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Why have Indian stock traders been spooked by the new closing price system?
India's benchmark Nifty has seen a sharp swing in price following the introduction of a new formula for calculating closing prices?for stocks that have derivatives contracts. The BSE Sensex and the volatility of Wednesday's session triggered a rare, third-straight session divergence. This led to heavy losses among traders. HDFC Bank, ICICI Bank, and Reliance Industries account for more than?27%. The Sensex is composed of 30 stocks that are all also included in the Nifty 50. WHAT IS THE NEW METHOD TO DETERMINE CLOSING PRICE? India introduced on Monday the Closing Auction Session, a separate window of 20 minutes that starts at 3:15 pm IST following regular trading in eligible stocks. Exchanges will collect orders to buy and sell during this time. The order entry window closes randomly between 3:28 and 3:30 p.m. After 3:30 pm IST and the matching of trades, the price at which maximum volume is possible can be determined. The new system replaces a previous method in which the closing price was based on an average of the trades that were executed during the last 30 minutes of continuous trading. Stocks without futures or options contracts will continue to be calculated using the old system. Why has the new method caused divergences between the NIFTY and SENSEX index? The National Stock Exchange of India stated that?the two exchanges maintain separate orderbooks, which means individual stocks prices can vary between exchanges. This leads to a divergence of index?closing level. Dealers have the ability to view bid and offer price in regular trading. However, the new system does not allow this visibility during the last 20 minutes. Divergence may also be due to the different weightings of stocks between the two indices. The NSE has a much higher institutional cash market volume than the BSE. Why was CAS introduced? The new process brings India closer in line with global markets and provides a transparent and fair closing price. It also improves the efficiency of executing large orders. What happened on Tuesday? Options premiums were affected by the sharp rise in the Nifty50 at the close of Tuesday, which coincided with the expiration of the weekly derivatives contracts. Traders who lost money on the move said that the 20-minute auction was not a good indicator of where the Nifty50 would end up. When will?THE DIFFERENCES IN INDEX? CLOSE PRICES end? Participants in the market expect that as more traders and institutional participants participate, the gap will narrow. Kotak Mutual Fund stated in a letter to investors that they expect pricing inefficiencies to ease as the new system is adjusted. It said that while the first days of the market may be characterized by temporary price dislocations and valuation volatility, the behaviour should normalize as participants adjust to the new framework. Reports on Wednesday stated that the regulator would not be able to review the system right away and expected issues to be resolved'soon. WINNERS & LOSSES Arbitrage funds that hold positions on both the cash and futures market were among the most benefited by the sudden jump in prices. A clear arbitrage opportunity was created as cash market prices soared and futures prices lagged. Retail traders were also caught by surprise and suffered losses. Vivek M. Reporting; Jayshree Upadhyay, Nivedita Bhattacharjee and Nivedita Bhattacharjee.
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South Korean shares close at a record high for a week on AI frenzy and cheaper oil
South 'Korean stocks closed at a record high for a week on Wednesday, as heavyweight chipmakers rallied in response to strong U.S. earnings. They also showed evidence of massive AI capital expenditure. Meanwhile, lowering oil prices eased inflation concerns. The benchmark KOSPI closed 3.8% higher, at 6,598.26. This was its highest closing since July 27. The junior Kosdaq rose 2.4%, reaching a new closing high of three weeks. Chip stocks rose by a record amount overnight, thanks to strong earnings from AI companies. SpaceX also boosted chip stocks with its massive expenditures. The Philadelphia Semiconductor Index jumped?6.6%. Samsung Electronics, a South Korean memory chip maker, and SK Hynix, a South Korean memory semiconductor manufacturer both gained 2,9% and 6,7% respectively. These two companies account for more than half of KOSPI. The sharp volatility in the market in recent weeks has been tempered by the tame trading of leveraged ETFs that are tied to chipmakers. The KOSPI lost almost 40% over the course of five weeks, ending in late July. However, it is still up by 57% for the year. The unwinding of single-stock leveraged exchange traded funds over the past few weeks has eased some technical pressure and allowed 'fundamentals' to gain greater influence,? said James Ooi. Market strategist at Tiger Brokers. While the KOSPI valuation has become more appealing following the sharp correction that began in May,... The selling pressure is easing but the deleveraging of memory stocks continues and could continue to keep volatility high." Hyundai Motors and Kia Corp, its sister company, both rose by 3.1% and 2.6% respectively. POSCO Holdings, a steelmaker, rose 1.3%. Samsung BioLogics, a drug maker climbed 1%. The won has appreciated for the third day in a row, reaching as high as 1,420.8 U.S. dollars on the settlement platform onshore. The currency is up almost 1% in the last three sessions. The minutes of the Bank of Korea meeting in July showed that policymakers felt the need for?further tightening?, though the timing and rate of future rate increases will depend on the incoming data. The markets are pricing in an almost 70% chance of a hike of 25 basis points ahead of the next meeting of central bank policy scheduled later this month. According to data from the exchange, foreigners bought shares worth 1.446.3 billion won ($1.02 million) on Wednesday after selling 9.862 trillion won during July. On the money and debt market, September futures on three-year Treasury bonds rose 0.24 points?to 103.57. The benchmark 10-year yield dropped by 10.1 basis point to 4.148%, while the most liquid Korean three-year treasury bonds yield fell by 7.7 points to 3.665%.
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Rio Tinto's executive claims that the price of iron ore will rise in the next decade due to the depletion of mines.
Rio Tinto's executive stated on Wednesday that the supply pressure resulting from the depletion?of?iron ore mining operations built earlier in this century, such as those found in Australia, will?underpin iron ore prices and the market over the next decade. Rio expects that it will invest over $13 billion in new mines, plants and equipment in the Pilbara Region from 2025-2027. It estimates that 800 million tons of additional production is needed globally within the next decade. Just 300 millions tonnes have been committed. Matthew Holcz said at a luncheon event held by the Melbourne Mining Club that "it feels like every year, the demise is being greatly exaggerated". "While I believe the demand story is fairly well understood, I truly think it was on the supply-side, so disruptions have been understated," he said. He pointed to the annual cyclones which strike Western Australia's Pilbara Coast from November to March. Holcz said, "I believe the rate of depletion has been greatly underestimated." "If we take a look at the years when the industry boomed - 2005, 2010, and 2015 - a lot of these?assets? are now 15, 20, or more than 20 years old, and the size of the iron ore sector... has grown." Holcz stated that the investment in new supply today is a fraction of what it was at the beginning of last decade. "Marginal costs have increased a lot... we believe there is good price support at the levels we've enjoyed in recent years." China's iron ore demand will remain stable until 2030, then decline slightly. However, the Global South, and in particular India, is expected to boost demand. Rio estimates that India could become a net importer of iron ore around 2035. LEVERAGE CHANGE Holcz stated that tensions between buyers and suppliers always existed, but Rio was focused on "win-win opportunities" and long-term ties. In remarks made on the sidelines, he said: "The balance between supply and demand has changed." "You have a market that is much more balanced, and that has certainly shifted some leverage." Holcz, in referring to union issues in the Pilbara where workers will strike this weekend at BHP’s Port Hedland operation, favored a “direct relationship” with workers, which he claimed?has historically resulted in better outcomes. The future capital expenditure decisions will be based on the competition, industrial relations, and taxation elsewhere. Australia has fallen behind in these areas. Holcz said that Rio Tinto has no significant exposure to the iron ore trader Radiant World. Bloomberg News reported last week that trading houses Vitol and?Cargill had stopped dealing with Radiant World because they were concerned about the validity of invoices sent to their banks. Radiant World denies this. Holcz stated that "from a Rio Tinto point of view, there's no exposure here about which we're worried." (Reporting and editing by Clarence Fernandez in Melbourne, Melanie Burton reported from Melbourne)
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Copper prices are weighing on demand, slowing the copper rally
Copper prices rose on Wednesday, but remained below the highs of yesterday. This was due to a combination of waning inventories and improving risk sentiment. Benchmark 'three-month copper' on the London Metal Exchange was up by 0.18% to $14,091.5 per metric ton at 0700 GMT. The Shanghai Futures Exchange's most traded copper contract rose by 0.96%, to 107.340 yuan (15,908.82 dollars) per ton. Prices reached a two-month peak on Tuesday and surpassed the psychological $14,000 per tonne for the first since early June. Red metal prices have been boosted by a decline in inventories, as more material has been brought into the U.S. to avoid potential tariffs on refined copper. The total copper stock in LME registered warehouses Since the end of May, prices have dropped by almost 40%. Daniel Hynes is a senior commodity strategist with ANZ. He said that the US imported over 200,000 tons copper in July, which was the largest monthly influx since 2014. The LME spread from cash to three-months reflected the supply pressure on physical materials The red metal was supported by an improved macroeconomic outlook and a better?risk sentiment from cooling fears about escalation in the Middle East. The red metal also benefited from a better macroeconomic outlook, and a better risk sentiment due to easing fears of escalation within the Middle East. Analysts from Chinese broker Everbright Futures stated in a report that high copper prices were beginning to impact demand. They questioned the strength of the seasonal demand for the second half of the year. Yangshan Copper Premium According to SMM, an indicator of physical demand in China's largest consumer, the price per ton dropped to $110 on Tuesday. Aluminium gained?0.23% on the LME, while zinc gained 0.94%. Lead added a?0.37%. Nickel lost 0.42%. Tin gained 0.9%. Aluminium gained 0.25% among SHFE metals. Zinc rose 1.88%. Lead rose 2.77%. Nickel lost 0.79%. Tin rose 1.56%.
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The stock market in Australia and New Zealand ends at a record high
Equities in Australia, New Zealand and Canada closed at record highs on Wednesday. In Sydney, miners and tech stocks led the way following a rally of U.S. technology shares and hopes for easing Middle East tensions. The benchmark S&P/ASX 200 index in Australia rose 0.9%, closing at an all-time high of 9,227.80. In New Zealand, the equivalent index finished 0.7% higher with a record 13,997.18. The relative strength index of the benchmark ASX200 index, which has been rising for four consecutive sessions, is now in overbought territory and at its highest level since mid-June, 2025. The risk appetite was strong following the strong rally of U.S. and European stocks on the backs of strong AI-driven profits, with the easing oil prices further boosting the mood. The ASX200 index received support as new money entered the market to start the new financial calendar year. It also attracted new inflows from investors looking for a low-beta destination that would help them ride out the volatility of high-beta markets, especially those in Asia, which are tech-heavy. Investors are now focusing on the August earnings season. A packed reporting calendar is likely to drive sentiment over the next few weeks. Sycamore believes the ASX 200 is at risk of sliding and retesting the 9,000-level. A sustained breakout will be unlikely before the reporting season ends and may not occur until September. The rise in iron ore prices led to a?3.7% increase for the miners on the day. BHP, Rio Tinto and Fortescue all gained between 0.6% to 3.3%. The gold miners posted their best session in a little over a month, with a gain of?6.4%. The Wall Street rise led to a 2.5% increase in tech stocks, which reached an eight-week record. Financials, which had been gaining, fell?0.4%, their worst day for?about two-weeks. The "big four" banks declined between 0.4% to 1.4%. The weaker oil price caused energy stocks to fall 2.2%. This was their worst session in more than a week. (Reporting by Kumar Tanishk in Bengaluru; Editing by Nivedita Bhattacharjee)
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Voestalpine tops profit forecast on stronger steel margins, aerospace demand
Voestalpine, an Austrian steelmaker, reported on Wednesday that its core earnings for the first quarter were 'above expectations.' This was boosted by strong aerospace demand and resilient steel margins. The company reported quarterly earnings of EUR495 millions ($571million), up from EUR361 millions a year earlier and slightly higher than the EUR491 milliards expected by LSEG's polled analysts. It said that the earnings included a one-off positive effect of approximately EUR100 million relating to the sale of its subsidiary Boehler Profil, and reorganisations measures in the High Performance Metals Division. Steel division of the company increased quarterly EBITDA to?14.3%, up from 12.7% during the same period in last year. This was due to lower raw materials and energy costs. Voestalpine was also optimistic about the European steel market. It said that the European Union has established a "significantly stronger" trade framework with its new safeguard measures. European steelmakers are benefiting from EU measures to protect domestic producers from cheaper imports. These include tighter steel import quotas in place since July and the introduction of carbon border levies on high-emission products from the start of 2026. Voestalpine's aerospace business continues to perform well, but U.S. tariffs and weak demand continue to impact its tubulars operations that serve the oil and gas industry. The Linz-based 'group has confirmed its outlook for financial year 2026/27, which began on April 1.
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Gold gains due to lower oil prices and weaker dollar
Gold rose for a third session in a row on Wednesday. This was helped by the softer dollar and lower crude oil prices. Investors were waiting for U.S. employment data to get a sense of interest rate outlook. By 0455 GMT spot gold had risen 1.4% to $4,133.83 an ounce, which was a new two-week high. U.S. Gold Futures rose 1%, to $4191.90. Holders of other currencies will find greenback-priced gold more appealing. Oil continued to decline after two days of steep drops. Lower oil prices can reduce inflation fears that are often the cause of expectations for higher interest rates. Qatar stated that mediators were making progress to end the U.S. - Iran war. However, Tehran denied U.S. president Donald Trump's claim that "talks have already begun." Gold's relationship with oil remains intact, as oil prices have a huge impact on the global economy when it comes to inflationary pressure. Gold prices may rise if we have a roadmap for further de-escalation of tensions," said Kelvin Woong, senior market analyst at OANDA. The probability that the Federal Reserve will raise interest rates at its meeting on September 15-16 has dropped from 67% to 59%. In a high-interest rate environment, gold tends to lose appeal despite its role as an inflation hedge. It pays no interest. Federal Reserve Bank of Philadelphia president?Anna Paulson stated that she was keeping an "open-mind" in regards to the future of monetary policy, which could include higher interest rates. The ADP Employment Report due later in the day, and the July payrolls reports scheduled for Friday were on the minds of traders. Analysts from TD Securities stated in a report that they expect gold to stay range-bound 'near its current levels. Spot silver rose 2% to $60.70 an ounce, and platinum rose 1% to $1.751.03 after reaching its highest level in mid-June. Palladium increased 0.5% to $1360.25 after reaching a two-month high.
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Rio Tinto's executive claims that the price of iron ore will be driven by the depletion of mines in the next decade.
Rio Tinto's executive said on Wednesday that the supply pressure from depleting iron ore mining operations?built in the early part of this century, like those in Australia, will drive iron ore prices and the market over the next decade. Rio expects that it will invest over $13 billion in new mines, plants and equipment in the Pilbara Region between 2025 and 2027. It is estimated that 800 million tonnes of additional production must be added worldwide within the next decade just to maintain supply. Only 300 millions tonnes have been committed. Matthew Holcz said at a luncheon event held by the Melbourne Mining Club that "it feels like the demise is exaggerated every year". He said that while the story of demand 'has been fairly well understood', it was really on 'the supply side', and disruptions have been under-estimated. Holcz said, "I believe the rate of depletion has been greatly underestimated." "If we consider the years when the industry boomed - 2005, 2010, and 2015 - a lot of these assets are now 15, 20, and the size of the iron ore sector and the amount we're consuming has grown." Holcz stated that the investment made today in new supply projects is a fraction of what was invested at the beginning of last decade. "Marginal costs have risen significantly... we believe there is good price support at the levels we've enjoyed in recent years." China's iron ore demand will remain stable until 2030 and then decline?slightly. However, the Global South?will step up to boost demand, particularly India. Rio expects India to become a net importer of iron ore around 2035. He said, "We think that demand will be stable." (Reporting and editing by Clarence Fernandez in Melbourne, Melanie Burton reported from Melbourne)
Oil slides, tech sentiment shifts and stocks rise in Asia
The Asian stock market jumped Wednesday as Wall Street reached record highs on the back of robust earnings, and a renewed interest in tech. Meanwhile, oil prices and bond yields fell on hopes of progress regarding opening of the Strait of Hormuz.
Japan's Nikkei rose 3.5% as more evidence of the huge sums spent on 'AI?capex was revealed, while South Korea maintained its wild swings and rose 4.3%.
The broadest MSCI index of Asia-Pacific stocks outside Japan rose by 2.3% while blue chips in China gained 1.5%.
The rally in tech came despite AMD's setback. AMD fell 8.8% following hours, as its earnings exceeded Street expectations but fell short of the sky-high investor expectations.
SpaceX, a satellite company and AI group, lost 7.5% on concerns that capex would eat up its entire cash flow.
The rising borrowing costs in the AI sector have been a constant concern for all AI stocks.
Chris Weston is the head of research for broker Pepperstone. He said that "SpaceX's ambitious investment program?means that additional capital will most likely be needed in the medium- to long-term."
Investors will continue to be interested in how management finances growth and at what price.
SpaceX investors will be tested again on Thursday when up to 912 millions shares owned by employees and other stakeholders in the pre-IPO become eligible for a?sale.
The Nasdaq was flat after the earnings report, but S&P futures rose 0.3% on Tuesday. EUROSTOXX Futures gained 0.3% while?DAX Futures rose 0.5%, and FTSE Futures added 0.2%.
BONDS ARE HELPED BY OIL?SLIDE
Qatar's claim that mediators are making progress to end the U.S./Iran War, but without providing details, boosted sentiment.
Brent crude dropped by 0.6% to $78.85 per barrel, which is a far cry from its peak of $102 in July. U.S. crude was down 0.9% at $75.09.
John Oh, a CBA energy economist, said that ship tracking data suggested that oil flow through the Strait of Hormuz was more resilient than initially thought. It may have reached 40% to 45% of its pre-war level last week.
He wrote that "we estimate traffic flows need only return to 50-60% of pre-war levels" to establish oversupply on global oil markets.
Brent oil futures have moved into the 70s because markets are justified in pricing in oversupply concerns when there is hope that the strait will be reopened.
The drop in oil prices has helped to ease inflation concerns and led to a global bond rally, with the 10-year Treasury yield now at 4,603%, down from the high of last week, which was 4.747%.
The markets also reduced the probability that the Federal Reserve will raise rates in September to 57%, from 67%.
Jeff Schmid, President of the Fed Bank of Kansas City, spoke on Tuesday and called for a tighter policy in order to bring inflation to its 2% target.
The currencies were mostly quiet. However, the New Zealand dollar fell 0.3% following data showing that unemployment reached a decade-high of 5.6% during the second quarter.
The euro remained flat at $1.1537. It was just a few cents shy of its recent high of $1.1559, which it reached in the last six weeks. Dollar was slightly lower against the yen, at 157.63. The threat of an intervention still loomed over traders.
U.S. Treasury Sec. Scott Bessent stated that he is confident Bank of Japan Governor Kazuo Ueda "will do what is best" to help the economy. This was interpreted by markets as an encouragement to increase interest rates.
Last week, Japan and the United States conducted a rare joint intervention to buy yens and promised to take additional action to stabilize the currency if necessary.
The drop in yields has helped gold that does not pay interest to rise 1.6%, reaching $4,140 per ounce. (Reporting and editing by Edwina G. Gibbs, Shri Navaratnam and Wayne Cole)
(source: Reuters)