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Gold prices rise on US-Iran truce; Fed decision is imminent
Gold prices rose on Monday, as investors waited to see what the U.S. Federal Reserve will do about its policy later this week. By 0421 GMT, spot gold had risen 0.9% to $4.087.79 an ounce. U.S. Gold Futures rose 0.5% to $4089.90. Tim Waterer is the chief market analyst of?KCM Trade. The U.S. Dollar Index fell by 0.3%, making metals priced in greenbacks more affordable to other currency holders. Iran will halt its attacks if the United States also does so, a senior Iranian government official said on Sunday. After President Donald Trump's advisors informed him that they were running out targets and worried about depleting U.S. weapons, the United States put a halt to its bombing campaign. The oil price was down by more than 4% for the day. Oil prices have risen since the beginning of this conflict, causing inflation fears and central bank rate increases. Gold, despite being traditionally considered as an inflation hedge is becoming less appealing as rising interest rates increase the opportunity costs of holding non-yielding gold. "Longer-term, I remain constructively bullish about gold." Waterer stated that the fate of gold is directly tied to where oil prices are headed. The path upwards is likely to be volatile and heavily influenced geopolitically until a more durable peace is achieved. Market participants expect the Fed to leave rates unchanged at its meeting on July 28 and 29. According to the CME FedWatch Tool, traders are pricing in a 76% probability of a September?hike. Silver spot rose by 1.7%, to $59.16 an ounce. Platinum rose by 1.5%, to $1.612,04, and palladium climbed 1.6%, to $1.263.73. (Reporting and editing by Subhranshu Sahu, Ronojoy Mazumdar and Ashitha Sinha from Bengaluru)
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Markets are hopeful as US and Iran hold off on war.
Wayne Cole gives us a look at what the future holds for European and global markets. The Gulf has settled into a fragile truce as the U.S. military halted its attacks in part due to concerns that it was running low on ammunition. Iran also said that it would hold off until the U.S. Hold off. Investors have viewed the Houthis' attack on Saudi Arabian oil facilities as a de-escalation step and have pushed Brent down 4%, to $92.80. The $100 mark seems to be where the U.S. blinks. Oil needs to remain close to this level to keep both sides talking. The Nasdaq Futures are up 1%, but Asian stocks are easing?in case this week's flurry of tech earnings stokes concerns about the massive amount of capex being spent on AI. A Wall Street Journal article reported that Nvidia had been in discussions to provide an estimated $250 billion as part of a project for a data center. This week, companies reporting include Microsoft, Meta Platforms (Amazon), Apple, Qualcomm and a number of industrial, defense and healthcare stocks. This week, about a third of S&P500 companies will report their earnings. Earnings are expected to increase by 26.5% compared to last year. However, even this may not satisfy the sky-high expectations. CXMT Corp. shares have surged by 500% since their Shanghai debut, after the company raised 8.6 billion dollars in Asia's largest initial public offering of this year. Oil's retreat helped bond prices rally following a difficult run last week. Fed funds futures, meanwhile, have removed 2 to 3 basis points from the curve. Markets still have a 'one in three chance' that the Federal Reserve will hike this week. Most analysts believe that Chair Kevin Warsh does not want to tighten, but it is possible for there to be one or two dissenters in favor of an immediate increase. Both the Bank of Japan and Bank of England will meet on Thursday. They are both expected to remain cautious and steady, while still assessing inflation risks. Singapore's central banks balance of risk was illustrated on Monday when it surprised the world by tightening its own monetary policy by allowing its currency to appreciate a little faster. Market developments on Monday that may have a significant impact German Ifo Business Sentiment for July - U.S. durables for June
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The oil price decline and de-escalation in the Middle East have led to a rise in copper prices.
Prices of copper rose on Monday as a result of a tentative?halt to fighting between the U.S.A. and Iran, and relief in the oil market. Benchmark three-month Copper on the London Metal Exchange gained 0.26% to $13,681 per metric ton at 0300 GMT. The most traded copper contract at the Shanghai Futures Exchange rose 0.27% to 105,010 Yuan ($15.515.43) per metric ton. After 13 nights of airstrikes, the U.S. announced that it was stopping its attacks on Iran. Tehran also said that it would cease its retaliatory strikes. Oil prices were able to recover a little from the?tentative ceasefire. Brent crude dropped more than 4% on Monday. Last week, it had reached $100 per barrel for the very first time. Energy costs are high, and this can cause people to bet on higher interest rates. This could have a negative impact on commodities like copper that depend on economic growth. Market participants will closely monitor the U.S. Federal Reserve's?meeting on Wednesday for their interest rate decision. According to CME's FedWatch, interest-rate traders have priced in a 63.7% probability that there won't be a rate change during this meeting. Dollar index fell, while gold prices rose. The?dollar is cheaper, making commodities such as copper that are traded in greenbacks more affordable to buyers who use other currencies. The?stocks of copper outside the U.S. are dwindling. The metal was shipped in large quantities ahead of potential tariffs on refined Copper. Copper in SHFE-monitored storages in China's top consumer, China Overall LME copper stocks fell 12.9% to their lowest level since Feb 2024 at 69.610?tons. Overall LME Copper Stocks The lowest level since March. Aluminium slid 0.11% among other LME metals. Zinc climbed 0.31%. Lead dipped by 0.16%. Nickel lost 0.63%. Tin grew 0.78%. Other metals on SHFE also slid 0.15%. Zinc gained 0.32%. Lead lost 1.17%. Nickel lost 0.39%. Tin rose 1.76%. $1 = 6.7681 Chinese Yuan Renminbi (Reporting and editing by Ronojoy Mazumdar).
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Seattle shooting leaves two dead and five injured, according reports
Local news reports said that at least two people were killed and five others, including an?2-year old child, 'were injured' in a shooting on Sunday, which took place during a food festival in downtown Seattle. The police said that multiple people were shot in the United States. On Sunday evening, the downtown area of the city was a scene of violence. Seattle police posted on social media X that "Please avoid the Area" in reference to the?Seattle Center where the Bite of Seattle festival was taking place. Police are investigating an incident. Multiple shooting victims. Seattle Center shot at by gunfire. Seattle Fire Department, Seattle Times and KOMO local TV reported that two people had been killed and five others?injured. The Seattle Times reported that witnesses heard several shots around 6 p.m. (0100 GMT).
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Bankers claim that India's UltraTech Cement is planning to raise its largest rupee debt financing.
Two bankers familiar with the matter said on Monday that India's UltraTech Cement was in discussions?with merchant banks and arrangers about raising?its largest rupee bond funding. It is looking to tap the debt markets before the central bank makes its policy decision next Thursday. Sources who requested anonymity because the talks were still private said that the country's biggest cement producer by production capacity planned to raise 50 billion rupees (517.80 million dollars) in bonds with maturities of two-and a half years, three and a half years, and five years. The target is?15 billion each for the two shorter tranches, with annual coupons of 7.22% and 7.23% respectively, as well as 20 billion rupees on the five-year tranche, at 7.25%. Bankers stated that UltraTech wanted to close the deal before the Reserve Bank of India made its monetary policy announcement on August 5, The company didn't respond to an email asking for a comment after regular business hours. Bankers said that the bonds were rated AAA by Crisil, and they may be in demand from mutual fund managers looking for high-quality credits. UltraTech will raise 10 billion rupees in March 2025 through bonds with a coupon of 7.34 percent per year. The country has outstanding bonds worth 35 billion rupees, of which 5 billion rupees are due in the next month. Cement maker reported nearly 17% increase in first-quarter profits earlier this month. It used its'scale and market position' to absorb higher fuel costs related to the Middle East Conflict better than smaller competitors.
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CXMT chipsets soar 470% in Shanghai debut to lead China's valuation
?Shares in CXMT Corp soared 470% at?their Shanghai debut?on Monday, in Asia's largest IPO of the year. This catapulted the chipmaker to China's top stock market by valuation despite a selloff of global tech stocks. Stocks began trading at 49.50 Yuan, compared to the 8.66 Yuan sale price per share. CXMT's market cap increased sharply in the first minutes, from $85.5 million during the IPO to 3.3 trillion yuan (487.31 billion). The shares briefly fell to 38.11 Yuan before quickly recovering and were trading at 49.51 Yuan by 0236 GMT. CXMT's explosive debut has made it the most valuable listed company in China. It now surpasses the previous market leader,?Industrial and Commercial Bank of China. CXMT's initial rally easily?surpassed the more than doubling of China?Resources New Energy following its $3.6 billion IPO earlier this month in China. Investors will be able to gauge how much money they are willing pay for an iconic Chinese chip company, while local markets continue to navigate the volatility that has followed a selloff triggered by AI, and as money is shifted between high-growth tech names and safe sectors. CXMT (formerly ChangXin Memory Technologies) raised 57.92 bn yuan (8.6 bn dollars). The proceeds could reach 66.61 bn yuan, if the over-allotment feature is used in full. CXMT's IPO price was 579 billion yuan, or $85.5 billion, before?the exercise of the over-allotment options. This made it one China's biggest listed semiconductor companies. CXMT’s expanded share capital is largely locked up, so only 6.73% was available for trading at the time of listing. The initial float of a small amount could lead to a large number of price fluctuations and high turnover. HSBC Qianhai Securities stated in a report last week that 'the offering could drain the liquidity from the broader Chinese market both before and during its debut, but past technology listings have suggested a recovery could occur the following trading day.
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Oil slips and shares, bonds, and bonds gain a cautious profit
The share markets responded with a cautious response Monday, as the pause in fighting around the Gulf brought oil prices down. This lowered inflation risks while boosting bonds in anticipation of a busy week filled with central bank meetings and earnings reports. Iran announced on Sunday that it would cease its "own" attacks as long as the United States followed suit. The U.S. army was reportedly worried about the dwindling supply of ammunition. Yemen's Houthis, who are aligned with Iran, have still continued to attack Saudi oil installations on the Red Sea Coast, a threat to another vital waterway for the global oil trade. Sally Auld is the group chief economist of NAB. She said, "It appears that developments in the Middle East moved in a more positive direction this weekend. This lends some credence to the idea that oil prices above $100 per barrel seem to encourage de-escalation from both sides." Brent crude fell 5.2% to $91.73 per barrel during the lull of fighting over the Strait of Hormuz, while U.S. Crude dropped 5.4% at $84.45. Oil's decline has eased inflation concerns and caused markets to reduce the likelihood of Federal Reserve rate increases. Markets indicate that the central bank will meet on Wednesday, and a rate hike is around a 1 in 3 chance. However, most analysts do not believe Chair Kevin 'Warsh will be supportive of such a move. Goldman Sachs analysts noted that investors see the outcome of July's meeting as "unusual uncertain" because of recent divisions within the Fed, Warsh’s position is unclear and some of re-escalation of tensions with the?Iran took place during the blackout. "There is likely to be at least one dissident in favor of a hike this week, but the majority of voters are unlikely to do so after the June inflation figures were softer." Bank of England meets on Thursday, while Bank of Japan meets on Friday. Both are expected to remain cautious and hold their ground despite the softer inflation data for June. Earnings from TECH BULLS S&P futures rose 0.7% and Nasdaq futures 1.1% as equities found comfort in the decline in oil prices and yields. In Europe, EUROSTOXX Futures rose by 0.4% while DAX Futures rose by 0.6%, and FTSE Futures were flat. South Korea's index of chips-heavy stocks, the Chip Index, fell 1.1%. The broadest MSCI index of Asia-Pacific stocks outside Japan remained unchanged. Chinese blue chips rose 0.4% after?chipmaker CXMT Corp surged by 470% on its Shanghai trading debut, having raised $8.6 billion through Asia's largest initial public offering. According to data from?LSEG, IBES, about a third of S&P500 companies will report earnings this week. Earnings are expected to increase by 26.5% compared to last year. Even blockbuster results might not be enough to satisfy investors, given the high expectations and the mounting concern over AI capex. A WSJ article reported that Nvidia had been in talks with OpenAI to provide a $250 billion backstop as part of a project for a data centre. Tech darlings Microsoft, Meta Platforms, Amazon, iApple, and Qualcomm are among the companies reporting. Also included in this list are a number of industrial, healthcare, and defence stocks. The U.S. Q2 GDP is a highlight, with growth accelerating to 1.5% on an annualised basis after a softer start to the year. The 'daily' also includes the PCE price index for June, personal income, consumption, weekly unemployment claims, Q2 Employment Cost Index, and July Michigan Consumer Sentiment. The Euro Zone's schedule includes the flash Q2 GDP (Gross Domestic Product), July economic sentiment, consumer confidence and flash inflation. The drop in oil prices helped the 10-year Treasury yields to fall by 4 basis points, from 4.63% to 4.63%. This also pushed the dollar down. The euro rose 0.3% to $1.1408 while the dollar fell 0.2% against the yen, to 163.54. The Singapore dollar grew after the central bank of the country unexpectedly tightened its monetary policy, allowing the currency to appreciate at a faster rate. The drop in yields has helped gold that does not pay interest to climb by 1.3%, reaching $4,103 per ounce.
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Iron ore slumps as China's demand falters, despite stimulus hopes
Iron ore prices fell on Monday as a result of a seasonally 'faltering' demand, and the thinning margins in steel production in China, the top steel consumer. This tempered hopes that Beijing would announce stimulus measures later this week to boost China's economy. Iron ore, the most traded contract at China's Dalian Commodity Exchange(DCE), recovered earlier losses and was trading up 0.07% to 743.5 Yuan ($109.89). As of 0251 GMT, the benchmark August iron ore traded on Singapore Exchange was down?0.61% at $97.55 per ton. After steel demand seasonally declined and margins shrank, several Chinese steelmakers began equipment maintenance. Data from Mysteel revealed that the average daily hot metal output, which is a measure of iron ore consumption, fell for the third consecutive week by 0.6% compared to the previous week. This was the lowest level since April 3. Analysts at Everbright Futures stated in a report that the market is focusing on the Politburo meeting scheduled for end-July, when policymakers are expected to strengthen countercyclical policies and introduce incremental measures to stabilise economic development. Coking coal and coke both increased in price, but other steelmaking?ingredients remained mixed. The benchmarks for steel on the Shanghai Futures Exchange mostly moved up. Rebar gained?0.33%; hot-rolled coils advanced?0.43%; wire rod gained 0.21% while stainless steel fell 0.24%.
As oil prices fall, the Australian and New Zealand dollar rates are rising.
The Australian and New Zealand dollar strengthened on Monday, as hopes for a diplomatic resolution to the Middle East conflict sent oil price?lower. This eased inflation concerns and helped boost global bond markets.
The Aussie gained 0.2%, to $0.7001, following a 0.3% gain on Friday. It is little changed from last week. The Aussie has moved away from its three-month-low of $0.6867. Resistance is seen at the one month peak of $0.7026.
New Zealand's dollar rose 0.2%, to $0.5798, after finishing last week down by 1%. This was primarily due to losses against the Australian dollar. The 200-day moving median of $0.5822 is seen as a resistance.
The Aussie rose 0.1% to NZ$1.2068 against the Kiwi after gaining 1% in one week. The gains were supported by a stronger-than-expected ?jobs report that led markets to almost fully price in a fourth interest-rate increase from the Reserve Bank of Australia this year.
Investors will be focusing on the quarterly inflation data due Wednesday. Economists expect that the trimmed measure of core inflation will rise by 0.9% in the second quarter and bring the annual rate up to 3.7%. This would still be above the RBA target range of 2%-3%, but lower than the central bank's expected 3.8%.
Paul Bloxham is the chief economist of HSBC. He said that if core inflation does not surprise in a significant way this week, then RBA will be able hold steady.
"However inflation is still high and the job market is likely to still be considered 'a bit tight' despite loosening. The board may still decide that tightening of the monetary policy is necessary.
The markets have lowered the likelihood of a RBA rate increase next month from 40% to 30%, while a November hike remains "around 80%" priced in. RBA Governor Michele Bullock will speak on Tuesday, and she could adopt a hawkish tone in light of the recent 'escalation' of the Gulf Conflict.
Australian government bonds recovered from heavy losses last weekend. After a surge of 23 basis points, the yield on three-year bonds fell by 9 basis points, to 4.635%. The yield on 10-year bonds dropped by 7 basis points, to 5.015%.
New Zealand's key two-year swap rate fell 6 bps, to 3.7219% after a 20 bps jump last week.
Markets now expect 3.0% in December and 3.5% at the beginning of next year.
(source: Reuters)