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Oil prices fall as worries about rates offset optimism over Iran talks.
As expectations for a rise in interest rates pushed up U.S. Treasury Yields, global stocks were mostly flat Monday. Oil prices fell as optimism about progress?in U.S.Iran talks was offset. U.S. Vice-President JD Vance stated in Switzerland that Iran has agreed to let nuclear inspectors enter the country. The conversations about the inspections could begin as early as this week. Treasury Department of the United States authorized Iranian crude oil, petrochemicals and petroleum products sales through August 21. This eases decades-old sanctions as the United States moves toward a final deal with Iran in exchange for nuclear inspections and a free transit through Strait of Hormuz. Wall Street's benchmark S&P 500 index and the Nasdaq both finished lower due to a decline in consumer discretionary and communication services stocks. The Dow finished higher. The Dow Jones Industrial Average fell 0.37%, the S&P 500 dropped 0.37%, and the Nasdaq Composite declined 1.32%. The STOXX 600 index in Europe rose by 0.58%. MSCI's global stock index fell by 0.03%. Gerry Sparrow, Chief Investment Officer at Sparrow Capital Management, stated that the markets are driven by the Fed's hawkish view and lower expectations of new Fed Chair Kevin Warsh moving to start cutting rates. Sparrow stated that the market was surprised by the action of the new Fed Chair, as they had expected him to be more lenient on interest rates. Last Wednesday, the Federal Reserve held interest rates at their current level. However, policymakers are expecting a rise in borrowing costs this year due to growing concerns over inflation that is above the 2% target set by the U.S. Central Bank. The yield on the benchmark U.S. 10 year notes increased 5.78 basis points to 4.50%. Brent crude futures settled lower by 3.38% at $77.90 a barrel, a far cry from their peak in May of $126.41. Sparrow stated that "the progress in peace negotiations is good. But the only negative surprise was the fact that the new Fed didn't seem to be a bit more accommodating during its latest announcement." UK POUND RISE AFTER STARMER'S RESIGNATION The pound rose after Keir Starmer, the Prime Minister announced his resignation. This paved the way for Britain to elect its seventh leader in ten years. The pound recovered from earlier losses to be up?0.11%, or $1.3244. Andy Burnham, the former Manchester mayor, is expected to succeed Starmer. However investors believe that a key question for UK bond markets nervous about Brexit will be who will become finance minister. The euro fell 0.36%, to $1.1427 after reaching a three-month high on Friday of $1.1418. The dollar was up 0.19% to 161,58 yen. Only the threat of Japanese intervention prevented it from reaching its 40-year high in 2024 of 161.96. The dollar index (which measures the greenback in relation to a basket including the yen, the euro and other currencies) rose by 0.17%. Gold spot rose by 0.72%, to $4190.17 per ounce.
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US Loans 500,000 Barrels of Oil from Strategic Petroleum Reserve
The U.S. Energy Department announced on Monday that a single energy 'firm' had borrowed 500,000 barrels of crude oil, or 1.25% of all the barrels available in the latest allocation under the Trump Administration's efforts to reduce fuel prices. In March, the Trump administration released 172 million barrels of oil from the SPR as part of a coordinated effort with the International Energy Agency. The goal was to reduce fuel prices which spiked following the U.S. and Israeli war against Iran that began on February 28. U.S. has so far granted contracts for the loan of approximately 133 million barrels. On June 10, the Energy Department announced its latest offer of a?SPR. It said it wanted to lend energy companies up 40 million barrels. The Energy Department announced on Monday that Vitol, an energy trader, was awarded a contract to purchase 500,000 barrels. The companies that borrow the oil must return it in its original volume, plus a premium of up to 24 percent as extra oil. The Department of Energy says the system will "stabilize markets without costing taxpayers in the United States." Energy Secretary Chris Wright has said that 35-40 million barrels extra of oil will be returned to the U.S. taxpayers this year and next as premiums. Oil prices have dropped as concerns about supply eased following the signing of a 60-day ceasefire agreement between Washington and Tehran. U.S. Vice President JDVance said on Monday that progress had been made with Iran in the talks and that the Strait of Hormuz was now open for trading energy. Reporting by Ismail Shakil, Editing by Andrea Ricci
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Dollar climbs following US-Iran talks; pound is choppy after Starmer's exit
?The?dollar rose on Monday, as optimism about a possible peace deal was boosted by the first round of U.S. - Iran talks. Meanwhile,?the pound rose in choppy 'trading' after British Prime Minister Keir?Starmer announced that he would resign. After the first round of talks in a budding deal, the U.S. lifted sanctions against Iran for a period of 60 days. Officials reported calm after fighting had led Iran to declare that the Strait of Hormuz was closed. U.S. crude fell 1.84%, to $75.19 per barrel. Brent dropped to $77.93 a barrel, down by 3.29%, on Monday, after the first talks under a budding peace deal. The dollar index (which measures the greenback versus a basket of currencies) rose by 0.16%, to 101. The euro fell 0.36%, to $1.1427. The European Central Bank's Christine Lagarde stated that the inflation shock in the?eurozone is too big to ignore, but not large enough to cause price increases or dangerous second-round effects. POUND RETURNS AS 'POLITICAL UNTRUTH LOOMS Sterling recovered from a session-low of $1.3175 after Labour leader Starmer announced he would step down, allowing Andy Burnham the opportunity to become the seventh Prime Minister in 10 years. Marc Chandler, Bannockburn Capital Markets' chief market strategist in New York said that he thought the bond market vigilantes would act as a safeguard against the next UK government moving too far to the left. The bond market is what will determine the credibility of a new government. The last increase in the sterling price was 0.08%, to $1.3243. The yen is near a 40-year low. After hitting 161.92, the dollar rose 0.14% to reach 161.50, just a few cents shy of the two-year-low reached last week. If the yen breaks above 161,96, it will be at its lowest level since 1986. The Japanese yen experienced several sharp movements in which it briefly strengthened against greenback. Satsuki Katayama, the Japanese Finance Minister, said that after the Bank of Japan increased rates last week as was widely expected, authorities are prepared to react appropriately to currency movements at any time. The yen lost?gains after a series of interventions on April 30. A shift in focus from the Federal Reserve led traders to expect rate increases this year. This has favored the dollar. Chandler warned that "people should be alert for BOJ interventions and perhaps even positive comments from the U.S." BofA Global Research and Deutsche Bank both revised their Fed forecasts on Monday, including rate hikes for September. BofA expects the central bank to raise rates 25 basis points in each of September, October, and December. According to CME FedWatch, the markets now price in a 38.5% probability of a rate increase at the Fed meeting on July. This is up from 6.4% one week ago.
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As Europe heats up, at least 18 people, including two children, have died in France.
As a heatwave gripped Europe on Monday, breaking temperature records across several cities, at least 18 people died in France. Forecasters in Britain said temperatures in June could be higher than ever before, as schools in France closed their doors or changed their schedules. Bordeaux, France's west wine country, saw its temperature rise to 41.9 degrees Celsius. This is a new record for the region. In central France, it reached 41.2 C. This was higher than the previous record set in 1947. Climate Monitor shows that Europe is the continent farthest away from its historical norm for Monday. A report from the World Meteorological Organization in April found that Europe is warming up at a rate more than twice as fast as the rest of the world. TWO CHILDREN PERISH IN A HOT CAR A prosecutor from Carpentras in southeast France said that first responders in Carpentras were unable resuscitate the two children who were unconscious in their family car outside their home. According to a local government official,?Sophie Brocas, late Sunday night, three elderly people aged 80-95 died in Bordeaux due to heat related illnesses. Jerome Boulanger, a spokesperson for the French Civil Safety service, said that 13 drownings were reported between Sunday and Monday. Last year, drownings in France increased by 172% during heatwaves when swimmers sought to cool down. Clair Barnes is a research associate at Imperial College, London, who specializes in extreme weather, climate and climate change. She said that the heatwave in Europe takes the form of an Omega block, which has a bulge in the middle of the letter and cooler air on either side. It's drawing hot air from North Africa and the Sahara up, which is why we're experiencing this intense heat. "It's slow-moving and there's no breeze, no wind to provide some relief," she said. Climate change is causing heatwaves and storms to intensify, driving temperatures up and causing increased rainfall, said she. UK HEAT WILL BREAKING JUNE RECORD SET INS 1976 Met Office, Britain’s national weather forecaster said Monday that a heatwave lasting four days could easily push temperatures over 39 C in some places, breaking the record set by 35.6 C in June 1957 and 1976. Only a few short weeks ago, Britain's record for the highest temperature in May was broken. Lewis Jennings said, while walking through central London: "Thirty six degrees will be disgusting." Meteo-France's preliminary data indicates that Paris is expected to reach its highest temperature in June with a mercury reading of 38.4 C. Ruben del campo, spokesperson of Spain's AEMET Weather agency, said that temperatures are between 5 - and 10 - degrees above average for this time of the year. In some northern areas, they may even be more than 10 - degrees above average. RED HEATWAVE ALERTS ACROSS ITALY Italy issued heatwave alerts on Monday for 12 cities. Utility?Iren is doubling the number of workers and adding generators in Turin to deal with sporadic power outages as the grid becomes overloaded, according to a spokesperson. Romaine de Jägere, the founder of the Centre for the Rehabilitation of Animals 'Living in the Wild Refuge in Temploux, Belgium, explained that birds such as swifts and swallows who nest in the eaves of rooftops have been affected most by the abnormally high temperatures. "Temperatures on the roofs can reach up to 60 degrees Celsius at times." De Jaegere added that 150 animals had been taken in by the shelter in the past three days. Reporting by Lewis Macdonald in Paris and Makini in Gdansk; Emma Pinedo and Giancarlo Navich in Milan; Sarah Young in London and Zoran Mikletic and Andrew Heavens in Brussels. Writing by Charlie Devereux. Editing by Alexandra Hudson.
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Ukraine says it struck Russian missile electronics plant, governor says five dead
Ukraine's military said that it hit a factory producing electronics for missiles in Russia’s border Voronezh Region on Monday. The?Russian area's governor reported five 'people' killed and dozens injured in the attack. The Ukrainian military's missile attack on Voronezh is the latest long-range strike to hit Russia's defence industries. The Ukrainian General Staff claimed that it used air-launched missiles to strike the facility. It described the facility as a "critical" component in Russia's defense production. It posted on Telegram that "It produces electronics used in Russian weapons, in particular the Iskander tac missile system." Alexander Gusev of Voronezh Region, in a Telegram message, described the main target as "an industrial establishment on the left side of the Voronezh River, the provincial capital." "We suffered extremely heavy losses today. Gusev stated that five people died as a result a missile strike on the city. "Several dozen citizens requested medical assistance, but the majority were sent home once they received treatment." Gusev reported that 10 apartment buildings as well as six private residences were damaged. The governor had earlier claimed that Russian air defences destroyed several high speed targets above the city. A video taken from a passing car, and verified by?, shows large plumes of smoke rising out of the factory in at least two places. Robert Brovdi said that his drone units took part in the operation along with?other forces. In the last few months, Kyiv has targeted several Russian military production facilities. Russian air attacks have a much greater reach in Ukraine despite Kyiv’s increased capabilities. A top Ukrainian drone manufacturer, General 'Cherry', revealed on Monday that one of its factories was hit. This is a rare disclosure. Max Hunder, Kyiv bureau and Bahareh Khosabandeh, Additional reporting by Ron Popeski, Cynthia Osterman, Andrew Cawthorne and Daniel Flynn.
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Oil prices fall as US-Iran optimism about peace lowers gold prices
Gold prices rose on Monday, after recovering from a?low? of over a week in the previous session. Progress in U.S. Iran peace talks helped to stabilize oil prices, and eased inflation fears. Gold spot rose 0.5%, to $4.182.39 an ounce at 1:50 pm. ET (1750 GMT). On Friday, prices reached their lowest level since June 11. U.S. Gold Futures for August Delivery? Settled 1% Lower at $4,202.7 per ounce. Ole Hansen, analyst at Saxo Bank, said that energy prices would remain the key driver of precious metals in the short term. We're watching the bumpy discussions in Switzerland between?U.S. Iran and the United States are still on track to reach a deal which would bring new barrels of oil onto the market, Hansen said. This would put pressure on crude prices as well as help gold. JD 'Vance, the U.S. vice president, said that talks in Switzerland with Iranian officials had "laid a good foundation" for an eventual peace deal despite tensions surrounding the Strait of Hormuz. Brent crude futures dropped more than 3% following the announcement. According to the CME FedWatch Tool, traders see an 89% probability of a rate increase in December. This is up from 61% prior to the Federal Reserve meeting last week. Nine out of 19 Fed policymakers think they'll need to increase the?policy interest rate this year. Gold, despite its reputation as an inflation hedge, tends to lose appeal when interest rates increase, as it becomes less appealing relative to other investments that pay interest. Bank of America stated in a note published on Friday that the $6,000 per ounce gold target is 'unlikely', since the market would have to price rate increases into their prices to reach such levels. The original premise that underpinned the bank's bullish gold call -- an unorthodox U.S. Macro Policy -- remains intact, according to the statement. (Reporting by Sukanya Mitra and Ashitha Shivaprasad in Bengaluru Editing by Leroy Leo and Vijay Kishore) (Reporting and editing by Leroy Leo, Vijay Kishore and Ashitha shivaprasad from Bengaluru)
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The US Strategic Petroleum Reserve has seen its lowest oil stocks since 1983
The?stocks of crude oil in the United States have fallen to their lowest level since June 1983. The Strategic Petroleum Reserve dropped to 331.2 million 'barrels' last week. This is the lowest level since June 1983, according data from the Department of Energy. Supplies continued to tighten as a result of the U.S. - Iran war. The government's emergency stock fell by 9.05?barrels. This is the third-largest draw ever recorded. The drawdowns were a part of an agreement between the U.S. and Canada to release 172 millions barrels from the facility in order to lower fuel prices. U.S. crude oil stocks have declined rapidly in recent weeks as a result of strong demand for American oil from exporters and refiners. Since the beginning of the war at the end February, U.S. overall inventories have dropped by 96.2 millions barrels. They are now the lowest they've been since 1985. Cushing is the main oil storage hub in Oklahoma, and also the price point for U.S. West Texas Intermediate crude oil futures have dipped to a low of?around 20 million barrels. This is considered a operational low for the tank storage farm. The latest SPR 'loans' require companies to borrow oil and return it in its original volume, plus a?premium, which is?extra oil. The Department of Energy says the system will stabilize markets without costing U.S. tax payers. Reporting by Arathy S. Somasekhar, Houston; editing by David Gregorio
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Oil prices fall as US-Iran optimism about peace lowers gold prices
Gold prices rose on Monday as the U.S. and Iran peace talks impacted oil prices. This helped to ease inflation fears. Gold spot rose 0.4%, to $4174.90 an ounce at 12:12 pm. ET (1612 GMT). On Friday, prices reached their lowest level since June 11. U.S. Gold Futures for August Delivery fell?1.2%, to $4193.90 an ounce. Ole Hansen, analyst at Saxo Bank, said that energy prices would remain the key driver of precious metals in the short term. Hansen said that the "bumps" in the talks between the U.S. and Iran are still pointing to a deal which would essentially add new barrels of oil into the market, putting pressure on the crude prices. JD 'Vance, the U.S. vice president, said that talks with Iranian officials in Switzerland laid "a good foundation" for an eventual peace deal despite tensions surrounding the Strait of Hormuz. Brent crude futures dropped more than 3% following the announcement. According to the CME FedWatch Tool, traders see a 90% probability of a rate increase in December. This is up from a 61% chance before the Federal Reserve meeting last week. Nine out of 19 Fed policymakers think they'll need to increase the policy rate this year. Gold, despite its reputation as an inflation hedge, tends to lose appeal when interest rates increase, as it becomes less appealing relative to other investments that pay interest. Bank of America stated in a note published on Friday that the $6,000 per ounce gold target is 'unlikely', since the market would have to price rate increases into their prices to reach such levels. The original premise that underpinned the bank's bullish gold call -- an unorthodox U.S. Macro Policy -- remains intact, according to the statement. Silver spot rose by 0.5%, to $65.24 an ounce. Platinum gained 0.1%, to $1,666.45, and palladium fell 0.5%, to $1,251.92. (Reporting and editing by Leroy Leo, Vijay Kishore and Ashitha Shivprasad from Bengaluru)
Oil prices fall as worries about rates offset optimism over Iran talks.
The global stock market was mostly flat Monday, while oil prices dropped. This was due to a combination of 'expectations' that higher interest rates would be imposed on the U.S. Treasury. U.S. Vice-President JD Vance stated in Switzerland that Iran has agreed to let nuclear inspectors enter the country. The conversations about the inspections could begin as early as this week. Treasury Department of the United States authorized Iranian crude oil, petrochemicals and petroleum products sales through August 21. This eases decades-old sanctions and pushes towards a final peace agreement with Iran. In exchange for?commitments to nuclear inspections and free passage through Strait of Hormuz.
Wall Street's benchmark S&P 500 index and Nasdaq fell on?the?day, dragged lower by consumer discretionary and communication services stocks. The Dow rose.
The Dow Jones Industrial Average increased by 0.13%. The S&P 500 dropped by 0.46%. And the Nasdaq Composite was down 1.32%.
The STOXX 600 index in Europe was up by 0.58%. MSCI's global stock index fell by 0.08%.
The apparent progress in peace talks has helped Asian stocks to rise overnight. MSCI's broadest Asia-Pacific index outside Japan closed up by 0.82%.
Gerry Sparrow is the chief investment officer of Sparrow Capital Management. He said that markets are driven by the Fed's hawkish view and a reduced expectation that new Fed Chair Kevin Warsh will begin to cut rates.
Sparrow stated that the market was surprised by the action of the new Fed Chair, as they expected him to be more lenient on interest rates. Last Wednesday, the Federal Reserve held interest rates at their current level. However, policymakers are expecting a rise in borrowing costs this year due to growing concerns over inflation that is above the U.S. Central Bank's 2% target.
The yield on the benchmark U.S. 10 year notes increased 5.78 basis points to 4.50%.
Brent crude futures settled lower by 3.38% at $77.90 per barrel, a far cry from their peak in May of $126.41.
Sparrow stated that "the?progress of peace talks was good, but the only disappointment was that the new Fed didn't seem to be a bit more accommodating during its most recent announcement."
UK POUND RISE AFTER STARMER'S RESIGNATION The pound rose following the resignation of Prime Minister Keir. This paved the way for Britain to elect its seventh leader in ten years.
The pound recovered from earlier losses to reach $1.3243, up 0.06%. Andy Burnham, the former Manchester mayor, is the "favorite" to succeed Starmer. However investors say that a key question facing nervous UK bond markets will be who will become finance minister.
The euro fell 0.38%, to $1.1424 after hitting a low of $1.1418 on Friday. The dollar rose 0.14% to 161.51 yen. Only the threat of Japanese interference prevented the currency from reaching its 40-year high in 2024 of 161.96.
The dollar index (which measures the greenback in relation to a basket including the yen, the euro and other currencies) rose by 0.18%. Gold spot rose by 0.76%, to $4192.46 per ounce.
(source: Reuters)