tokyo - to flee into an emergency shelter. The agency said that the cause of the fire is being investigated. Local media reported that a person was found dead. Police sources were cited. A woman in her fifties was hospitalised with mild burns. In a recent post on X, Japanese Prime Minister Sanae Takayi expressed her heartfelt sympathy to residents who were evacuating. She wrote: "The Government will provide maximum support in collaboration local authorities." Kyushu Electric Power reports that the fire caused power outages in around 300 homes of the district. It is the biggest urban fire in Japan, barring earthquakes. The size and number of buildings involved make it the most intense urban fire since 1976 in Sakata. A fire in Itoigawa, Japan, burned 147 structures and 40,000 square meters. There were no fatalities. (Reporting and editing by Saad Saeed; Kantaro Koiya)
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Malaysia's Tenaga Nasional suffers losses in excess of $1 billion due to crypto power theft
The energy ministry reported that Tenaga Nasional Bhd, Malaysia's national utility company, has suffered losses in excess of $1 billion due to illegal power usage from cryptocurrency miners. This was between 2020 and this August. The ministry of energy and water transformation said that TNB had found that 13,827 buildings illegally mined cryptocurrency during the period. The ministry stated that the illegal use of power for cryptocurrency mining has resulted in financial losses of approximately 4.6 billion Ringgit ($1.11billion), adding that TNB works with authorities to stop power theft. Electricity Supply Act criminalizes tampering or bypassing meters. According to the ministry, TNB was able, following joint operations, by the police, communications regulator, anti-graft agency, and other enforcement agencies, to seize bitcoin miner machines from the premises in question. TNB has created a database to help curb the issue. The database contains all records on owners and tenants who are suspected to be involved in theft of electricity for bitcoin mining. This database is used as a reference internally to monitor and identify suspicious properties and as a basis for operational inspections. The ministry also added that smart meters will be installed in electricity distribution substations, to monitor energy consumption and detect power manipulations in real-time.
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Oil prices fall on the back of oversupply, but sanctions keep declines in check
The price of oil fell on Wednesday, as a report from the industry showed that crude inventories were higher in the U.S. Brent crude futures fell 11 cents or 0.2% to $64.78 per barrel at 0510 GMT after rising 1.1% the previous session. U.S. West Texas Intermediate Crude Futures were down by 9 cents or 0.2% at $60.65 per barrel after gaining 1.4% on Tuesday. Market sources reported late Tuesday that U.S. crude oil and fuel stockpiles rose during the past week. They cited American Petroleum Institute data. API, according to sources, reported that crude stocks increased by 4.45 millions barrels during the week ending November 14. Gasoline inventories rose by 1.55million barrels while distillate inventories rose by 577,000. The ING commodities analysts said that the overall report was "relatively bearish", but they warned that "market participants seem more concerned with supply risks than the likelihood of a future surplus." The U.S. has imposed sanctions against major Russian producers Rosneft, and Lukoil. Companies have until November 21, 2011 to end their business with these firms. On Monday, the U.S. Treasury said that sanctions have already reduced Russia's oil revenues and will eventually reduce its export volume. China and India are already switching to other suppliers of crude oil. Emril Jamil is a senior oil analyst with LSEG. He said that benchmark prices were range-bound as the market was focusing on the impact of the sanctions (November 21). However, there are also downward pressures with an oversupply feeling in the background. Investors reacted positively to the U.S. sanction and the Ukrainian attack on Russian refineries, export terminals and oil pipelines. They are now more concerned about fuel and crude disruptions. Analysts have forecast that the oil production is above current demand. This has pushed prices up. Profit margins in Europe for diesel fuel production have soared following Ukrainian attacks on Russian energy infrastructure and port infrastructure. They reached their highest level since September 2023 Tuesday. The increase in global refinery margins is causing this to happen. Analysts at Chinese brokerage Haitong Futures stated that the "strong diesel market has supported oil prices but the persistent crude supply is keeping investors cautious to chase further gains in crude." The official U.S. Government inventory data will be released on Wednesday. Eight analysts polled ahead of the data release estimated that crude inventories would likely have fallen by approximately 600,000 barrels during the week ending November 14.
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Gold prices rise as attention shifts to Fed minutes and US jobs data
Gold prices rose on Wednesday, as investors awaited the minutes of the Federal Reserve’s latest policy meeting. They also awaited the U.S. Jobs Report that may shed light on the Federal Reserve’s interest rate path. As of 0449 GMT, spot gold was up by 0.2%, at $4,074 an ounce. U.S. Gold Futures for December Delivery edged up 0.2% to $4,074.40 an ounce. Tim Waterer, Chief Market Analyst at KCM Trade, said that the strong USD and uncertainty about the timing of the next Fed rate reduction has slowed gold's momentum. Gold has been a safe play for investors due to a recent bout of risk aversion, which has helped limit the decline. The dollar rose 0.1% against its competitors. Gold becomes more expensive when the dollar is stronger. The global equity markets have been in a downward spiral this week. The S&P 500 is on a 4-day losing streak due to concerns over the valuations of AI stock. Investors are now awaiting the minutes of the Fed's most recent meeting which is due to be released in the afternoon, as well as the September non-farm employment report that will be released Thursday, after having been delayed by the recent U.S. shutdown. The economists surveyed by the expect that the report will show employers adding 50,000 jobs in the month. The number of Americans who received unemployment benefits reached a two-month-high in mid-October, according to data released on Tuesday. The U.S. Fed cut interest rates last month by 25 basis points. However, Chair Jerome Powell expressed caution about another rate reduction this year due in part to the lack data. CME Group’s FedWatch tool shows that traders now expect a rate reduction at the Fed’s meeting on December 9-10. Gold that does not yield tends to perform well in low interest rate environments and times of economic uncertainty. Silver spot rose 0.4% per ounce to $50.90, while platinum dropped 0.2% to 1,533.82 and palladium increased 0.6% to 1,409.19. (Reporting and editing by Sherry Jacque-Phillips in Bengaluru)
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Asia markets are teetering ahead of Nvidia's earnings test
Investors were held back by jitters over AI valuations ahead of a quarterly earnings report from Nvidia. The Nasdaq, a tech-heavy stock, fell by 1.2% over night. It was the second consecutive day that it lost money. It is now more than 6% lower than its record high reached in late October due to valuation fears. S&P 500 and Nasdaq futures were down 0.2% more by Asia afternoon. European futures dropped 0.1%, while FTSE Futures rose 0.1%. Nikkei, the Japanese stock market, which has fallen more than any major market in November, losing around 7% of its value in U.S. dollars, lost small gains and traded flat. Hong Kong shares dropped 0.5% and Mainland China indexes remained steady. Nvidia is the company that sells graphics processing units, the GPUs, which are the foundation of artificial intelligence. This rally has taken stock markets all over the world to new highs, and has lifted stocks with even the slightest AI connection. According to data compiled and reported by LSEG, it reports after the close of U.S. markets. It is expected to report a 56% increase in its fiscal quarter August-October revenue to $54.92 Billion. Wong Kok Hoi is the founder and CEO of APS Asset Management, a Singapore-based asset management firm. JAPAN BONDS SLIDER Investors worry about the impact of President Donald Trump’s declining approval rating on fiscal spending, which could lead to inflation. The safe haven U.S. Treasuries are not gaining even though the mood of the market has soured. The benchmark yield on the 10-year note was at 4.12% last. The markets are now pricing in a 42% probability of a Federal Reserve rate reduction of 25 basis points in December. This was a near certainty just a month earlier. "If, and this is a big IF, the growth slows down, can we expect the same fiscal support that was provided during the pandemic, or the global financial crises, given the fact that governments' fiscal position has deteriorated significantly since then?" Rob Subbaraman, Nomura's chief economist, said: Concern over the government's spending plans have sent Japanese long-term bonds tumbling and yields reaching record highs. The 20-year auction attracted solid bids, but the benchmark yields for 10-year bonds climbed to their highest level in 17 years of 1.781%. Bitcoin Bounces Back From Below $90,000. The mood-barometer Bitcoin has slightly recovered from its trip to a low of seven months on Tuesday, trading at $91,400. This is still about 27% below the record high of October. "BTC is erasing this year's gains, and then some. Anyone who has acquired in the last 10 months will be underwater," said Justin d'Anethan. He's head of research for Arctic Digital, a crypto advisory and investment firm. "But I do not think that this is the start of a bear-market, but just a response to equity prices falling, disappointing expectations for rate cuts, and leverage being cleared out." The foreign exchange market was largely on hold as buyers gravitated towards dollars. The yen is at 155.45 dollars per yen and has reached a level where the authorities have warned about intervention. In Asia, the euro was held at $1.1580 and Australian and New Zealand dollar were down 0.5%. Gold, which reached record highs along with stocks in October has also declined and suffered losses at $4.070 on Wednesday. Brent crude futures dipped 21 cents to $64.68 per barrel. After China bought large quantities of U.S. soybeans, soyabeans reached a high not seen in 17 months. (Reporting from Tom Westbrook, Singapore; Editing done by Sonali Paul.)
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Sources say that India's Adani Enterprises has won the approval of creditors for a $1.53 billion takeover plan of Jaiprakash Associates.
Two officials familiar with this matter claim that the creditors of India's Jaiprakash Associates have unanimously supported Adani Enterprises 135 billion rupees ($1.53billion) bid to take over the bankrupt infrastructure company. They preferred it to Vedanta. The officials, who declined to be identified because the matter was private, said that Adani's bid, which included higher upfront payments, won out over Vedanta’s offer of 170-billion rupees. Other bidders were Dalmia Bharat and Vedanta as well as Jindal Power, PNC Infratech, and Dalmia Bharat. Manoj Gaur, the controlling shareholder, had also made a last-minute offer, which was later withdrawn. Jaiprakash Associates owes 550 billion rupees to its creditors. It was once India's largest conglomerate in the infrastructure sector. Last June, insolvency proceedings were launched under India's bankruptcy law. This is one of the biggest bankruptcy cases currently ongoing. Vedanta’s bid included a five-year timeline for payment, which was significantly longer than Adani’s proposal of 1.5-2 years, according to one official. This influenced the preferences of creditors. "Creditors voted for Adani." The committee of creditors is now going to make a final determination, which will likely confirm this result, and present it to the National Company Law Tribunal. National Asset Reconstruction Company, which purchased Jaiprakash’s loans from State Bank of India-led lender consortium, tops the list of claimants for the ongoing resolution. Adani Enterprises did not respond to emails sent. ($1 = 88.55350 Indian Rupees) (Reporting and editing by Sonia Cheema; Gopika Gopakumar)
MORNING BID EUROPE - Hush over the markets before Nvidia
Tom Westbrook gives us a look at what the future holds for European and global markets.
The financial markets are in a holding pattern before the earnings report of Nvidia later on Wednesday.
Nvidia is near 7% of the S&P 500, which means that wherever Nvidia goes, the market goes. It reports after business hours.
CPI data for Britain is due before the release. It would take an unexpectedly large increase to derail the rate cut that has been priced into the markets for December.
The Asian session saw a mostly stable market for stocks, bonds, and currency. However, gains were difficult to come by, as investors waited to see if Nvidia could live up to its lofty expectations.
Investors are becoming nervous about the long-term sustainability of the returns.
LSEG data shows that analysts are more optimistic about the future performance of the company. Expectations for fiscal 2027 revenues have risen 15% since May, to $285 billion.
The minutes of the Federal Reserve meeting in October are due on U.S. Day. They will provide a glimpse into the dynamics of the Fed's divided members, who are advocating for different policy responses to inflation data and labour statistics.
The yen in Japan held steady at just above the nine-month low of Tuesday, while the central banks governor and finance ministers met.
The BOJ chief last met with the ministers of finance and economic revitalization in October, last year. They warned against excessive yen drops and agreed to closely monitor market developments.
The following are key developments that may influence the markets on Wednesday.
- UK, euro zone inflation
- Federal Reserve minutes
- Earnings of Nvidia and Target
(source: Reuters)