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Investors weigh Middle East tensions as they consider oil gains
Investors weighed Middle East tensions which could disrupt supply and a major obstacle remains in the Russia-Ukraine talks. Brent crude futures were up?56 -cents or 0.92% to $61.20 a barrel at 0236 GMT. U.S. West Texas Intermediate crude rose 51 cents or 0.9% to $57.25. Both benchmark prices dropped more than 2% Friday, as investors considered a global glut of supply and the possibility that a Ukraine peace deal could be reached ahead of weekend discussions between U.S. president Donald Trump and Ukrainian President Volodymyr Zelenskiy. The geopolitical tensions are still high, and Russia and Ukraine continue to strike each other's energy infrastructure. "The Middle East?has?also been unsettling recently, with Saudi Air Strikes in Yemen and Iran claiming?the country was in a?full-scale conflict' with the U.S. Europe and Israel. Yang said that this may be the reason for market concern about possible supply disruptions. U.S. president Donald Trump stated on Sunday that both he and Ukrainian president Volodymyr Zelenskiy are "getting closer, perhaps very close" to a deal to end the conflict in Ukraine. However, both leaders admitted that many of the most difficult details remain unresolved. Both leaders held a press conference together late on Sunday afternoon, after meeting at Trump's Mar-a-Lago Resort in Florida. Trump stated that it would be obvious "in a matter of 'weeks'" if the negotiations to end this war were successful. Tony Sycamore, IG analyst, said that while the peace talks were positive there was still a'significant obstacle' in the form of territorial control for the?Donbas area. WTI will likely trade in a range of $55 to $60, with an eye on the?U.S. Sycamore stated in a report that enforcement actions would be taken against Venezuelan oil exports and the fallout of a U.S. strike on ISIS targets in Nigeria. Nigeria produces approximately 1.5 million barrels / day. Reporting by Sam Li in Beijing and Ryan Woo; Editing by Raju Gopikrishnan, Thomas Derpinghaus
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Asian stocks are rising, and precious metals have reached new records due to Fed rate cuts.
On Monday, Asian stocks reached six-week highs, and the dollar was near its lowest level in nearly three months. This is due to expectations that the Federal Reserve will cut interest rates in the coming year. It has also led to a strong rally in precious materials. Silver, platinum and palladium all fell after reaching record highs. Gold fell by nearly 1%, but it has broken record highs several times this year due to dollar weakness, safe haven demand and bets on rate cuts. Charu Chanana is the chief investment strategist for Saxo. He said that precious metals were boosted this year due to a powerful combination of rate-cutting tailwinds, and hedging geopolitical, fiscal, and economic uncertainty. "Add in supply concerns and the move has become parabolic." Silver's near-vertical rise in late-year also increases the risk of increased volatility. The risk is primarily technical and position-driven in the near-term. The big picture for precious metals, however, still looks structurally favorable with eased rates ahead, fiscal unrest and geopolitical uncertainty, and continuing diversification demand. Chanana stated that any pullbacks could be viewed as "opportunities by long-term investors" to rebuild their exposure. Investors are once again focused on geopolitics after U.S. president Donald Trump stated on Sunday that the United States and Ukraine's Volodymyr Zelenskiy "are getting a lot closer, perhaps very close" to a deal to end Ukraine's war. Stocks have a strong year-end MSCI's broadest Asia-Pacific share index was 0.27% up, reaching its highest level since October 3, in a positive start to the final week of the calendar year. The index is up over 25% in the last year. This was boosted by tech stocks, as AI mania took hold of investors. South Korea's Kospi climbed 1.5% to reach a near two-month high, bringing its annual gains to 74%. This is on track to be its biggest gain since 1999. Japan's Nikkei fell 0.4% while Taiwan stocks rose to a new record high. The minutes of the Fed’s last meeting, due Tuesday, will be the focus for investors during the holiday-shortened week. The U.S. Central Bank cut rates this month, and forecast just one further cut for next year. However, traders have priced at least two additional cuts. Tony Sycamore is a market analyst for IG. He said that markets would be scouring the minutes to gain deeper insight into the debates of the committee on the balance 'of risks and timing future easing. Sycamore stated that the focus will shift to data on the labour market, including non-farm payrolls. If these reports show unambiguous weakness in the labour market, it will increase likelihood of the Fed cutting?rates 25bp during its January FOMC Meeting. FRAIL YEN SUPPORT The Japanese yen rose 0.2% on Monday to 156.13 U.S. dollars after a summary of slightly hawkish opinions from the Bank of Japan policy meeting held in December was released. The summary revealed that many members of the BOJ board felt the need to increase the policy rate. BOJ raised interest rates in a well-telegraphed decision earlier this month, but the markets were disappointed by comments made afterwards which suggested that the central bank wasn't in a hurry to raise again. This weighed down on the yen, and traders were worried about intervention after officials in Tokyo issued strong verbal warnings. The yen is still close to its 10-month low, 157.9 yen per dollar (which it reached in November), and the risk of intervention remains as investors reduce their long Yen positions. The yen is still close to the 10-month low of 157.9 per dollar, which it reached in November. The dollar has been under pressure due to the prospect of the Fed lowering rates next year. A new Fed chair who may be dovish or willing to lower interest rates is also a threat. The dollar index (which measures the greenback versus six rivals) was 0.08% higher at 97.953, and is on course for a 9.7% decline for the year. This will be its steepest drop since 2017.
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Australia shares rise on miners' and gold rally
Australian shares rose on Monday as mining and gold stocks extended gains to reach record highs. This was due to a rise in commodity prices that overshadowed the losses of?energy companies. S&P/ASX 200 index increased 0.2% to 8,777.90 by 2319 GMT. The benchmark index fell by 0.4% before the markets closed on Boxing Day and Christmas Day. The mining stocks rose by 1.1%, reaching a new record high. Copper prices reached a new high on Friday and iron ore prices also increased. Rio Tinto, the world's largest iron ore company, rose 0.7% following a?briefly reaching another record high. The Anglo Australian miner is looking to shift its focus towards its copper business in order to take advantage of record-high prices during a green energy revolution. Gold stocks climbed to record highs, tracking the bullion's persistent rally. Northern?Star Resources, Evolution Mining and other gold producers jumped by 1.4% and 1.33% respectively. The rise in the price of mining stocks has been nearly 42%, outperforming that of the benchmark index, which is up 7.6%. This was due to strong commodity prices, and a rotation away from bank shares, which are expensive. Westpac, one of the "big four", fell 0.6% on the day. The sub-index is up for five weeks in a row. The valuation?concerns persisted throughout the year as Australian banks boasted some of the richest multiples in comparison to their peers from developed countries. The sub-index is up 8.5% this year compared to the 28% increase in 2024. Energy stocks also lost 0.5% on Friday, as oil prices fell. Investors weighed the looming glut of this commodity. Woodside Energy, a producer of oil and gas, and Santos both fell by 0.2% and 0.5% respectively. The benchmark S&P/NZX 50 Index in New Zealand rose by 0.1% to 13,547.74.
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Beijing's plan to control the global iron ore markets
China's iron ore state buyer uses increasingly aggressive tactics against mining giants like BHP in order to tighten their grip on the $132 Billion seaborne market, and to extract better terms from steel?mills. This is happening just as an enormous new supply source is about to strengthen China's hand. China Mineral Resources Group, (CMRG), in November asked their steel mills and traders to refrain from buying spot cargoes for a second BHP-product. This was months after the group blacklisted a product that had raised concerns with Australia's top supplier. Analysts and traders said that the standoff over a supply deal for next years' supply?marked a significant escalation?because CMRG hadn't previously banned multiple products coming from a single provider. This shows how far the buyer, who has been in business for three years, is willing to go in order to get better terms for China’s steel industry. The deal is expected to account for around a fifth (or more) of China's production needs, as well as the majority of BHP's mines located in Australia's north-west. Interviews with over three dozen steel and mine executives, traders, and analysts indicate that CMRG is assertive but has had limited success. Some steelmakers privately complain that CMRG hasn't delivered better contract terms or prices they wanted. RBC analyst Kaan Peek in Sydney said that CMRG's tactic with BHP may set a precedent with Rio Tinto, Fortescue, and Brazil's Vale. China is looking to reduce the 80% margins enjoyed by the 'iron ore' miners. CMRG's strategy has been refined and it has seen some successes, but also some mistakes. Three sources familiar with the matter said that, in a previously unknown move, a Chinese buyer obtained a freight-related discount of $1 per metric tonne on certain large cargo vessels from Rio last. CMRG became the sole Chinese supplier of iron ore to billionaire Gina Rinehart’s Hancock Prospecting after a long-running standoff, during which mills, traders and others claimed they had been pressured by Rinehart to not buy Roy Hill MB on the spot market for more than a full year. In implementing the strategy, CMRG actually made it more difficult for their own steelmakers. The company targeted a product of lower quality that was in demand during times when margins were extremely thin, and forced mills to spend more money to buy from other suppliers. CMRG refined its strategy to select products that would exert maximum force on individual miners while?minimizing market disruption. Several Chinese traders reported that mills who were banned from purchasing BHP's Jimblebar blend fines in September could easily substitute Rio's Pilbara Blend fines. BHP CEO Mike Henry said to CTV Canada in late December that the company is still in negotiations with Chinese clients. Hancock, Rio, Fortescue BHP, and Vale all declined to comment. CMRG - the State-owned Assets Supervision and Administration Commission - which directly supervises CMRG - the state-backed Steel Association and the world's largest steelmaker, China Baowu Steel Group - did not respond when asked for comment. In Search of Leverage China created CMRG 2022 in order to use its position as the largest iron ore purchaser to negotiate better terms with miners whose fat profit margins were a problem when steel mills had paper-thin or negative margins. Wood Mackenzie estimates that CMRG now negotiates on behalf of mills more than half the 1.2 billion metric tons per year of iron ore imported by China. CMRG wants to negotiate better terms on the index-linked price and other conditions, such as shipping and promoting more transactions via a domestic index. Some steelmakers privately complained early on that CMRG’s presence merely increased costs and reduced flexibility with their suppliers. It was bitter to give up negotiation rights, but it was also impossible for state-owned mills to refuse what was effectively a political mission. CMRG has become the dominant player in annual contract negotiations. However, traders and mills have said that it has failed to offer better prices. We have no choice but to pay a commission fee. "No, the company did not negotiate better terms or prices for us. "It's a politically charged task, and you must cooperate," said the manager of a steelmaker who refused to identify himself due to the sensitive nature of the issue. Steel industry sources claim that CMRG commission fees increased procurement costs for mills who were already suffering from low margins due to a downturn in the property sector. There have been many benefits, but especially for smaller mills. CMRG helped those who were unable to access credit lines to import iron ore, by acting as their buyer. CMRG is also aggressively buying spot cargoes via its Shanghai-based trading platform in an attempt to reduce volatility. Three sources confirmed this, and also said that the company has a trading target of 100 million tons by 2025. NEW SUPPLY SOURCE LOOMS Iron ore prices are still above $100 per ton despite China's slowing economic growth. They have been trading at this level since July. Wood Mackenzie predicts that prices will be $98 per tonne in 2026, and $95 per tonne in 2027. The vast Simandou Project in West Africa’s Guinea, however, is slated to provide around 7% global supply by 2028. This will tip the market into a surplus of 65 million tons and give CMRG a stronger bargaining position. Chinese companies are the largest shareholders in Simandou. Guinea is next, with a 22,5% stake, and Rio comes third, with a 22,5% stake. The ramp-up of Simandou has been widely viewed as a sign that the market dynamics are changing structurally. Peker, of RBC, said that it would fragment Australia's dominance when supplying iron ore into China. Peker stated that it is "sensible" for China to be aggressive in negotiating better terms of contract this year. Most mining executives that we spoke with agreed that CMRG will struggle to dominate a market if it doesn't have a dominant supply. The Chinese really want CMRG more effective. Demand and supply fundamentals continue to determine the price, said Gautam Varma founder of commodity consulting firm V2 Ventures who worked previously at Fortescue.
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The Kremlin has said that Trump and Putin do not support the idea of a temporary ceasefire between Europe and Ukraine.
The Kremlin announced on Sunday that?Russian President Vladimir Putin and the U.S. The Kremlin said on?Sunday that Russian President Vladimir Putin and?U.S. Yuri Ushakov, Kremlin's foreign policy aide, said that a phone call between Putin - and Trump lasted an hour and fifteen minutes - at Trump's request ahead of Trump meeting with Ukrainian President Volodymyr Zelenskiy in Miami. Ushakov stated that "the main thing is that the presidents from Russia and the United States share the same view that the temporary ceasefire option proposed by the Ukrainians or the Europeans, under the pretext of preparation for a referendum (or under any other pretext), only leads to a prolongation in the conflict. It's fraught with renewed hostilities." Ushakov stated that in order for the hostilities to cease, Kyiv would need to take a "bold" decision?in line with Russian and U.S. discussions about Donbas. It would be logical for the Ukrainian regime, given the current situation on the fronts to take this decision about Donbas. (Reporting Anastasia Lyrchikova, Writing by Gleb Stallyarov, Editing by Guy Faulconbridge).
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Brazil's labor court orders Petrobras to keep 80% of its workforce in place
The Brazilian Superior Labor Court has ruled that staffing levels at Petrobras Brazil facilities will remain at 80%, as negotiations between employees at the state-run 'oil 'company drag on during a long strike. The ruling, which was made by the court on Saturday, also prohibits worker unions from preventing the transport of workers and equipment from and to facilities, such as those of Transpetro, Petrobras’ logistics subsidiary. Sylvia dos Anjos is the head of exploration and production. She told Sunday that "we continue to work and ensure production and supply." In a separate statement, the company stated that, after four months of trying to reach an agreement at the negotiation table, '11 unions approved the compensation proposal from the company, ending the strike movement in the vast majority of their bases. Petrobras stated that there are still five groups of dissenters. The Sindipetro-NF union, which represents 25,000 workers within the Brazilian oil industry, has rejected the latest proposal from the state-run company to end the two-week-old strike, which began on December 15. Sindipetro-NF, in a statement on Saturday, said that the court ordered Petrobras also to provide information, including headcount by operating unit, job title and function. They called the decision a "victory." The FNP, another?separate? group on strike, which represents 26,000 Petrobras workers, has said that Petrobras's staffing level of 80% is "unenforceable." The dispute is not over yet, as the salary negotiations also include complex issues relating to Petrobras pension funds and deductions for payments to pensioners. Petrobras has played down the impact of the current labor action on production, and said it had deployed contingency team where necessary to ensure the market remained supplied. (Reporting and writing by Rodrigo Viga Gaier, Ana Mano, Nick Zieminski).
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Local officials confirm three deaths in protests against Alawites on the Syrian coast
Thousands of protesters call for federalism and the release of prisoners After an assailant fires, security forces will shoot into the air One member of the security forces has been killed By Karam al-Masri LATAKIA (Syria) Dec. 28 - According to the media office of the province, three people were killed when protests in Syria’s Alawite?heartland?of Latakia erupted into violence and gunfire. Syria has been racked by sectarian violence since the ouster of long-time leader Bashar Al-Assad last year. He is a Muslim Alawite who was ousted in a rebel assault and replaced by a Sunni led government. On Sunday, thousands of Alawite demonstrators gathered in Azhari Square to call for a decentralized political structure in Syria. A reporter on the scene said that gunshots were heard from an unknown location about two hours into protest. The protest then descended into chaos as security forces fired in the sky. Demonstrators were seen carrying injured people on foot. In a written statement distributed to journalists by the Latakia media office, it was stated that three?people had been killed and over 40 others injured. The statement did not say if all the deaths occurred in Azhari Square or in other towns that were also protesting. UNKNOWN ATACKERS SANA, the Syrian state-run news agency, reported that a member of the security force was killed in Latakia by gunfire fired by "armed remnants" of the former regime. Unknown assailants shot at civilians and security staff near Azhari Square, the report said. Ghazal Ghazal, the head of the Supreme Alawite Islamic Council had called for the rally on Sunday. In November, a similar protest lasted only an hour before it was confronted with a rival demonstration in support of Syria’s new government. Both protests were broken up by Syrian security forces. On Sunday, protesters chanted "We want federalism!" The Syrian people are united! Salman Mansour said, "We came here to demand our dignity and a living. We came here to demand political federalism, just like the big states of America, Germany, and (United Arab) Emirates." He added, "We came to demand our right to?living since we were killed on our land." More than 1,000 Alawites were killed in March after a failed insurrection by ?Assad loyalists sparked revenge killings by government-affiliated forces. Eight people were killed last week when a bomb exploded at an Alawite Mosque in Homs, a nearby city. "We will continue to ask for federalism in order to maintain our dignity. "They say we hate one another - No!" Nisreen Khzem, another protester said. Reporting by Karam Al-Masri, Writing by Maya Gebeily, Editing by Andrew Cawthorne
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Brazil's labor court orders Petrobras to keep 80% of its workforce in place
The Brazilian Superior Labor Court has ruled that staffing levels at all Petrobras sites in Brazil will remain at 80% as negotiations between workers at the state-run company continue to drag out amid a long strike. The ruling of the court on Saturday prohibits worker unions from preventing the transport of workers and equipment into and out of facilities, such as those of Petrobras Logistics subsidiary Transpetro. Sylvia dos Anjos told the press on Sunday that "we?continue to work and ensure production and supply". Petrobras workers began a strike on Dec. 15 The Sindipetro-NF union, which represents 25,000 workers within the Brazilian oil industry, has rejected the latest proposal from the state-owned oil company to end the two-week strike. Sindipetro-NF, in a statement on Saturday, said that the court had also ordered Petrobras, to provide information including headcounts by operating unit, function and job title. They called the decision a "victory." The FNP, another group on strike, representing 26,000 workers, has said that Petrobras' staffing levels at 80% are "unenforceable". The dispute is not over yet, as the salary negotiations also include complex issues relating to Petrobras pension funds and deductions for pension payments. (Reporting and writing by Rodrigo Viga Gaier, Ana Mano, Nick Zieminski).
Investors weigh Middle East tensions as they consider oil gains
Investors weighed Middle East tensions which could disrupt supply and a major obstacle remains in the Russia-Ukraine talks.
Brent crude futures rose 57 cents, or 0.94%, to $61.21 a barrel at?0112 GMT. U.S. West Texas Intermediate crude (WTI), however was up 54 cents, or 0.95%.
The benchmark prices of both oil and gold fell by more than 2 percent on Friday, as investors considered a global glut of supply and the potential for a peace agreement in Ukraine ahead of weekend negotiations between U.S. president Donald Trump and Ukrainian President Volodymyr Zelenskiy.
The main reason for the price increase is because geopolitical tensions are still high, and Russia and Ukraine continue to strike each other's infrastructures over the weekend.
The Middle East is also unrest, with Saudi airstrikes in Yemen and Iran claiming that the country is at a "full-scale battle" with the U.S. Europe and Israel. This may be the reason for market concerns over potential supply disruptions, said Yang An of Haitong Futures.
U.S. president Donald Trump stated on Sunday that both he and Ukrainian president Volodymyr Zelenskiy are "getting closer, perhaps very close" to a deal to end the conflict in Ukraine. Both leaders, however, acknowledged that many of the most difficult details still remain unresolved.
Both leaders held a press conference together late on Sunday afternoon, after their meeting at Trump's Mar-a-Lago?resort. Trump stated that it would be evident "in a couple of weeks" if the negotiations to end the war are successful.
Peace talks were positive. Tony Sycamore, IG analyst, said that there was no breakthrough and a major obstacle remains - the territorial control of Donbas.
IG stated in a report that crude oil will trade in a range of $55 to $60, with an eye on US enforcement actions against Venezuelan shipments, and any possible fallout from US military strikes against ISIS targets, in Nigeria. Nigeria produces approximately 1.5 million barrels a day. (Reporting from Sam Li and Ryan Woo, Beijing; Editing done by Raju Gopalakrishnan).
(source: Reuters)