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The UK government permits some new oil and gas fields but is firm on taxes
The government announced on Wednesday that it will allow oil and natural gas to be produced on existing fields or in close proximity to them, but with certain conditions. It also shattered the hopes of oil and gas producers for an early termination of windfall tax on their sector. During its election campaign in 2024, the Labour government pledged to stop issuing new oil and natural gas licenses. The Department for Energy Security and Net Zero announced that the move on Wednesday allows the government the option to issue new oil and natural gas licenses, if the licences do not require any new exploration and are linked to existing infrastructure and fields. The Winter Tax will remain in effect until 2030 The government did not make any changes in its budget presentation on Wednesday. It has maintained one of the toughest tax regimes in the world for oil and natural gas producers, which includes a 38% windfall tax, increasing the total tax burden to 78%. Gas prices are higher than the threshold set by the government for so-called Energy Profits Levy. Once both prices fall below the thresholds that are updated regularly, windfall taxes will be disabled. The government also announced on Wednesday that the Oil and Gas Price mechanism would replace the EPL in March 2030. This would happen at a 35% rate if the oil and gas price stays above certain thresholds.
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UK cuts household energy bills to 150 pounds per year
Finance Minister Rachel Reeves announced on Wednesday that Britain would reduce energy bills in the UK by an average of 150 pounds ($198.23). This will be achieved by shifting some costs into general taxation, and by cutting a scheme for helping to pay for home improvement. Reeves stated that the Energy Company Obligation will be abolished in April 2026. This obligation, which requires energy companies to fund measures such as insulation and new heating system for low-income homes, is a measure that forces them to pay. Last month, the National Audit Office raised concerns about possible fraud and low-quality work undertaken by the ECO programme. Green groups criticised the decision to abolish it entirely rather than reform it. Ami McCarthy (Greenpeace UK, head of politics) said that cutting the insulation program and funding could leave millions of households trapped in cold and damp homes. Budget documents revealed that 75% of the Renewables Obligation cost, which is used to pay for renewable energy production, will be transferred to general taxes in order further reduce the energy bill. The price cap set by the regulator Ofgem is expected to rise by around 12% in January compared to the 1,568 pounds per year it was when Labour took power in July 2024.
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The European Parliament backs a year-long delay in the deforestation laws
The European Parliament voted on Wednesday to delay the implementation of the European Union deforestation legislation by an additional year. The European Parliament announced that companies will have another year to comply with the new EU regulations to prevent deforestation. The obligations of the regulation will apply to large operators and traders as of December 30 2026 and to micro and small businesses from June 30 2027. The EU's green agenda is built around the ban on cocoa, palm and other products linked to deforestation. This policy, a world first, aims to stop the 10% global deforestation caused by EU imports of soy, beef and palm oil, among other products. However, it has become a controversial part of Europe's environmental agenda. Some industries and countries are opposed to the plan, claiming that it is costly and logistically difficult. Environmental setbacks have been a concern for critics in the past. Nestle, Ferrero, and Olam Agri are among the food giants that support this law. They warned Last month Delaying the implementation of this directive is contrary to EU goals for simplifying business regulations and endangers forest worldwide. Business For Nature, a group that advocates for environmental issues, called the delay a "deep failure of political courage". (Reporting and editing by Bart Meijer, Ed Osmond, and Charlotte Van Campenhout)
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Sources say that the insurance review has delayed the discharge of Russian oil cargo at Indian ports.
Three industry sources who have direct knowledge of this matter say that a Western-sanctioned ship with Russian oil bound for Indian Oil Corp had its discharge delayed in a port in Eastern India because of a delay in the online verification of insurance coverage provided by a Russian provider. India tightened its insurance regulations for ships that call at its ports earlier this year, focusing on older and so-called "shadow fleet" vessels which are often used to transport Russian oil. LSEG data revealed that the Aframax Tiger 6, under sanctions from the European Union and UK, was supposed to discharge cargo of ESPO-grade on November 23, but was spotted floating near Paradip Port on Wednesday afternoon. Two sources claimed that the ship is in the process berthing Paradip. India's increased security in ports is evident by the delayed unloading. India requires online verification of insurance policies for all ships insured by companies not part of the International Group. This is to prevent forged documents from being presented to Indian port authorities. Non-IG insurers cover many shadow fleet vessels. Sources said that Russia's Soglasie Insurance Co Ltd had insured the vessel transporting oil for the state-run Indian Oil Corp. They added that the cargo had been supplied by an un-sanctioned company. Soglasie and Indian Oil have not responded to our requests for comment. India recognizes P&I coverage provided by 19 non IG insurers including eight from Russia. This allows the South Asian nation to continue purchasing discounted Russian oil.
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Gold prices near two-week high as Fed rate cuts fuel bets on tepid US economic data
Gold prices rose by more than 1% on Wednesday to a two-week-high after positive U.S. data boosted expectations for a Federal Reserve rate cut in the coming month. This supported non-yielding gold. At 1208 GMT spot gold rose 1% to $4,172.18 an ounce, its highest level since November 14. U.S. Gold Futures for December Delivery were up 0.7% to $4,168.70 an ounce. Market participants are beginning to price again a U.S. interest rate cut for December," stated UBS analyst Giovanni Staunovo. Bullion is a non-yielding investment that tends to do well in environments with low interest rates. Staunovo stated that "we continue to see more upside in the short term. We have a forecast for year-end of $4,200/oz, and $4,500/oz by mid-next year." The data released on Tuesday revealed that U.S. retailer sales rose less than anticipated in September, but producer prices were within estimates. In November, U.S. consumer sentiment also declined as consumers became more worried about their finances and jobs. These data were released in response to a recent series of dovish remarks from Fed policymakers. The CME FedWatch tool shows that traders now expect an 83% probability of a Fed rate reduction next month, up from 30% one week ago. A report that White House economist Kevin Hassett is the frontrunner for the position of the next Fed Chair has also added to the support for the metal. This confirms expectations about a dovish approach in policy, as favored by Donald Trump. Investors are now awaiting the U.S. Weekly Jobless Claims Report due later on Wednesday. This report is a crucial gauge of labor market health and Fed policies. Deutsche Bank has raised its gold forecast for 2026 to $4450 per ounce, up from $4,000 citing stable investor flows and persistent demand by central banks. (Reporting by Noel John in Bengaluru Editing by Mark Potter) Reporting by Noel John, Bengaluru Editing Mark Potter
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JSW's voluntary job reduction plan attracts high interest among workers, CEO claims
Boguslaw Olesky, the acting CEO of Polish coal miner JSW, said that an internal survey showed that more than 6,000 workers were interested in the planned reduction in workforce. This is almost twice the number eligible to participate. Oleksy stated that the plan is contingent on a newly enacted mining law and aims to reduce jobs in two ways: "mining leaves", which are state-funded furloughs leading to retirement for more than 3,100 workers; and voluntary severance package for 700 others. JSW is facing a cash crunch. Oleksy said that the stabilization fund of the company was "on its way to depletion", which forced it to look for new external funding as it continued to report quarterly losses. The company also said that the broader cost-cutting plans include selling non-core assets and merging mines to create two "mining centers" in order to improve efficiency. It also removes a 10-year guarantee of employment for 1,000 administrative staff. Oleksy stated that negotiations with unions regarding cuts to other benefits were "extremely hard." JSW employees are represented by over 80 unions. The unionization rate is nearly 170%, as many of them belong to more than one organization. This complicates the negotiations. (Reporting and editing by Milla Nissi - Prussak. Additional reporting by Rafal nowak.
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Mamdani faces a test after NYC comptroller's push to drop BlackRock
Brad Lander, New York City Comptroller, is urging officials of the city pension funds to rebid the $42.3 billion managed BlackRock due to climate concerns. This is the first major step taken by a Democrat in order to counter the pressure from Republican allies who support the fossil fuel industry on financial firms. Lander's tenure ends on December 31. His recommendation, which will be announced on Wednesday, puts Mayor-elect Zohran Mdani on the spot when he assumes office in five weeks. Mamdani’s appointees are in key positions and will have some influence over the pension boards, which decide where to invest retirement money for 800,000. Lander, in a memo he sent to other trustees of pension funds on November 25, urged them to re-evaluate their contracts with New York's BlackRock. BlackRock is the largest asset manager in the world and also the largest manager of retirement assets for the city. Lander pointed to what he described as "BlackRock’s restrictive approach to engaging" with approximately 2,800 U.S. firms in which the company owns more than 5 percent of the shares. 'Abdication of Financial Duty' BlackRock, under pressure from the Trump Administration in February, said that it would not try to control businesses through its discussions with executives. This was contrary to Lander's and other investors who were environmentally conscious, as they wanted to pressure executives to disclose emissions. Lander stated in an interview that the change is "an abdication from financial duty" and makes them incapable of meeting our expectations regarding responsible investing. The pension boards, which traditionally follow the lead of the comptroller’s office, must still approve his recommendation. Mamdani's representatives and those of Mark Levine, the incoming New York Comptroller in New York, did not answer questions on Tuesday. Lander, who was a rival of Mamdani's during the mayoral race, but became an ally, suggested that the pension funds continue to use BlackRock for the management of non-U.S. index mandates, and other products. Lander recommended that the three pension plans continue to use State Street for managing $8 billion of equity index assets and drop deals with Fidelity Investments or PanAgora. He also said they did not push companies enough on environmental issues like decarbonization. WASHINGTON PRESSURE A number of Republicans, some from fossil-fuel-producing states, have withdrawn money from BlackRock and other money managers, accusing them of basing investment decisions on social or environmental issues. New York City funds are the first major asset owners with a liberal or Democratic leaning to do so. Environmental activists want Lander, and other public officials, to adopt a more aggressive stance by supporting shareholder resolutions which push corporate boards towards policies that combat climate changes. Richard Brooks, director of climate finance for Stand.earth advocacy group, stated that dropping major asset management companies "will be one the first tests to see the climate credentials of incoming mayors and comptrollers." I hope that they will take the initiative to get these recommendations passed. (Reporting and editing by Dawn Kopecki, Thomas Derpinghaus and Ross Kerber)
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Mitsubishi Materials will reduce primary copper smelting volumes by 30 to 40 percent by 2035
Mitsubishi Materials, a Japanese company, said it would shift its focus to secondary smelting in order to increase profitability. Due to a tight supply of concentrates and the expansion of smelting capacity by China, Japanese copper smelters face a tumbling treatment charge and refining charge (TC/RC) as well as shrinking smelting profits. Mitsubishi Materials announced in October it would cut the refined copper production at its Onahama Smelter & Refinery in the period October-March by a quarter. It plans to integrate its copper products sales and procurement of copper concentrates with rival Pan Pacific Copper owned by JX Advanced Metals Mitsui Mining and Smelting and Marubeni. Mitsubishi Materials announced a new three-year business plan beginning in April. The company said that it would shift its primary copper operations into secondary smelting by using electronic waste. It will also explore the possibility of building new secondary melting plants in Europe and America to boost growth. The secondary smelting process produces copper by recycling materials, rather than mining ore. Tetsuya Tanahka, President of Japan, said at a press conference that the low TC/RCs will continue. This makes the move to profitable eScrap processing vital for our sustainable growth. E-scrap is electronic waste, such as old computers, smartphones, and home appliances. He said: "We will quickly shift our focus from volume to quality. We'll transition our revenue structure from processing copper concentrate to secondary smelting, and optimise production systems and business portfolio." Tanaka stated that the company plans to double its secondary smelting capacities by 2035. However, it expects to see a drop of 20-30% in its annual refined copper production from around 400,000 metric tonnes due to a reduction in primary smelting. Mitsubishi Materials is also expanding its global tungsten business by increasing recycling capacity in Europe, and constructing new U.S. recycling facilities for the rare metal used in batteries and defense. Tanaka stated that by achieving a 100 percent recycled material rate in our tungsten production sites outside China, we will meet the rising demand and increase profitability. (Reporting and editing by Kirsten Doovan; Yuka Obayashi)
Stocks rise on Fed optimism, but sterling and gilts are slammed by budget surprises
The growing bets on a rate cut in the U.S. lifted stocks for a 4th straight day, and Europe's stock markets experienced an incredible few hours when Britain's fiscal regulator accidentally published new forecasts that were crucial ahead of a brutal UK budget.
The UK budget was released by Finance Minister Rachel Reeves and contained yet another round of tax increases.
Early release
The Office for Budget Responsibility’s Economic and Fiscal Outlook has already triggered a response.
The sterling and gilt yields both rose as OBR figures showed a better than expected picture of the UK's fiscal room, but then fell as Reeves gave her speech.
"The problem with this budget is that it has backloaded the majority of fiscal tightening, and what's important has near-term fiscal loosening." Evelyne GomezLiechti, Mizuho's strategist, said that the market has had a mixed reaction.
Reeves' speech was over when UK stocks had gained 0.4%, while European equity markets were up by 0.6%. MSCI's global stocks index rose 0.4%, with Wall Street also poised to start higher.
The UK's budget was the focus of traders, reflecting the tightrope act that the government under pressure and Finance Minister Reeves were performing.
Reeves, who promised that the tax increases would be one-off and were worth $52.7 billion, has now reportedly ordered another 20-30 billion pounds in tax increases.
All of this pushed sterling to $1.32. Meanwhile, 10-year gilt yields -- the main proxy for UK borrowing costs -- ticked upwards to 4.46% after dropping to 4.48% on the previous day. This is their lowest level in nearly two weeks. The yen reversed an initial rise against the U.S. Dollar triggered by sources who said the Bank of Japan is preparing to raise rates as early as next month.
This would be a shift in the central bank's stance to a more hawkish one and follows a meeting between new prime minister Sanae Takaichi, and BOJ governor Kazuo Ueda last week.
The Yomiuri reported that the high approval ratings of Takaichi are also encouraging Japanese opposition parties, who have been preparing for snap elections.
The kiwi currency surged by as much as 1.2% after the Reserve Bank of New Zealand reduced interest rates 25 basis point to 2.25% but removed its dovish advice, signaling an end to the central banks' easing cycle.
The Australian dollar also jumped by 0.5% after an inflation report that was hotter than expected reinforced the bets made there that rate cuts were over for now.
Expectations regarding the rate of exchange
The oil prices also remain volatile. Brent oil prices remained at a low of five weeks after Ukrainian President Volodymyr Zelenskiy signaled on Tuesday that he was willing to move forward with a U.S. backed peace plan.
This could open the door to a relaxation in sanctions against Russian oil companies. Brent traded at $62.50 during London trading. U.S. president Donald Trump said that a deal is near on Tuesday, but investors are aware of the long road ahead.
Wall Street futures pointed to a fourth consecutive day of gains, amid a broader increase in market sentiment. Tuesday's disappointing U.S. retail and consumer confidence numbers had firmed expectations for lowered Fed rates and helped offset some ongoing tech- and AI-related jitters.
Retailers are gearing up for a busy holiday season that begins with Thanksgiving on Thursday. Black Friday, Cyber Monday and the weekend after it will be a critical period.
Investors will also receive a report on September durable goods, which is delayed, at 8:30 am ET. ET. Beige Book, the Fed's snapshot on economic conditions is due at 2 pm. ET.
Fed funds futures are now pricing an implied 80.7% chance of a 25 basis-point cut during the Fed's meeting on December 10, compared to equal odds a week earlier, according to CME Group's FedWatch.
The yield on the benchmark 10-year Treasury note hovered around 4,019%. It was little changed from the U.S. closing of 4.002%. After it briefly fell below the 4% threshold this month, for the first.
The Nikkei led the overnight gains in Asia, gaining another 2%. However, the Japanese government bonds' short-term rates rose to their highest level since the 2008 global financial crisis as the selloff of these bonds resumed.
Hong Kong and China’s stocks had lagged behind the wider stock rally after Alibaba's shares fell over 1% following its underwhelming Q4 Guidance.
Bitcoin, which has fallen 30% in the last few months, was just below $87,000. Spot gold rose 0.8% to $4,163.58 an ounce.
(source: Reuters)