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Gold drops as inflation fears fuelled by renewed Middle East tensions
Gold prices dropped on Monday as renewed U.S. - Iran tensions?pushed up the dollar and oil price, fueling inflation fears and reinforcing an outlook for higher interest rates. Gold spot was down 0.7% to $4,506.49 an ounce by 1158 GMT, after reaching a high of two weeks on Friday. The yellow metal fell nearly 2% in the month of May, marking its third consecutive monthly decline. U.S. Gold Futures for August Delivery fell 1.2% to $4,36.70. Dollars rose, making bullion priced in greenbacks more expensive for holders of other currencies. The U.S. claimed to have struck Iranian military bases over the weekend, and Iran's revolutionary guards?on Monday announced that they had attacked a U.S. based in response. This is the latest exchange of attack amid negotiations to end?the?three-month old war. Ricardo Evangelista, an ActivTrades analyst, said that the optimism around negotiations between the U.S.A. and Iran aimed to end?the standoff? in the Strait of Hormuz waned over the weekend. As a result of this, energy prices rose, reinforcing Federal Reserve expectations and reviving inflation fears. Brent crude oil has increased by more than 3% since the last strikes. Oil prices that are higher can increase inflation and cause interest rates to remain high for longer. Gold is traditionally seen as an inflation hedge, but in a high interest rate environment it becomes less attractive as a non yielding asset. According to CME Group's FedWatch, traders are pricing in an?Fed interest rate increase this year. There is a 39% probability of a quarter point increase?in December. This week, a number of Fed board members will be speaking. Friday's major data releases include the ISM manufacturing survey and the May payroll report. "Traders are closely monitoring this week's important data releases, as they have the potential to reshape expectations about the future path of monetary policy at the Fed, influencing the demand for the U.S. Dollar and, therefore, the performance in gold prices," Evangelista stated. Silver spot rose 0.6%, to $75.69 an ounce. Platinum gained 1.3%, to $1,941.15, and palladium remained at $1,355.00. (Reporting and editing by Thomas Derpinghaus, Kevin Liffey and Noel John from Bengaluru)
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Russell: It's not about altruism, but economics that's driving China's crude imports to slump.
China's imports of crude oils by sea fell to their lowest level in nearly 10 years in may as a result of the Iran War. This led to a drastic reorganization of operations for the world's largest oil importer. According to data compiled by Kpler, seaborne arrivals of crude oil were down to 6.36 million barrels each day in May from 8.10 in April. This was the lowest since October 2016. The imports also fell by a little over half of the 11,39 million bpd that Kpler recorded for February. This was the 'last full month' before the U.S.-Israeli attack on Iran, which took place on February 28, the last month in which arrivals occurred. Media and market commentary frame the collapse in China's imported crude as helping Asia adapt to the loss of 10 million barrels per day of crude due to the closure of the Strait of Hormuz. Beijing is not acting out of altruism, but rather as a result of the changing dynamics in price and supply. The conflict in Iran is clearly the main reason for the decline in China's oil supplies. But the real challenge lies in understanding what China does to adapt to a loss of up to 10% of global crude supply. First, China's imports are falling as usual when prices increase. In March 2022 when Brent crude futures reached a high of $139.13 per barrel following Russia's invasion in Ukraine, China's imports fell from 10.84 millions bpd to 8.07million bpd. China is not unusual in having imports fluctuate by up to 2,000,000 bpd per month in response to price changes. However, the drop in arrivals between February and May of this year was a much larger 5.5,000,000 bpd. The drop in prices is not the only reason for the decline. The Chinese refiners may also have struggled to get crude oil from their usual sources, particularly those who were cut off due to the closure of Strait of Hormuz. Kpler reports that imports from Iraq dropped from 790,000.00 bpd a month earlier to only 60,000.00 bpd a month later in May. Imports from Kuwait also fell from 522,000.00 bpd bpd bpd bpd bpd bpd bpd bpd ppd bpd bpd bpd bpd bpd bpd RUSSIAN CRUDE The drop in seaborne arrivals of Russian products in May was the lowest since August, and down from 1,96 million bpd. Prior to the Iran War, China was the sole major buyer of Russian crude oil which had been under Western sanctions ever since the invasion and occupation of Ukraine. The?administration led by Donald Trump, President of the United States, eased sanctions against Russian oil to help meet the shortfall in crude supplies caused by the war with Iran. India, Asia's largest buyer of crude oil, has returned to purchasing Russian crude. Arrivals in May were 2.17 million barrels per day, a new record and more than double the 1.07 million barrels per day in February. Higher prices and supply problems help explain China's decline in crude imports for May, but it is not clear how the country is adapting to such a "massive" drop. Refiners are likely to have changed their product mix in order to maximize the production of middle distillates, such as jet fuel and diesel. Light distillates, which are used in petrochemicals and plastics production, is likely to be affected by the shortage. China's Strategic Petroleum Reserve (SPR) is unlikely to be tapped yet, as the refineries are using commercial stocks of crude and refined products. This sharp decline in refined products exports from 777,000 to 463,000 bpd is keeping fuels more available on the domestic market. The problem is that the commercial inventories are unlikely to last for a long time, so China will have to eventually do one of three things or a combination of them. The SPR will either have to be increased, the refinery processing rate drastically reduced or it will need to tap into crude oil imports. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, an author for.
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Global stocks near record highs, as AI boom overshadows Middle East tensions
The AI boom drove demand on Monday, while news of new?attacks? in the Gulf tempered optimism for a reopening of Strait of Hormuz. This pushed up oil prices. Iran and the United States both claimed to have carried out military strikes, accusing each other of aggressive behavior as diplomatic efforts continue to try and end the three-month war. Donald Trump, the U.S. president, had been quiet about their progress before he posted that everyone should just "sit back and relax". On Saturday, Defense secretary Pete Hegseth stated that the U.S. would be ready to resume attacks against Iran if an agreement could not come about. U.S. forces had struck Iranian targets at the weekend, and Tehran responded. Kuwaiti defences intercepted missiles and drones, according to reports. Brent crude futures rose by nearly 3.3%, to $94.12 per barrel. This prompted a sale of government bonds. Government bonds were hurt by expectations that interest rates would rise to combat inflation spikes. S&P 500 Futures grew by 0.3% and Nasdaq Futures grew by 0.3% following the record-breaking week for both benchmark indices. Markets in Tokyo, Seoul, and other cities traded at or close to all-time highs. This was largely due to the demand for AI-related products. The market continues to hold on to the idea that Iran/US negotiations are still ongoing, despite the attacks by both sides. "A deal to 'end the Middle East war and reopen Strait of Hormuz is still possible," XTB Research Director Kathleen Brooks stated. Investors will have to "watch" how this all plays out as the market's sentiment could be affected by any delays in reaching an agreement. Data showing South Korea’s exports increased at their fastest annual rate in over four decades in the month of May, hitting a record $87.75 Billion. Nvidia's Jensen Huang will kick off the Computex show in Taiwan with a speech on AI on Monday. He is expected to elaborate on the latest product efforts of his company as well as Taiwan's role as a leader in the industry. PAYROLLS Ahead European stocks fell marginally for the day as gains in energy shares was offset by losses in airline and defence shares. The inflationary pressure from oil continued to hamper the bond market as U.S. 10 year yields rose by 1.2 basis points, to 4.465%. Yields on German 10-year debt increased 5 basis points on the day, to 2.98%. In a recent note, Mohit Kumar, Jefferies' chief European economist, wrote: "Market needs an open Strait of Hormuz agreement, which will provide the next leg of higher equity prices and lower rates." He said that as we approach June, the focus will be on the central bank meetings in the coming weeks. This week, a number of Fed members will be speaking. Also on Friday are the ISM manufacturing survey and the May payroll report. The market forecasts a steady increase of 85,000 jobs, which will keep the unemployment rate at 4,3%. The odds of a rise would be further reduced if the data were to get stronger. Chris Weston, Pepperstone's chief market strategist, said that the Federal Reserve speakers scheduled for this week will continue to promote a two-way approach to policy. Officials are "open" to both rate increases and rate reductions depending on new data. Expectations may grow that the Fed will gradually move away from its easing policy and toward a neutral policy stance over the next few months. The markets indicate that the Federal Reserve is 50/50 likely to have to raise rates by the end of the year, which has allowed the dollar to remain strong against a variety?of currencies. Most notably the Japanese yen. The dollar is up 0.1% against the Japanese yen, at 159.44. This is just below the 160-mark that many think could spark another round of government intervention to boost its currency. A survey released on Monday showed that the growth of euro zone manufacturing slowed in May due to a stagnant demand for goods and disruptions in supply chains linked to the Middle East conflict, which pushed up input costs. (Reporting and editing by Alex Richardson, Kevin Liffey).
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Shares of Revolution Summit rise as cancer drugs that have been tested show promise in improving survival rates
Shares of Revolution Medicines, Summit Therapeutics and Summit Therapeutics rose in premarket trading Monday after their experimental cancer treatment boosted'survival rates for patients' in late-stage clinical trials. Daraxonrasib is an experimental cancer pill that doubles survival when compared with chemotherapy. Summit's ivonescimab treatment, in collaboration with Akeso, a Chinese partner, helped lung cancer patients to live 15 percent longer than BeOne Medicines Tevimbra. On Sunday, the companies presented their data at the American Society of Clinical Oncology in Chicago. Summit's stock gained 3.6%, while Revolution's shares rose 7.3%. Summit's shares are essentially flat this year while Revolution's has almost doubled. Daraxonrasib was found to reduce the risk of death in patients with advanced pancreatic carcinoma who had already failed a round of chemotherapy by 60% compared to chemotherapy standard. Two?brokers called Revolution's trial data "compelling." Sean McCutcheon, Raymond James analyst, called the overall survival results of daraxonrasib a "homerun" and predicted rapid and widespread adoption in patients with advanced cancer. Patients with advanced non-small-cell lung cancer treated with ivonescimab, chemotherapy and Tevimbra lived on average 27.9 months compared to 23.7 months in the Tevimbra-treated group. Tyler Van 'Buren, TD 'Cowen analyst, said: "This is a significant advancement in a -setting where other treatments have never found success." Summit has the rights to the drug for the U.S.A., Canada Europe and Japan, through a deal worth up to $5 billion. Akeso holds the rights in?China and for the rest of world. Some analysts warned that there are still questions about the broader patient populations and whether or not this?study is applicable to China only. Faisal Khurshid, an analyst at Jefferies, said that investors will be looking to see if similar benefits are replicated globally in trials conducted in the U.S.A. and Europe. Reporting by Christy Santhosh from Bengaluru, edited by Pooja Deai and Sriraj Kalluvila
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Indian automakers sales increase in May despite rising fuel costs
India's leading?carmakers have reported increased sales in May. Maruti Suzuki, the market leader, said that bookings for its compressed -natural -gas vehicles had risen by 40% as fuel prices rose because of the energy shock caused by the Iran War. India increased petrol and diesel prices four times in May to offset losses due to soaring crude oil costs related to the Iran conflict. This added to the automakers' woes, as they are also dealing with higher raw materials costs, supply chain disruptions, and labour issues. All automakers reported increased domestic sales on Monday. Mahindra &?Mahindra, a maker of SUVs, reported an 11% rise year-over-year, Hyundai Motor India, a 9.1% jump, and Tata Motors Passenger Cars, a 42% increase. Maruti Mahindra Tata and Hyundai raised their prices in June to cope with the rising costs. Partho Banerjee is Maruti Suzuki India’s senior executive for marketing and sales. He said the company had "no other choice" but to pass higher costs on to customers. The firm will monitor the war before deciding further price increases. Alternative fuels are a powerful lure for consumers. Banerjee told reporters that CNG vehicle bookings have risen since the price increases, because they are "significantly cheaper to run than petrol-powered cars." Maruti's overall vehicle exports grew?34% for May despite a slowdown in shipments into the Middle East. Hyundai Motor India exports dropped 10.4% compared to a year ago. (Reporting and writing by Surbhi Misra, Nishit Navin; editing by Mrigank Dahaniwala).
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India's April Industrial Output grows by 4.9% according to the first data release of a new series
India's industrial production stood at 4.9% last April, according to government data released on Monday. The surge in energy costs and the disruption of supply caused by the Iran War, which has lasted for months, weighed heavily on parts of Asia's third-largest economic system. This was the first data in a series that had 2022-23 set as the base. The latest data cannot be compared to the growth of 4.1% in March. Economists surveyed by expected industrial production to grow by 3.9%. The reading for April is the second one since the Iran War broke out in February. This sparked energy shortages across the world's largest crude importer and biggest consumer. Manufacturing, which makes up 13% of India's economy, and has been one of the worst-hit sectors by the Middle East Crisis, grew 6.2% last month. Capital goods production, which is a proxy of factory output, increased 16% on an annual basis in April. In April, the output of consumer durables (such as mobile phones and cars) grew by 4.3% compared to a year ago, while that of consumer non-durables (such as food and toiletries) increased by 2.8%. In April, electricity generation increased 4.9% compared to the previous year. Mining activity declined 5.1%. KEY CHANGES UNDER NEW SERIES The statistics ministry has used a "chain-linked" approach that allows it to update the weights of index components every year to reflect changes in the economy. The new data series reflects India's energy transformation by dividing electricity generation into renewable and nonrenewable sources. The?index now includes rare earths and minor minerals to reflect the growing importance of these materials in high-tech manufacturing, infrastructure, and clean energy. Gas distribution, water supplies, sewerage, and waste management have been included to bring?Indian industrial statistics closer in line with global standards. The index also includes a framework to replace outdated or closed factories with more modern production units, and a list for miscellaneous items such as emerging products and special industries. Reporting by Shubham Bhatra in New Delhi, editing by Mrigank Dahniwala
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EU launches first investment roadshow targeting minerals in South Africa
Signing of the EU-South Africa Trade and Investment Partnership in 2025 * South Africa is looking to process more minerals at home Diversification of raw material sources is a key objective for the EU Colleen Goko and Tim Cocks JOHANNESBURG - On Monday, 200 companies participated in a European 'Union' investment roadshow held in?South Africa. They were competing for a share of the EUR12 billion ($13.98billion) in investments that the bloc had pledged in response to global rivalry regarding critical minerals. The EU's first Investment Roadshow, held at the Johannesburg Stock Exchange in Johannesburg, marks the first major effort to mobilise capital under the EU-South Africa Clean Trade and Investment Partnership 2025. South Africa, like other African countries wants to condition access to minerals for energy transition, modern weaponry and artificial intelligence on moving up the value-chain. Parks Tau, Minister of Trade, said during the opening remarks. "Our goal is beneficiation, processing and industrial development." EU BUILDING SUPPLY CHAINS FOLLOWING CURBS ON EXPORTS FROM CHINA China's?"restrictions" on mineral exports with potential military applications has pushed Western nations into seeking alternative supply chains in Africa. David McAllister is the chairman of the EU Parliament’s Foreign Affairs Committee. He said in an interview that the EU has learned from past experiences to diversify away from Russian energy, which was heavily reliant on by many EU members. He said that diversification is the best way to reduce dependence, and South Africa has a key role to play. The countries have already struck deals, including a EUR600m framework loan to the Development bank?of southern Africa?which will deliver 1,200 megawatts and displace 3.6m tons of CO2. Separate EUR1.48 billion facility will be provided to the state?freight firm Transnet, which is the first drawdown from a EUR1billion EU-EIB Just Energy Transition pledge. This facility will modernise South Africa’s rail and port network. South Africa's biggest trade and investment partner is the EU, with EUR46billion in bilateral trade flows in 2025. More than 1,700 European companies will represent over 40% of all foreign direct investments. Sandra Kramer, EU ambassador to the United States, said: "We have moved from thinking about development to thinking about investment."
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Summit rises as lung cancer drug trial results show 15% higher survival rates than rival's
Summit Therapeutics shares rose up to 7% before bell ringing?after its ivonescimab treatment with China-based Akeso helped advanced lung cancer patients?live 15% longer than BeOne Medicines Tevimbra immunotherapy. Late-stage trial results revealed that in a head to head study conducted in China, patients with advanced non-small-cell lung cancer squamous who were treated with ivonescimab, chemotherapy and Tevimbra lived on average 27.9 months compared to 23.7 months when they received Tevimbra, chemotherapy and Tevimbra. Tyler Van Buren, TD Cowen's analyst, said: "This is a significant advancement in a situation?where other treatments have never found success." Ivonescimab belongs to a class of newer medicines called bispecific antibodies. These have two targets. It blocks the protein PD-1, which helps cancer to avoid immune attacks and a second called?VEGF, which can promote tumor growth. Summit Therapeutics holds the rights to the drug in the U.S.A., Canada Europe and Japan, through a $5 billion deal, while Akeso has the rights to China and the rest. This study included 532 patients newly diagnosed with advanced non-small cell lung carcinoma in stage 3 or 4. The study compared ivonescimab and Tevimbra in the first-line treatment. All patients received chemotherapy. The results of this study were presented in Chicago at the American Society of Clinical Oncology meeting. Faisal Khurshid, an analyst at Jefferies, said that since the study had only been conducted 'in China,' it was still necessary to see if the same benefits were seen in trials around the world, particularly in the United States and Europe. Julie Gralow is ASCO's Chief Medical Officer. She said that the new China-only data will not be used for U.S. approval. However, a separate global?late stage trial comparing ivonescimab with Merck's Keytruda should produce interim 'data' later this year. Summit's shares rose 2.7% in Monday premarket trading to $18.01. Stock has been mostly flat this year. (Reporting and editing by Pooja Deai in Bengaluru, Christy Santhosh from Bengaluru)
MORNING BID AMERICAS - AI and 1984
What's important in the U.S. market and globally today by Mike Dolan, Editor at Large, Finance and Markets
The same obsessions with the market continue in a new month. Iran and AI are still competing for the attention of investors, but AI is currently winning. The momentum from last week looks to be continuing into Monday.
Below, I'll explain more. Listen to the latest episode of the Morning Bid Daily Podcast. Subscribe to the Morning Bid daily podcast and hear 'journalists' discuss the latest news in finance and markets seven days a weeks.
AI AND 1984 The U.S. and Iran peace plan of last week was buried over the weekend as the two sides engaged in new military exchanges. Israel also advanced its incursions into Lebanon to fight the Tehran-backed Hezbollah. Donald Trump, the U.S. president, reiterated his claim on Monday that Iran was interested in a deal. However, whatever the outcome on the diplomatic front there is no relief for the Gulf and June is an important month for energy supply. Brent crude prices rose by over 3% to around $94 a barrel after falling 2% on Friday. The AI frenzy has continued. Jensen Huang, Nvidia's Jensen Huang, unveiled on Monday a new chip which puts AI capabilities into desktop and laptop computers. Experts say this will revolutionize how users interact with AI. Samsung's shares in South Korea rose another 10% Monday on a variety of news stories, including the start of shipments for its new HBM4E processor and expectations of a meeting between Huang and Nvidia later this week. South Korean shares increased by more than 4%. Official data released on Monday confirmed that the global demand for chip products is real. South Korean exports grew by over 50% in May compared to the same month last year, marking the highest annual rate since 1984. According to the latest survey by the Chinese government, factory growth in China slowed in May as export demand dropped. Washington reportedly halted Nvidia chip deliveries to Chinese subsidiaries outside China.
ISM's U.S. Manufacturing Survey for May will be released later today. The U.S. Employment report for May is due on Friday, which will start off another busy week of macrodata.
Analysts are a little weary of the current themes, but there will be more factors to consider in June. This month, central bank meetings could result in interest rate increases. Meanwhile, a UK by-election that is crucial will bring the brewing leadership crisis to light. There may be a desire to explore other stock sectors. The Russell 2000 small-caps index is doing at least as good as the SOX chip index this year, despite the recent attention that tech has received with its explosive stock moves. Revolution Medicines shares soared by 20% before Monday's bell, after tests of the pancreatic cancer drug revealed that it doubled chances of survival.
Chart of the Day South Korea's exports increased more than expected at the fastest annual rate in four decades in May, as an AI boom drove chip sales to record levels, boosting optimism about the trade-dependent economy.
Preliminary trade data released on Monday showed that exports from Asia’s fourth largest economy, which is a bellwether of global trade, increased 53.2% compared to a year ago, reaching a record high of $87.75 Billion.
The exports grew for the 12th month in a row on an annual basis, the largest percentage increase since January 1984. The benchmark KOSPI index has more than doubled this year.
Watch today's events
* U.S. ISM & S&P Global Manufacturing PMIs for the month of May (9:45-10 a.m. EDT) EDT)
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(source: Reuters)