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Ampol's Lytton quarter refining margin has more than tripled on the back of higher oil prices
Ampol, Australia's refinery, reported on Thursday a 255% increase in its second-quarter margins. This was attributed to a rise in oil prices due to the Middle East conflict as well as disruptions in shipping through the Strait of Hormuz. The top fuel retailer in the country said that its Lytton refinery margin?rose from $8.71 to $30.93 a barrel, compared with a year ago. Ampol shares rose by 3.4% to their highest level since April 2024. The higher refining margin highlights how geopolitical tensions - in the Middle East - boosted profitability during this period as concerns over fuel supply disruptions pushed up prices. Ampol stated that the closure of the Strait of Hormuz for a prolonged period of time has reduced crude oil supplies to Asian refiners. This in turn has led to a reduction of refinery activity, and a rise in refined fuel margins due to the product shortages. Fuel retailer said that its replacement cost operating profit EBIT for the first half of this year is expected to be around A$1.35billion ($965m), which is more than?triple what it was a year ago. The total volume of sales for the second quarter was 6,176 millions litres, up from a year ago's 6,304 million litres. Ampol has also reported a production impact of?about 300 million litres? (ML)?from planned maintenance?shutdowns between August andOctober.
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Oil prices continue to fall as tankers continue to travel through Middle East conflict zones
Oil prices lost some of their gains as oil tankers 'continued their journey out of the Middle East despite the escalating tensions in the region, and the U.S. - Iran war spreading beyond the main fronts. Brent?futures dropped 79 cents or?0.9% to $87.30 per barrel at 0015 GMT. ?U.S. West Texas Intermediate crude (WTI), which is the most widely traded oil in the United States, fell 76 cents or 0.9% to $83.70 per barrel. Brent closed up 7.91% and WTI was up 6.56% during the previous session, in one of most dramatic spikes in the Iran War. This reversed a 5% drop on Tuesday following a pause of hostilities between the U.S. and Iran war. Preliminary shipping data revealed that 39 commodity ships transited the Bab 'el-Mandeb Strait on Tuesday. This was the highest number of vessels since July 19. Only a handful of ships crossed the Strait of Hormuz. While overall volumes have been reduced, oil is still leaking out of the area through multiple channels. Additional workarounds are also being explored. "The longer this situation continues, the more these alternate routes and methods will erode Iran’s leverage over the 'Strait of Hormuz", IG market analyst Tony Sycamore stated in a recent note. Strait of Hormuz is the most important oil shipping route in the world, and around a quarter of all global oil and natural gas flowed through it. The strait has been mostly blocked since the U.S. - Iran war began in February, despite diplomatic efforts to find a solution. A senior Iranian official stated on Wednesday that Iran had rejected an Omani proposal for regional joint management. U.S. and Saudi strikes?hit Iran backed paramilitary in Iraq on Tuesday, marking the first time Saudi publicly joined U.S. aerial strikes in response to drone attacks against Saudi oil targets launched from Iraq. It was the first time since the weekend that President Donald 'Trump called off an air campaign due to dwindling supplies of munitions. Iran said it also fired on U.S. base in Jordan, and hit three tankers that were transiting Strait of Hormuz via an unauthorised route. Saudi Arabia, according to sources on Wednesday, is seeking to form a coalition in order to protect Red Sea shipping against Houthi attacks. The Iran-backed 'group in Yemen' announced on July '20 that they would impose a maritime blockade on Saudi Arabia on the Red Sea. They also said they would expand attacks on oil tankers, opening a new front in Iran War, in a bid to disrupt shipping through the Bab el-Mandeb strait. This is the second-most important oil shipping route. (Reporting and editing by Lincoln Feast.
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US Dollar stocks fall after Fed keeps rates unchanged
The dollar fell on Wednesday, U.S. stock prices extended their losses, and interest-rate-sensitive two-year Treasury yields declined after the Federal Reserve kept interest rates unchanged. Meanwhile, oil?prices soared in response to renewed attacks across Middle East. The ?Fed's decision was largely expected, but three of the 12 members ?of ?the policy-setting Federal Open Market Committee dissented from the move that left the benchmark interest rate in the 3.50%-3.75% range in favor of a quarter-percentage-point hike. After major airstrikes resumed, oil prices rose by about 8%. This raises the possibility of further disruptions in already strained global energy supplies. This rally was boosted by data from the industry showing a decline in U.S. oil inventories. Bill Merz is the head of capital market research and portfolio development at U.S. Bank Wealth Management, Minneapolis. Oil prices rose, and expectations were raised that the U.S. The central bank may raise rates this week despite the fact that inflation in June was lower than expected. JP Powers said that this was expected after the June inflation print showed progress. "But with each meeting, we are creating more uncertainty than ever before." Fed funds futures traders now price in 60% odds that a rate increase will occur in September. The bigger question is how much pressure they will have to exert in order to raise rates in September. The market is expecting the next rate hike in September, as the inflation rate is high and crude oil prices are surging. The Dow Jones Industrial Average dropped 2.2% to 51,594.86, while the S&P 500 fell 1.5% to 7,316.39, and the Nasdaq Composite declined 1.7% to 24,442.94. The MSCI All Country World Price Index dropped by 1.1%, to its lowest level in June 2011. The yield on the benchmark U.S. 10 year notes increased 7.53 basis to 4.679%. This is due to concerns over future inflation. The dollar index (which measures the greenback versus a basket including the yen, the euro and others) fell by 0.45%, while the euro rose by 0.54% to $1.1447. Worries about tech giants The global markets have been volatile in the past month, as investors questioned the sustainability of AI spending. This is due to signs that U.S. major companies continue to invest billions of dollars into AI at the expense free cash flow. Meta missed earnings on Wednesday and lowered its annual capital budget forecast range as the social media giant focuses on building data centers to increase its AI computing power. The focus is now on returns, not spending plans. Investors are looking for evidence that AI capex generates revenues right now and also strengthens the future growth prospects," said Gina Martin Adams. Gina Martin Adams is chief market strategist at HB Wealth. As China's competition intensifies in both the race to develop advanced chip technology and its cheaper AI models, investors are becoming more scrutinizing. Amazon.com and Apple are expected to release earnings this week. Even though SK Hynix reported a six-fold increase in its quarterly profit, it fell short of expectations. Its shares dropped 9.6%. South Korea's KOSPI fell 6% in a single day after falling more than 10% and reaching a new three-month low. South Korea will impose additional restrictions on leveraged single-stock exchange-traded fund (ETFs) in response. This includes a cap on an individual's investments of up to 20%. The pan-European STOXX 600 fell by 0.3% while the FTSEurofirst 300 index in Europe fell by 0.4%.
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US stocks continue to fall after Fed maintains rates
?U.S. Stocks remained lower for the day. Interest-rate sensitive yields on 2-year Treasury notes reversed an earlier rise and the dollar fell?on Wednesday, after the Federal Reserve kept interest rates steady. This was a move which economists had expected. The ?decision to leave the benchmark interest rate in the 3.50%-3.75% range drew dissents from three of the 12 members of the policy-setting Federal Open Market Committee that "preferred" a quarter-percentage-point hike at this meeting. The recent rise in oil prices, due to the return of the war against Iran, had some expecting that the U.S. Central Bank would raise rates this week. The U.S. central bank is still raising rates despite the fact that June's inflation data was lower than expected. JP Powers is chief investment officer of TWA Wealth Partners. He said that this was expected after the June inflation print revealed some progress. "But with each meeting, we are now creating more uncertainty than ever before." The Dow Jones Industrial Average fell 1.55% to 51,928.87. The S&P 500 dropped 0.50% to 7391.31 while the Nasdaq Composite declined 0.37% to 24784.10. The yield on the interest rate-sensitive 2-year Treasury note was unchanged at 4.277%. The yield on the benchmark U.S. 10 year notes increased 3.67 basis points, to 4.641%. The dollar index (which measures the greenback in relation to a basket including the yen, the euro and other currencies) fell by?0.25%, falling from 101.17. The oil prices rose by around 7% as major airstrikes resumed across the Middle East. This quelled hopes of an imminent end to the?Iran war. The rally was exacerbated by data from the 'industry showing a decline in U.S. oil inventories. Bill Merz is the head of capital market research and portfolio development at U.S. Bank Wealth Management, Minneapolis. EARNINGS TO SET TONE Investors will also be waiting for a wave key earnings. Microsoft and Meta are due to report their results after the close of markets, followed by Amazon.com, and Apple later in this week. The global markets have been volatile this month, as investors question whether the AI spending boom will last. This is despite signs that U.S. major companies are continuing to invest billions in the technology and continue to drain cash from their free flow. "The focus is shifting away from budgets to return on investment." Investors are looking for evidence that AI capex generates revenues right now and also strengthens 'the future growth prospects,' said Gina Martin Adams, chief strategist at HB Wealth. As China's competition intensifies in both the race to develop advanced chip technology and its cheaper AI models, investors are paying more attention. The expectations have become so inflated that SK Hynix shares fell 9.61% despite a six-fold increase in its quarterly profit. South Korea's KOSPI - which has become emblematic for the wild swings of AI sentiment - fell almost 6% in a single day, after falling more than 10% and reaching a three month low. South Korea's finance ministry announced on Wednesday that it would introduce new restrictions on leveraged exchange-traded products, such as ETFs with single stocks. These will include a cap on individual investors who invest in these products. The pan-European STOXX 600 fell by 0.29% while Europe's FTSEurofirst 300 fell by 0.36%. The MSCI All Country World Price Index was down 0.45% in the last few days and had earlier dropped to its lowest level since 11 June.
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Official Israeli source: Trump and Netanyahu discussed all options, including an attack on Iran.
?U.S. In their meeting on Wednesday, President Donald Trump and Israeli Premier Benjamin Netanyahu discussed all possible ways to stop Iran's nuclear program, including diplomacy, pressure from the economy and force. The official told reporters in a press conference after the two men had met at the White House, on Tuesday that Netanyahu did not inform Trump of Israel's preference for an attack against Iran. The official stated that Trump's decision was final. The official stated that Trump had 'three options, all of which were discussed in detail: a deal, continuing the blockade, economic pressures and a massive strikes. Officials said there was evidence that?Iran’s clerical leaders have been rattled? by rising inflation, but that the impact on the global economy and the oil markets were also taken into consideration. The oil prices soared on Wednesday, one of the biggest spikes since the beginning of the war on February 28. This was due to a joint Israeli and U.S. aerial campaign against Iran. Tehran responded by launching strikes on Israel and Gulf States. Israel did not take part in the two-week U.S. airstrikes this month, which prompted Tehran to respond by firing on U.S. military bases. However, it has warned Tehran that it will strike back if attacked. The United States and Saudi Arabia attacked Iran-backed paramilitary groups on Wednesday. Trump promised to "beat the fucking sh*t" out of Iran after it fired at U.S. soldiers days after he stopped?air strikes. Iran has confirmed that it fired at U.S. bases in Jordan, as well as ships in the Strait of Hormuz. It also rejected an Omani proposal for a joint management of the Strait.
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SAIL and Krakatau Steel to invest $350 Million in a stainless steel plant
Two Indian sources said that India's state run Steel Authority of India and Indonesia's Krakatau Steel are planning to invest up to $350 million in a stainless-steel slab plant in Indonesia. Sources said that the?plant?will have a?capacity of?500,000 metric tonnes and will be operational in the next three to five years. SAIL and Krakatau Steel have signed a preliminary joint venture agreement in Indonesia to produce stainless steel plates. This was done during the visit of Indian Prime Minister Narendra Modi to Indonesia earlier this month. Sources said that SAIL will send a "technical" team to Indonesia in the next month to produce a feasibility study. After this, both companies will finalise details such as the equity structure, timeline for government approvals, and other details. Sources declined to be identified because the discussions aren't public. SAIL didn't respond to an email sent Monday seeking comment. Krakatau Steel?did not respond to an email request for comments made on Tuesday. Sources?said that the proposed plant's capability could be?expanded once it becomes operational. One source said that partnering with Krakatau Steel could help SAIL obtain nickel at a lower price, which is a crucial raw material for stainless steel production. Indonesia produces more than half of the world's nickel. The second source said that SAIL would consume all the output from the planned Indonesian facility, and then bring the stainless steel plates to its Salem plant to be rolled and finished. Salem is located in Tamil Nadu, a southern Indian state. Sources said that the state-run steelmaker would primarily sell the finished product to Indian clients, with a small portion?possibly being exported to Europe and the Middle East. According to commodities consultancy BigMint, SAIL was India’s third largest?steel manufacturer in the fiscal year ending March 2025. It held a 10.1% market share. India, which is the second largest producer of crude steel in the world after China, has identified Indonesia as well as more than a dozen?countries to cooperate with the steel industry. This will boost exports and ensure key raw materials. BigMint data shows that India's finished steel consumption has increased by 55% in the last five years. This is more than double the increase in production of 42%. Indian steelmakers are "pivoting" to the domestic market in order to offset weaker imports from Europe and Britain, but Chinese steel is sabotaging that strategy. (Reporting from New Delhi by Neha Arora; Additional reporting in Jakarta by Fransiska Nanangoy; Editing by Mayank Bhadwaj, Christian Schmollinger).
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Stocks fall as Mideast conflict reignites and Fed decision looms
U.S. stock prices fell, while oil and Treasury yields rose, as the fighting in the Iran war resumed just hours before the highly anticipated 'Federal Reserve interest rate decision due later on Wednesday. Although the Fed is expected to keep rates unchanged, traders have priced in roughly 34% of a rate hike. This is because rising oil prices are reigniting concerns over inflation which remains above the U.S. Central Bank's annual target of 2%. The markets have fully priced in a Fed rate hike for the September meeting. Chris Low, FHN Financial's chief economist, said that if oil prices continue to rise in September, then the Fed will determine that the shock has lasted for long enough to warrant a rate increase, or increases. The market also believes that some participants will make the case for rate hikes today...and there's a good chance they can convince a majority to support them. After major airstrikes resumed, oil prices rose more than 6%. This quelled hopes of an imminent end to Iran's war. This rally was exacerbated by data from the industry showing a decline in U.S. crude inventories. The Fed chairman Kevin Warsh prefers to give less "forward guidance" on the Fed's probable monetary path. The yield on the benchmark U.S. 10 year notes increased 2.45 basis points from late Tuesday to 4.629%. The Dow Jones Industrial Average dropped 1.37% to 52 024.98, the S&P 500 declined 0.62% at 7,382.73 while the Nasdaq Composite was down 0.83% at 24,670.23. EARNINGS TO SET TONE Investors will also be waiting for a wave key earnings. Microsoft and Meta are due to report their results after the close of markets, followed by Amazon.com, and Apple later in this week. Investors have questioned the sustainability of AI spending boom amid signs that U.S. major companies are continuing to invest billions in the technology and continue to drain free cash flow. The focus is now on returns from investment, not spending plans. Investors are looking for evidence that AI capex generates revenues right now and also strengthens future growth prospects, said Gina Martin 'Adams, Chief Market Strategist at HB Wealth. As China's competition intensifies in both the race to develop advanced chip models and Chinese firms rolling out cheaper AI models, there is a growing concern. Even a six-fold increase in SK Hynix’s quarterly profit failed to meet expectations, sending the shares tumbling by 9.61%. South Korea's KOSPI fell almost 6% in a single day, after falling more than 10% and reaching a three-month high. South Korea is responding by introducing additional 'curbs' on leveraged single-stock exchange-traded fund, or ETFs. This includes a cap that would limit an individual investor's investment to 20% of total assets. The pan-European STOXX 600 fell by 0.21% while Europe's FTSEurofirst 300 fell by 0.28%. The MSCI All Country World Price Index dropped by 0.57%, to its lowest level since June 26.
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Hungary's Paks Nuclear Plant will shut down one reactor due to a drop in the Danube water levels
Operator MVM announced that the Paks nuclear plant in Hungary will shut down one of the 'four reactors' at a time of?1300 GMT on Wednesday due to record low water levels along the Danube River, which provides cooling water for the facility. On Monday, the plant had already cut output by 254 Megawatts at another unit. The plant operates four Russian-built nuclear reactors with a combined 2 gigawatts of capacity. It produces almost?half of Hungary’s electricity. The shutdown on Wednesday will reduce production to?about 60 percent of its capacity. It follows?contingency steps taken in June, during a heatwave record. Authorities exempted this plant from temperature limits for discharged cooling waters. The water levels along the Danube are now at new record lows. This has disrupted cargo and river cruises on one of Europe's most busy?waterways. The Environment Minister Laszlo Gajdos stated earlier on Wednesday that the Hungarian water management authorities are ready to assist in ensuring cooling water supplies for the plant. He said that the authorities had placed four pumping pontoons, and two floating cranes near Paks in preparation for a possible deployment as water levels are expected to continue to drop over the next few days. Reporting by Gergely szakacs and Anita Komuves. Mark Potter edited the article.
Asian stocks are choppy following a rout; Fed uncertainty on interest rates
Asian stocks were unable to find direction on Thursday as investors grew increasingly nervous about the AI trade. The Federal Reserve, divided, kept interest rates unchanged, which left bond markets wondering where rates will go.
Brent futures fell below $90 per barrel after a jump of over 7% the day before as the 'fighting' in the Middle East intensified. However, data shows that tankers continue to leave the region despite continued drone and missile strikes.
Investors were confused by the Fed's split decision on whether it would raise rates to combat inflation. The yields on longer-dated U.S. Treasuries reached 19-year-highs.
This week, Asian chipmakers were the focus of attention after a sell-off in South Korean shares that erased more than $2 trillion from the country’s equity market. Investors worried about the returns on massive AI spending.
The KOSPI gained 4% on Thursday in choppy trade, but it is now facing a 12% drop for the week. This prompted Finance Minister Koo Yon-cheol apologized for introducing single-stock leveraged exchange-traded funds.
Gina Kim is the portfolio manager of emerging market equities for Nordea Asset Management, Singapore. She said that the current sales appear to have an "irrational and panic-like" element.
"I can't comment on the exact moment that panic will end, but I would look at margin balances for both Taiwan and Korea retail investors. Kim said that both are falling, but we'd like to see a leveling off.
Samsung Electronics, a chipmaker, said its operating profit increased 19-fold in the second quarter to a new record. This helped boost investor sentiment.
MSCI's broadest Asia-Pacific share index outside Japan grew by over 1% during early trading. Japan's Nikkei rose 2%, but is still on track for a weekly drop of 3%.
The earnings of U.S. megacaps Meta, and Microsoft highlighted the contrast in fortunes between the two companies who are able show their ability to generate money even while they invest to build out AI Infrastructure.
Microsoft's shares rose after it said that it expected to continue generating cash until the fiscal year of 2027, which just began. Meta reported a 91% decline in its second-quarter cash flow and sent its stock down.
Nasdaq Futures rose by 1.2% during Asian hours, while European Futures gained 0.3%.
FED LOOK TO MARKETS AS CUES
Kevin Warsh, Fed chair, spoke to the media after the meeting. He pledged to keep inflation in check but declined to give any direction on what actions would be required by central banks.
Warsh pointed out that bond yields had risen since the Fed's most recent monetary policy meeting -- investors had priced in rate increases -- a move he welcomed, but said it didn't mean that central bank action was required to confirm it.
The yields on 30-year U.S. Bonds were?at 5.2273%, after reaching their highest level since June 2007.
Chris Weston is the head of Pepperstone's research. He said, "We heard a pretty?defiant... message about getting inflation back on target. However, there was very little substance as to how this would be achieved."
Fed funds futures implied that the Fed will raise rates by around 60% at its next meeting in September. By year's end, 33 basis points would be priced in.
Kerry Craig, global strategist at J.P. Morgan Asset Management and J.P. Morgan's Global Market Strategist, said that the Fed will continue to be questioned about its credibility.
The gap between the Fed’s words and actions could pose a problem for market pricing. A new chair is faced with a divided committee, and a bond markets that are beginning to doubt the central bank's determination. (Reporting from Ankur Banerjee in Singapore and Rae Wee; Editing by Christian Schmollinger).
(source: Reuters)