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Stocks and the dollar fall as US-Iran talks fail
The dollar and oil prices jumped Monday after the U.S. and Iran failed to reach an agreement, leaving a fragile ceasefire in the air and no end to the choke on Mideast exports of energy. Early trade showed that stocks were expected to drop in Asia. S&P 500 futures fell around 1.1%. Benchmark Brent crude opened at $102.37 per barrel, up about 7.5%. The euro dropped about 0.5%, to $1.1672. The marathon talks in Islamabad came to a deadlock and U.S. president Donald Trump said on Sunday that the U.S. Navy will blockade the Strait of Hormuz. Since the beginning of the war in late February, Iran has closed the chokepoint for 20% daily global energy supplies. This has caused oil prices to rise by over 30% and fueled fears about a spike in inflation which has wreaked havoc on bond markets. U.S. Treasury Futures fell in early trade, and gold, which had been a "loser" as investors cashed out their profits from the long pre-war rally, fell nearly 2%. Fiona Cincotta, senior market analyst at City Index, said: "This is a complete unwinding of optimism leading into the peace talks and into that play of safe-haven dollar; oil jumpers and selling everything else." On the other hand, we have seen markets exaggerate at times. The market struggles to 'price' this scenario correctly because of the uncertainty and unknowns. Early Monday, moves brought many asset prices near the levels they were trading at in the middle last week before the U.S.-Iran ceasefire agreement. The market has returned to the conditions prior to the ceasefire. However, the U.S. is also blocking the remaining Iranian-linked oil flows of up to 2 million barrels through the Strait of Hormuz, according to Saul Kavonic of MST Marquee in Sydney. The key question that remains is whether the U.S. will renew its strikes against Iran. This could lead to strikes on the energy infrastructure in the region, which would have an impact far beyond the duration and end of the war. The Wall Street Journal reported that Trump and his advisors are now considering limited strikes against Iran. The Australian dollar and the sterling fell 0.7% and 0.5% respectively. The dollar increased 0.3% to 159.78 Japanese yen. Investors have priced in the likelihood that several central banks such as the European Central Bank (ECB) and Bank of England will be inclined to raise interest rates this year. This is in stark contrast to pre-war expectations of cuts or stable rates. The global equities are still around 2% below their pre-war levels, despite the optimism generated by the belief that the United States would be able to reach a resolution with Iran. Trump acknowledged on Sunday the possible political consequences of the war by saying that oil and gasoline prices may remain high until the midterm elections in November.
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Dublin takes action to reduce fuel prices by removing blockades, as Irish police do
Irish police cleared Sunday 'tractors and trucks which?had blocked traffic?and blocked?oil infrastructure throughout the country in a wave protests against rising fuel prices. To ease discontent among consumers and businesses, the government announced tax reductions and spending increases totaling 500 million euros (586 million dollars) to help reduce the negative impact. Protesters angry by the more than 20% increase in diesel prices since the start of the Iran War, used vehicles to block an?oil?refinery and two ports. They also blocked a fuel terminal, Irish roads, and a fuel?terminal. The protests disrupted transport in Dublin and left a third (or more) of Ireland's fuel stations without fuel. Finance Minister Simon Harris described this as a "very danger moment" for Ireland. The police removed vehicles that were blocking the only oil refinery in Ireland on Saturday, cleared a blockade at Galway Port (a major fuel depot), and removed roadblocks on Dublin on Sunday. The government refused to negotiate with the protesters who included farmers and drivers, as well as contractors. They complained that a previous 250 million euro package temporarily reducing taxes on gasoline and diesel was not enough. Dublin, however, announced measures after talks with agricultural and transport groups. These included a reduction of 10 cents per litre for petrol?and diesel and a postponement of the increase in a carbon tax. The government announced that a fuel subsidy scheme would be implemented for agriculture and fishing. A survey in the Sunday Independent newspaper revealed that 56% of respondents supported the protesters. However, most of the supporters of the two ruling parties were against them.
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Nigerian airstrike on market in northeast Yobe, 200 people feared dead
Residents and a councillor in the area said that at least 200 people are feared to have died after Nigerian military planes struck a village's market on Saturday night while pursuing Islamist terrorists. Nigeria's Air Force claimed to have killed Boko Haram terrorists on the Jilli axis of Borno State, but did not mention a "market" in a Sunday statement. The Nigerian Air Force did not reply to any further questions. The strike took place in a village near the border of Borno in Yobe, the long-running heartland of an?insurgency which has claimed thousands of lives and forced millions to flee their homes. Lawan Zanna Nur Geidam is the councillor of Fuchimeram Ward in Yobe's Geidam District and the?traditional leader of Fuchimeram. She told?vermögenzeug???sprachdersprachsprachsprachsprachsprache or Lawan Zanna Nur Geidam, the councillor and?traditional head of Fuchimeram ward in Yobe's Geidam district told? "This is a devastating incident that happened at Jilli Market." In a telephone conversation, he told the interviewer that "over 200 people lost their lives in the air strike on the market as I speak to you." Three other residents and a representative of an international humanitarian organization confirmed the strike and its likely death toll. The Yobe State Emergency Management Agency (SEMA), which activated emergency response, said that it received preliminary reports about an incident at Jilli Market. Ahmed Ali, 43, who is a resident and sells medical consumables in the market, claimed to have been injured by a blast. "I was so terrified that I tried to run, but my friend dragged me. We all fell on the floor," he said from the hospital. Reporting by Ahmed Kingimi in Maiduguri and Adewale Kolawole in Kano; writing by MacDonald Dzirutwe, editing by David Goodman & Alexander Smith
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Australia and the US increase support for critical minerals by $3.5 billion
Canberra announced 'on Sunday' that Australia and the U.S. had committed a total of more than A$5 Billion ($3.5 Billion) to a number of important mineral projects. This is nearly twice the amount pledged six months ago when the two countries signed a cooperation agreement. The funding is intended to?support Australian ventures that develop and refine metals vital to industries such as defence, advanced manufacturing, and energy transition. This market has been long dominated by China. The funding will help reindustrialise America's high tech manufacturing base while also helping to "counter China’s export dominance" and ensuring Western supply-chain reliability, the two countries said in a framework agreement last October. Australia and the U.S. committed to investing at least $1 billion each in a $8.5 billion pipeline for priority critical minerals projects between the two countries within the next six months. Australia is a rich source of rare earth minerals, but China is the master of the environmentally and technically challenging refining process. In a press release, Resources Minister Madeleine King stated that "Australia and the U.S. deliver on the White House commitments with priority projects in Australia which?support the production of rare Earths and critical minerals". "Australia is leading the world in diversifying supply chains of critical minerals and rare Earths that are essential to Australia's economic and national security and to our trading partners. Refinery Project Backed Export Finance Australia and the U.S. Export-Import Bank will be responsible for funding A$5 billion of critical Australian mineral projects. EFA and EXIM issued letters of interest and support for a project to build a rare earths refining plant owned by Tronox Holdings. The investment is worth a total of A$849 million. King explained that Tronox with operations in Western Australia as well as the U.S. would use its existing mining and process capabilities to create mixed rare earth carbonate, which contains both light and heavy elements of rare earth. The agencies also committed to a combined support of up to A$1 Billion for Ardea Resources’ Kalgoorlie Nickel project in Western Australia. The framework also supports Alcoa’s Gallium Recovery Project and Arafura’s Nolans Rare Earths Project, as well as graphite ventures. King stated that additional projects for minerals such as vanadium, scandium, and graphite have received support.
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Philippines: any energy deal with China must respect Philippine sovereignty
The Philippines announced on Sunday that any decision regarding oil and gas cooperation with China will be made in strict accordance with its constitution. The Department of Foreign Affairs stated that it had taken notice of various public statements made by groups regarding the proposed reopening of talks between the Philippines and China about oil and gas collaboration in the South China Sea where both countries have been involved in maritime disputes for a long time. The Chinese Embassy in Manila didn't immediately respond to a comment request. * Any decision to pursue, structure or conclude an agreement on oil-and-gas cooperation with China, or any other government, would be made in full accordance with Philippine Constitution, laws, jurisprudence, and regulations. * The Philippines and China re-started a series of 'talks' late last month over the disputed South China Sea. They explored preliminary steps towards oil and gas cooperation and addressed energy and fertilizer?supply?issues resulting from the Middle East conflict. * Philippine President Ferdinand Marcos Jr. has stressed the need to ensure stable and affordable energy supplies. Reporting by Karen Lema and Khanh Vu from Manila, Hanoi, and Christina Fincher.
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Reeves, UK's Reeves, to present plan to assist businesses with energy costs
In a piece in 'The Sunday Times,' British Finance Minister Rachel Reeves said that she would be presenting her plan to help businesses who are struggling with high energy prices in the wake of ongoing conflict in Iran. Reeves expressed frustration at the U.S.'s and Israel's lack of action to address Iran's closing of the Strait of Hormuz, a crucial waterway that is used by crude oil markets. Reeves announced that she would provide more information on how businesses can be assisted with costs as the talks in Pakistan over a peaceful settlement ended without agreement. The government previously pledged to ?cut some green levies ?and lower bills for some electricity-intensive firms, but Reeves said that nevertheless the "UK's manufacturing sector... has faced uncompetitive energy prices for too long." She wrote in the Sunday Times: "So, later this week, I will set out the next stage of our plans to increase Britain's Competitiveness." "I will also lay out the principles which will guide our support for businesses in the months to come." Reeves will attend the International Monetary Fund meetings in Washington, D.C. this week. She said she would meet with her allies to discuss ways to ensure freedom of navigation through the Strait of Hormuz. She said that the?war in Iran would cost British families and businesses. "We do not yet know the exact cost, but the immediate priority is to ensure the ceasefire lasts." Reeves has previously stated that any assistance for household bills which are expected rise in July will be targeted and based upon household income.
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After days of gridlock, Irish police clear fuel protesters out of central Dublin
Irish police cleared trucks and tractors?on Sunday? that had been 'blocking traffic? in central Dublin? for five days?in protest?against?surging fuel prices?as government moves to minimize the economic fallout of a wave?of blockades? This week, protesters angry by the more than 20 percent increase in diesel prices following the start of the U.S./Israeli war on Iran used tractors and trucks to block an oil refining plant, two ports and fuel terminals, as well as a number roads throughout the country. The protests led to major disruptions in Dublin's?transport system and about a third of?petrol stations across the country were without fuel. Finance Minister Simon Harris called it a "very danger moment" for Ireland. On Saturday, the police cleared the blockade at the only oil refinery in the country. They also announced on Sunday that they have begun an operation to remove a "blockade" of Galway Port. The government refused to negotiate with the protesters who included farmers and drivers. The government is in 'talks' with groups from the agricultural and transport industries about measures to reduce fuel costs. The Sunday Independent published a poll that showed 56% of respondents supported the protesters. However, the majority of supporters of both the ruling parties were against them. Conor Humphries, David Holmes and Conor Humphries are the authors.
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Minister: South Korea is close to securing oil from Kazakhstan
South Korea has a good chance of obtaining crude oil from Kazakhstan, said the Industry Minister on Sunday. The?country is looking for alternative energy sources amid the Middle East war. Kim Jung-kwan, Industry Minister at KBS, said: "There have been (some) significant progresses. We should be able announce specific amounts and detail?early the next week." Kang Hoon Sik, the presidential chief of staff, travelled to Saudi Arabia, Oman, and Kazakhstan with Kim earlier this month to secure supplies of crude oil and naphtha due to disruptions in shipping through Strait of Hormuz. Kim explained that the visit to Kazakhstan was part of a long-term strategy to diversify oil supplies. South Korea is almost completely dependent on importing oil, with 70% of its purchases coming from Middle East. Last month, the United Arab Emirates also pledged to provide 24 million barrels. (Reporting and editing by Raju Gopalakrishnan; Jihoon Lee)
Dollar increases as US-Iran failed peace talks spark safe haven demand
Investors sought relative safety in the dollar against other major currencies during early Asia trading Monday. This was after marathon talks between Washington, D.C. and Tehran failed to produce a peace agreement, plunging the?markets into uncertainty for a seventh consecutive week.
Donald Trump said on Sunday that the U.S. Navy will begin blockingading the Strait of Hormuz. This is a choke point for 20% of daily energy supplies in the world, which?Iran has effectively shut down since the start of the war late February. This has caused oil prices to rise by more than 30%, and fueled fears of inflation.
As Asian markets opened, the dollar rose, which had acted as a haven due to the limited exposure the United States has to import energy-price inflation. The euro fell 0.53% to $1.1663, while the Japanese yen gained 0.1% to trade at 159.43.
US stock futures dropped?more that 1% late on Sunday in U.S. trading.
After last week's announcement of a ceasefire, the S&P 500 recovered this week as the market hoped that the Middle East conflict was nearing an end. By Friday, the S&P 500 had recovered nearly all of its losses since the U.S. began military strikes with Israel in late February.
Investors initially reacted positively to the announcement of a ceasefire between the U.S.A. and Iran, which was made on April 7, by selling some oil and investing some money in risk assets like stocks. Concern over the fragility has led to a unwinding of these trades.
Fiona Cincotta, senior market analyst at City Index, said: "This is a complete unwinding of any optimism going into the peace negotiations?into this play of dollar safe-haven oil jumping and selling everything else."
On the other hand we've seen markets exaggerate at times. "I think the market struggles to price this scenario correctly because there's so much uncertainty and so many unknowns."
The Australian dollar and the sterling, which are more risk-sensitive currencies, have been under pressure. They fell by 1.1% and 0.5% respectively.
Investors have priced in the possibility that several central banks such as the European Central Bank (ECB) and Bank of England will be inclined to raise interest rates in this year. This is in stark contrast to expectations before the war, when borrowing rates were expected to remain unchanged or even fall.
The global equities are still around 2% lower than they were before the war broke out. This is despite optimism that the United States and Iran would reach a resolution.
Since late February, gold has dropped about 10% as investors now prefer the dollar to gold as a safe haven.
The market has returned to its pre-ceasefire conditions, with the exception that the US is blocking the remaining Iranian-linked oil flows of up to 2 million barrels through the Strait of Hormuz. This was confirmed by Saul Kavonic of MST Marquee, an analyst based in Sydney.
The key question remains whether the U.S. The key question is whether the U.S.
Trump acknowledged on Sunday the possible political consequences of the war by saying that oil and gasoline prices may remain high until the midterm elections in November.
(source: Reuters)