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Profit-taking causes the price of copper and nickel to fall
Prices of copper and nickel fell on Thursday as investors retreated from the recent sharp rise. Benchmark three-month Copper on the London Metal Exchange fell 0.3% at $12,853 a metric ton as of 1106 GMT. Concerns over a tight mine supply, and bets about future demand growth led to a record-high copper price of $13,387.50. The analysts at Sucden Financial stated that the continued mirroring of precious metals suggests this is "primarily profit-taking, position cleaning and not a major change in underlying trend." S&P Global said that the growth of artificial intelligence and defence sectors would boost global demand for copper by 50% by 2040. However, supplies will fall by more than 10 million tons per year without increased recycling and mining. Nickel fell 3.8%, to $17.205 per ton, as the Indonesian Government refused to disclose its 2026 mining production quota. This ended a rapid rally that saw the metal reach its highest level since mid-2024, on Wednesday. An official confirmed that Indonesia will adjust nickel quotas in order to support prices and meet the demand of local smelters. Analysts said that the policy could be reversed and added that a similar attempt a year earlier had only a limited effect. Nickel stocks In LME-registered storage warehouses, the number of tons is now 276,300, which is their highest level since mid-2018. This follows the inflows into Asia-listed warehouses that began earlier this week. Discount of cash LME Nickel contract against?three-month ahead The price of a ton increased to $224 on Wednesday, the highest level since March. It was $144 on Friday. Lead fell 0.6%, to $2,047. Tin remained at $44,310. (Reporting and editing by Kirby Donovan; Polina Devitt)
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The US Senate votes on Trump's Venezuela policy
On Thursday, the U.S. Senate will consider a measure that would prevent President Donald Trump from taking any further military action against Venezuela without congressional approval. Supporters of the resolution said it could pass with a close vote. After the U.S. military captured Venezuelan president Nicolas Maduro during a dramatic raid on Caracas in Caracas on September 29, senators will vote to approve the latest of a series war power measures that have been introduced by the Obama administration since it increased military pressure against the country through attacks on boats near its coast. Republicans blocked all the measures but the final vote was only 49-51. Two senators from Trump’s party voted with Democrats to support a resolution back in November. At the time, administration officials told lawmakers that they did not intend to strike Venezuelan territory or bring about a regime change. Several lawmakers, including Democrats publicly and Republicans behind-the-scenes, have accused the Maduro administration of misleading Congress after his capture. "I spoke with at least two Republicans who didn't vote for this resolution before, who are now thinking about it," said Senator Rand Paul of Kentucky, who is cosponsoring the measure, in a press conference held ahead of the vote. Paul spoke alongside Democratic Senator Tim Kaine, a leader of the resolution. He didn't identify the Republicans. Trump's party has a majority of 53 seats in the Senate. HURDS AHEAD Senate passage would be an important victory for lawmakers who have been pressing the war power issue. To become law, the resolution must pass both the Republican-led House of Representatives, and also survive an anticipated Trump veto. This would require a two-thirds majority in each chamber. The lawmakers admitted the obstacles, but stated that some Republicans might?be hesitant of a long and costly campaign to change Venezuela's regime. Trump said Wednesday on his Truth Social website that he wants the U.S. Military budget to go up to $1.5 trillion, from $1 trillion. Kaine pointed out that U.S. troops have been attacking Venezuelan boats since months. He also mentioned Trump's claim that the U.S. will "run" Venezuela, as well as the seizure of Venezuelan oil. Kaine said: "This is not a?surgical arrest operation by any means." According to the U.S. Constitution, any president must obtain Congress' consent before launching a long-term military operation. Senators opposing the "war powers" resolution claim that the arrest of Maduro was a law-enforcement operation and not a military one. Maduro is facing trial before a U.S. Court on charges of drug trafficking and gun possession. He has pleaded innocent. Trump, they say, is also within his rights to take limited military action if he feels it's necessary for national safety.
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Euro defence stocks reach record highs, dollar gains due to geopolitics
The European defence stocks rose to a "record high" on Thursday as oil prices and dollar gained ground. Geopolitical tensions rumbled from Venezuela to Greenland, keeping traders guessing. seizure Two Venezuelan-linked oil tanks in the Atlantic were reported alongside the news that U.S. Secretary Marco Rubio will?attend Meet?Denmark leaders Next week we will be discussing Greenland, and there are also some mixed economic statistics. STOXX, Europe's aerospace and defence stock index, has risen nearly 2% in the first hour of a fifth consecutive day of gains. They have already risen 13% so far this year and over 260% since Russia invaded Ukraine in 2022. Euro-dollar exchange rates are on course for their eighth consecutive drop, but mixed U.S. data from Wednesday kept dollar bulls at bay ahead of the closely watched nonfarm payrolls report on Friday. Peter McLean is the Head of Multi-Asset Portfolio Solutions, Stonehage Fleming Investment Management. While it is unlikely that we will see military action in Greenland, there is a clear impetus for increased defence spending in Europe. Brent futures recovered above $60 per barrel on Thursday and U.S. Crude rose 0.5% to $56.30 per barrel. Top U.S. officials stated on Wednesday that the country must control Venezuela's oil revenue and sales indefinitely in order to stabilize the economy of the latter, rebuild its oil industry and ensure it acted in America's interest. Daniel Hynes is ANZ's senior commodities strategist. He said that the market's reaction to Trump's comments about Venezuelan oil control was a bit'misplaced'. Oil prices would rise if the U.S. controlled oil sales continued in the short-term. I think that's why oil prices are rising. Stocks in other markets were mostly lower after a positive start to the new year that lifted global markets. The STOXX 600, a pan-European index, was down by 0.2%. Japan's Nikkei fell 1.6% over night amid increasing tensions with China, and Wall Street futures slipped 0.2%. Charu Chanana is the chief investment strategist for Saxo. Chanana said that "geopolitical headlines" were in charge, pointing out China's export ban for dual-use to Japan and the potential risk of rare earths. Tokyo shares of Japanese chemical producers fell, while those of their Chinese competitors jumped. This was after China's Commerce Ministry announced that it would launch an anti-dumping investigation into the imports of "chemicals used for chipmaking". PAYROLLS NEXT Investors were also watching the U.S. initial weekly jobless claims, due later, and the closely watched non-farm payrolls employment report, due Friday. Both could give further clarity to the Federal Reserve on its rate outlook. Goldman Sachs analysts predict a rise of 70,000 above the consensus in non-farm payrolls for December. They also expect unemployment to drop to 4.5%. The data released on Wednesday painted a mixed image. JOLTS figures for the labour market bolstered the view that "no hiring, no firing" is the best way to look at the job market. However, the ISM services index in December reached a 14-month-high, which was reassuring. The market's expectations for two further Fed rate cuts in 2019 were not altered by the readings. The 10-year Treasury yields were muted, at?4.15%. Germany's bund yields for the 10 year period were 2.8%. This is still down 7 basis points this week. On the currency market, the yen of Japan rose to 156.67 yen per dollar, while sterling bought $1.3458 last time. Silver and platinum fell 2.6% and 3.2% after recent gains. McLean, of Stonehage and Fleming, said that the direction of bond rates is one of the biggest risk factors for this year. "I think it would be positive if the 10-year Treasury yield falls below 4 and continues to fall.
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China warns about battery overcapacity risk
China's Industry?Ministry said Thursday that it has urged a battery manufacturer to optimise the industry capacity and?mitigate overcapacity risks. According to the readout from a meeting posted on Wechat on Wednesday, the ministry stressed the need for market regulation and enhanced supervision in the electric vehicle and battery storage sectors. China Daily, citing sources, reported that 16 companies, including top battery manufacturers, were present. According to the report, energy storage system integrators Beijing HyperStrong Technology and Zhuzhou CRRC Times Electric, as well as Trina Solar – a leading solar manufacturer – were also present. The state planner, the?industry minister and the?energy regulators convened this meeting. The construction of data centers?all over the world has led to a surge in demand for energy storage batteries. The ministry echoed the criticism of the solar industry where a ballooning production capacity resulted in falling prices and losses for the entire industry. (Reporting and editing by Jacqueline Wong Stephen Coates, Louise Heavens).
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Galp and Moeve are in merger talks to combine their fuel retailing and refining businesses into a European giant
Portuguese energy company Galp is in talks with private equity-backed Moeve to merge their refining and?chemicals businesses as well as fuel retail businesses. They announced the deal on Thursday. According to their non-binding contract,?Galp, Spain's Moeve and the United Arab Emirates state-owned investment firm Mubadala, as well as U.S. investment firm Carlyle Group plan to form two new companies. One would run 3,500 retail fuel stations, primarily in Spain and Portugal. It would sell more than 6 million metric tonnes of refined products per year. The other would run Moeve’s Huelva, Algeciras and Galp’s Sines oil refineries. Three facilities with a combined capacity of 700,000 barrels a day. Moeve will be the majority shareholder in the unit with?Galp to hold a stake of more than 20%. Galp's upstream business in oil and gas production, which includes stakes offshore Namibian oil fields that are closely watched, will not be included? in any merger. Biraj Borkhataria, RBC analyst, said: "We anticipate the main takeaway from the market will be that it may increase the likelihood that Galp is a candidate for a 'take-out' given the cleaner Portfolio." At 0921 GMT the share price of Galp was up by 1.4%, beating a wider index of European energy companies, which fell 1.4%.
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Vietnam trade is tepid due to farmers holding back their sales. Indonesia premiums are rising.
The coffee trade in Vietnam was subdued on Thursday, as farmers held off sales in anticipation of higher prices. However, exporters were rushing to meet their delivery obligations as the demand increased. Premiums in Indonesia also rose. Farmers in the Central Highlands sold beans for 97,500 to 98.200 dong per kilogram ($3.71 to 3.74). As of Wednesday's closing, Robusta coffee delivered in March was down $68 to $3,939 per kg. A trader in the coffee belt stated that "demand is high as exporters have resumed their activities after the holidays. However, supply is limited." The trader said that farmers are not under pressure to sell beans at this time as they also have income from durian. They therefore tend to keep the beans and demand higher prices. A trader from the area said that the 'output is estimated to be 5%-10% higher this year and weather conditions are favourable for coffee plantations. Traders provided 5% black-grade 2 robusta with a discount between $140 and $150 per ton compared to the contract signed in March. Vietnam will export 1.58 million tonnes of coffee by 2025. This is up 17.5% on a year ago, according to government data. Export revenue increased 59% last year, reaching $8.9 billion. The data shows that coffee shipments in December grew by 40.8% compared to a year ago, reaching 180,000 tons. A trader said that Sumatra Robusta beans from Indonesia were being offered at a premium of $215 to the February contract. This is up from the $120 premium two weeks earlier. A second trader reported that beans would be offered at a premium of $200 for the contract in March, up from a $300 premium prior to the holidays. Coffee farmers in West Lampung, Indonesia, said that recent heavy rains could have caused cherries to fall from plants, possibly affecting the supply.
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Gold drops as selling pressure is sparked by the rebalancing of commodity indexes
Gold prices fell on Thursday, as investors prepared for futures sales?linked?to? a commodity index reshuffle. A stronger U.S. Dollar added pressure to the price of gold by making it more expensive for overseas buyers. As of 0921 GMT, spot gold dropped 0.6% to $4.427.28 per ounce. U.S. Gold Futures for February Delivery fell 0.6% to $4435.40. "Gold and Silver remain under pressure, as the annual commodity index rebalancing begins. In the next five business days, COMEX metal futures may see sales in the region of $6-$7 billion. This is according to Ole Hansen of Saxo Bank, who heads commodity strategy. The annual rebalancing of the?Bloomberg Commodity Index is designed to align the index with the current global commodity market. This year's window is from January 9-15. Hansen said that the U.S. - Venezuela conflict had added a georisk premium at the start of the week, but it is now fading as attention shifts to the rebalancing. Investors weighed mixed economic data in advance of Friday's nonfarm employment report. The data on Wednesday revealed that U.S. employment dropped to its lowest level in 14 months, while hiring returned to its usual sluggish tone. This indicates a waning labor demand. Investors await the non-farm payrolls report from the United States for further clues about monetary policy. Markets have already priced in two interest rate reductions by the Federal Reserve during this year. The U.S. has seized two Venezuelan-linked oil tanks in the Atlantic Ocean. Spot silver fell 3.1%, to $75.73 an ounce after reaching an "all-time" high of $83.62 per ounce on December 29. HSBC expects gold to reach $5,000 per ounce in 2026 due to geopolitical risk and increasing fiscal debts. Silver is expected trade between $58 - $88 by 2026 as a result of supply deficits and robust investment demand. Palladium fell 4.4%, to $1,687 an ounce. Spot platinum dropped 4.2%, to $2,209.50. (Reporting and editing by Varun H. K. in Bengaluru)
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NYT: Trump's comments on Venezuelan oversight could last for years
In an interview with the New York Times published early Thursday, U.S. president Donald Trump stated that "only time will show" how long the United States will continue to maintain their oversight of Venezuela. Trump replied: "I'd say it will be much longer." When asked by The Times how long he thought the situation would last, Trump responded, "I'd say much longer." Trump said of Venezuela that "we will rebuild it in a profitable way." He added, "We're going?to be taking oil and using oil." We are bringing down oil prices and we will be giving Venezuela money, which it desperately needs. According to The Times, Trump said that the U.S. and Venezuela's interim president Delcy Rodriguez are "getting on very well". Trump unveiled his new design on Tuesday A plan to refine and sell Up to 50 million barrels Venezuelan oil remained in Venezuela due to a U.S. ban, a sign that Washington has been coordinating with the Venezuelan government ever since President Nicolas Maduro was captured in an armed raid last weekend. Trump said that Venezuelan officials were giving him "everything we think is necessary".
As global tensions increase, crude oil prices fall and shares decline
Crude futures fell?and stocks in Asia declined as markets struggled to deal with the ramifications and fate of Venezuela's petroleum reserves.
The oil prices continued to fall after U.S. president Donald Trump announced that Venezuela would "turn over" up to 50 million barrels to be sold at market price, following the capture and toppling of the nation's leaders.
Japanese shares fell sharply while gold and industrials metals were near record highs. Geopolitical tensions in South America and China dominated the yen rally, while investors looked for clues on the timing of possible interest rate cuts from the Federal Reserve.
Michael McCarthy, CEO Moomoo Australia & New Zealand's investment platform, stated that the most likely outcome of the turmoil in Venezuela is an increase in the global economy. "Clearly, it's negative for oil prices themselves. But energy costs are crucial to your global economy outlook."
He added: "On the flip side, the increased uncertainty in the geopolitical landscape could overwhelm any positive economic benefit."
U.S. crude oil fell by 1.66%, to $56.18 per barrel. Brent dropped to $59.94 a barrel. This is a 1.25% drop on the day. MSCI's broadest Asia-Pacific share index outside Japan fell 0.6%. Japan's Nikkei stock index slid 1.1%.
The S&P/ASX 200, a heavily-weighted index in Australia, which is dominated by commodity producers, rose 0.2%. Hong Kong's Hang Seng index fell 1.3% after giving up some gains following a three-day rise.
The Euro Stoxx '50 futures for?European equity market rose 0.05%. German DAX Futures rose by 0.2%. FTSE Futures fell 0.24%. The S&P 500 eminis futures in the U.S. were down 0.04%.
Trump announced on Tuesday that Caracas has reached an agreement with Washington to export Venezuelan crude oil worth up to $2 billion to the United States.
The agreement follows a weekend attack on Venezuela and comments from the White House that they were looking at ways to acquire Greenland, with the U.S. using its military as a means of achieving that goal "always being an option".
Venezuelan President Nicolas Maduro is still awaiting drug charges in a New York prison, whereas opposition leader Maria Corina Machado said that she wanted to return to the country to lead it.
The dollar index (which measures the greenback in relation to a basket currencies) fell 0.06%, reducing its?0.2% increase on Tuesday. The euro remained at $1.1691, and the yen gained 0.2%, to 156.42 dollars per yen.
China announced a ban on dual-use products that could be used to make weapons for export to Japan. This was Beijing's response to the remarks made by Japanese Prime Minister Sanae Takayichi regarding Taiwan.
Nickel jumped over 10% in the last session as concerns about supply fueled gains?in industrial resources.
The key U.S. employment report due on Friday is likely to influence the market's expectations for monetary policy. The current price of two additional Fed rate cuts in this year has been priced into the market. The JOLTS survey, and ADP private pay on Wednesday are two important events that will likely influence the market's monetary policy expectations.
Data from the Asian trading day showed that core inflation in Australia slowed a little and consumer prices increased less than expected. In Japan, a private sector survey showed that the service sector grew at its lowest pace since May.
Spot gold dropped 1.1% to $4.448.29 per ounce. Copper fell 1.34%, to $13,060.50 per ton.
Bitcoin fell by 0.8%, to $92,496.86. Ether also declined by 0.8%, to $3,247.70. (Reporting and editing by Christopher Cushing, Shri Navaratnam and Rocky Swift from Tokyo)
(source: Reuters)