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Oil prices continue to rise despite US job losses, Asian stocks pause over US jobs
Asian shares were on edge Friday as they awaited the U.S. employment data, which could be pivotal in next month's Federal Reserve interest rate decision. Meanwhile, rising oil prices reminded investors that Middle East tensions are far from being resolved. MSCI's broadest Asia-Pacific share index outside Japan fell 0.1%, and the overall week was down by 0.5%. Japan's Nikkei fell 0.5%, despite being set to rise 1.7% for the week. South Korea's KOSPI fell by 0.5%, and it was down 5.1% on the week. This is the seventh consecutive week of declines. The index doubled during the first half of this year due to the fervent demand for AI-linked "chip stocks". China's CSI 300 index rose by 0.8% following data showing China's massive export machine continued to power ahead in order to boost the country's economy. Investors are now focused on the U.S. Payrolls Report due later that day. This could be crucial for the interest rate outlook. Forecasts predict a gain of 80,000 jobs in July, after a gain of 57,000 in June. The unemployment rate is expected to remain at 4.2%. The stakes are very high, as the'markets can't seem to decide how to react to a Federal Reserve rate increase next month. Michael Feroli is the chief U.S. economics at JPMorgan. He said that yields and inflation are still the main risks for stocks. "We expect Friday's NFP will trade as a ‘good news is a bad news’ print," he added. A strong jobs number could reinforce higher prices and increase pressure on rates. Feroli said that a weak payrolls report could be a positive for stocks, as the yields will ease and expectations of policy will shift to a more dovish direction. Nasdaq Futures rose 0.1%, while S&P500 futures were unchanged. Stock futures for the entire region are down 0.2%, indicating a lower opening on European bourses. OIL CLIMBS AGAIN Tensions have risen in the Middle East after Yemen's Houthis, who are a major oil exporter, attacked Saudi Arabia. Riyadh warned that coordinated attacks from the Houthis, and Iran-backed Iraqi militas are imminent. Brent crude futures rose 1.5% to $83.78 per barrel after a 3.8% jump overnight. The price was still on track for a loss of 7% per week and they were still a long way off the recent high of $102 per barrel. Iran is reviewing an initial bill which would ban U.S. and Israeli vessels, as well as other "hostiles" from transiting Strait of Hormuz. The draft bill could impose fines of up to 20 percent of the ship's value for violating proposed restrictions. The higher oil prices boosted treasury yields. In Asia, the 2-year yield remained at 4.2496%, after rising by 7 basis points overnight. The 10-year yield stayed at 4.6821% despite a 5 bps increase overnight. After a bouncing start to the day, the dollar remained steady in Asia on Friday. The dollar was trading at 158.38 Japanese yen after rising by 0.4% overnight to surpass the 200-day average. After last week's sharp rally, the U.S. jobs data could determine the next moves for the yen. Spot gold increased 0.7% to $4268 per ounce while spot silver increased 1.3% to 62.229 an ounce. (Reporting and editing by Stella Qiu, Shri Navaratnam, Kate Mayberry).
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Thyssenkrupp owners vote on materials spin-off in latest restructuring move
Thyssenkrupp shareholders will vote on Friday on the proposed spin-off of the materials trading division. This is the largest division based on sales in the German conglomerate. Thyssenkrupp would continue its overhaul by separating the?hydrogen division and defence division in recent years. Investors are expected to vote on the issue at an extraordinary meeting on Friday. Analysts at Jefferies believe that tk Accelis, which has around 15,500 employees, is active across 30 countries, and generated sales of EUR11.4billion in the past fiscal year, could achieve an enterprise worth of EUR3.6billion ($4.2billion). During a capital market day held last month, tk Accelis stated that it aimed to achieve a?adjusted?margin of 4-5% for earnings before tax, depreciation, and amortisation, as opposed to?2.0% in the fiscal year 2024/2025. In June, the 'business,' which counts Airbus and BP as customers, along with Tesla, Volkswagen, and Volkswagen, was 'on the hunt for acquisitions in North America. It specifically mentioned the fragmented precious-metals market.
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Two dead, including gunman, at school shooting in Thailand, officials say
Authorities said that a student who opened fire at a Thai school on Friday, killing one teacher and injuring four others, then killed himself was responsible for the deaths of at least one teacher. Dechrapee Kongdee, the Nonthaburi Police Commander Lt. Col. confirmed the deaths and stated that the gunman was suspected to have committed suicide. He said that among the injured were a teacher and three pupils. The incident occurred in the Bang Kruai District of Nonthaburi Province, north of Bangkok. The perpetrator was identified by the police as a university student. One student, aged 18, said he first thought there were firecrackers or someone banging an object. He said: "I didn't think it was a weapon at first. There were many shots, bang bang. Then, it became quiet. "Then it started up again." Emergency workers circulated photos showing students streaming out of Debsirin Nonthaburi School, located on the northern edge of Bangkok. Ambulances were also operating. In one picture, a person is pictured?lying on a stretcher in front of an ambulance while another is being tended to by a doctor. According to the district authorities, in the 2025 academic school year, there were 147 teachers and 3,100 students enrolled. A teacher was killed and a student injured in February after a gunman opened fire on a school in southern Thailand's Hat Yai district.
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INDIA RUPEE - Indian rupee drifts after central bank intervention calms oil fears
The Indian rupee slid near a one-month-high on Friday. It was on track to end the week on a calm note as a likely dollar-selling by?the Central Bank helped to offset 'the impact of rising oil?prices in Middle East jitters. As of 10:00 am IST the rupee was trading at 95.2650 to the dollar, barely changing from its previous close of 95.22. The rupee had reached 94.9175 at the beginning of the week. The currency was vulnerable on Friday before the local markets opened. However, state-run bank's dollar sales, likely for the Reserve Bank of India (RBI), tamed the pressure of higher oil prices. Oil prices increased on Friday due to concerns about the opening of the Strait of Hormuz. Iran and Oman proposed banning hostile vessels from the Strait, as well as heavily fining anyone who violated these rules. Another factor that weighed on the rupee was the increased demand for dollars at the daily reference rate of the central bank, which is also known as the fix. The daily fix hovered at 0.70/0.80 premium. The local stock market fell, while the benchmark bond yield increased. Traders also pointed to a general risk-aversion as we head into the weekend. Later that day, traders will be focusing on?U.S. Monthly non-farm payrolls are a good indicator of the direction that benchmark borrowing rates will take in the largest economy. The forecasts predict a?rise of 80,000 jobs in July, following a?gain of 57,000 in June. The labour market is now a critical factor in the Fed's decision to move forward with its next policy. The markets are now pricing in a near 60% chance that interest rates will be raised next month. This is after the Financial Times reported, citing sources who were close to Federal Reserve chair Kevin Warsh. They also added to their 'wagers' following a report stating that September could see an increase, depending on data. (Reporting and editing by Harikrishnan Nair; Jaspreet K. Kalra)
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Concerns over plans to reopen the Strait of Hormuz cause oil prices to rise
Oil prices rose on Friday as concerns grew over the opening of the Strait of Hormuz. Iran and Oman proposed banning hostile vessels from the Strait of Hormuz, while imposing heavy fines for those who violated these rules. Brent crude futures rose by?80 cents, or 0.97 percent, to $83.29 per barrel at 0303 GMT. U.S. West Texas Intermediate Futures rose 64 cents or 0.83% to $77.93. Oil futures settled at $3.03 a barrel as Iran considered a bill that would ban U.S. vessels and Israeli vessels from entering the Strait of Hormuz, where a fifth of world oil and LNG was transported before the conflict began?at the end of Febuary. Prices dropped earlier in the week, as it appeared that a solution to the conflict was more likely. But benchmark Brent broke through $80 on Friday after having fallen below this level for the first since July 13. Both benchmarks are headed for a loss of 8% or more per week. Analysts say that events this week indicate that hostilities between Iran & the U.S. have not yet ended. The proximate cause is the reaction of oil prices to Iran's draft plan on transit conditions for Hormuz, which would prohibit U.S. and Israeli vessels and require that other 'hostile countries' pay compensation before passing, said Lin Ye. Vice president of commodities markets - Oil at Rystad Energy. Ye said that the price of oil is not indicative of a bad deal. It's a confirmation by the market that what emerges will be a managed/conditional route, and not a return to normal flow. According to Fars News Agency, an Iranian lawmaker stated that a parliamentary panel is currently reviewing a preliminary draft bill which would ban U.S. vessels, Israeli ships and other hostile vessels from the Strait of Hormuz and fine violators of proposed restrictions up 20% of their cargo value. According to a senior Iranian official, Iran wants fees between 5% and 7 % of the price of the cargoes of ships that use the Strait. Oman has proposed fees of around 3% while Washington is against any fees. Four industry sources said that the proposed deal was not feasible due to U.S. restrictions and restrictive insurance clauses. The market has been on a roller-coaster this week as a result of the signals about a possible Iran-Oman Transit Deal. However, as yet, it is not clear what the market needs to do to clinch the deal. Yemen's Houthis claimed to have carried out drone and missile attacks against "Saudi installations" in Marib, Hadramout and Yemen on Thursday. Donald Trump, the U.S. president, told reporters on Thursday that he believes the war will be over soon.
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The recovery of the Indian rupee is a delicate balance, as it depends on the return of oil risk before US job data
The Indian rupee will likely open lower on Friday, as a rise in crude oil prices is expected to weigh on the currency and fuel expectations that the Federal Reserve of the United States could raise interest rates. The U.S. July jobs report, which is due later in the day, should provide some clues about the state of the labor markets and the Fed's policy. Traders expect the rupee to open between 95.35 and 95.40, after closing at 95.22 against the dollar on Thursday. Brent crude rose about 4% Thursday, and another 1% during?Asian trades. It now stands at near $84 a barrel amid renewed concerns regarding access to the Strait of Hormuz. Iran and Oman proposed to ban vessels that were deemed hostile in the Strait of Hormuz. They also proposed imposing heavy fines on those who violated the rules. Oil prices have influenced the direction and sentiment of the rupee for many months. The Reserve Bank of India’s direct market interventions and policy actions have also played a major role in determining currency's trajectory. The rupee has managed to surpass the 95-per dollar mark. This was helped by Brent crude falling below $80 per barrel and RBI?dollar sales. Oil-related risks are back in the spotlight, and traders say the direction of the rupee will depend again on the amount of RBI support. You?will witness a rise in the dollar/rupee today throughout the day. Not just oil. A currency trader from a bank stated that there is an underlying demand for dollars at these levels. US JOBS - FED, DATA According to a survey by economists, the nonfarm payrolls in the United States are expected to have increased?by 80,000 during July after a rise of 57,000 last month. According to a survey of?economists, the unemployment rate will remain at 4.2%. The data comes amid a climate of increased uncertainty about whether the Federal Reserve is going to raise interest rates in response to inflation risks fueled by higher oil costs.
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Oil prices continue to rise despite US job losses, Asian stocks pause over US jobs
The Asian stock market waited with bated breath for the U.S. employment data, which could be pivotal in determining if Federal Reserve will raise interest rates next month. Meanwhile, rising oil prices reminded investors that Middle East tensions are far from being resolved. The broadest MSCI index of Asia-Pacific stocks outside Japan was flat for the week and down by 0.4%. Japan's Nikkei fell 0.9%, despite being set to rise by 1.2% on a weekly basis. South Korea's KOSPI fell 0.5%, and was down by 5.0% for the entire week. This is the seventh consecutive week that KOSPI has declined. The index doubled during the first half of this year due to the fervent demand for AI-related?chip stocks. China's CSI 300 rose by 0.2%. Investors are now focused on the U.S. payrolls data due later that day. This could be crucial for interest rate outlook. Forecasts predict a gain of 80,000 jobs in July, following a 57,000 increase in June. The unemployment rate is expected to remain at 4.2%. Markets cannot decide how the Federal Reserve will move next month. A rate increase is seen as a coin flip. Michael Feroli is the chief U.S. economics at JPMorgan. He said that yields and inflation are still key risks for stocks. We expect Friday's NFP to trade as "good news, bad news" print. A strong jobs number will reinforce higher prices and increase pressure on rates. In contrast, stocks may react positively to a weak payrolls report, as yields are easing and expectations of policy shift towards a more dovish direction, said Feroli. Nasdaq Futures were unchanged, while S&P500 futures fell 0.1%. Stock futures for the entire region are down by 0.2%, indicating a lower opening on European bourses. OIL CLIMBS AGAIN The tensions in the Middle East have risen again since Yemen's Houthis, who are a major oil exporter, attacked Saudi Arabia. Riyadh warned that coordinated attacks from the Houthis, and Iran-backed Iraqi militas would be imminent. Brent crude futures rose 1% overnight to $83.38 per barrel after a?3.8% jump. The price of Brent crude futures was still expected to fall 7.5% on a weekly basis and remain well below the recent peak of $102 per barrel two weeks ago. Iran is examining a draft bill which would prohibit U.S. vessels, Israeli ships and other "hostiles" from transiting through the Strait of Hormuz. The draft bill could impose fines up to 20% of the value of a ship’s cargo for violating proposed restrictions. Treasury yields rose as oil prices increased. The 2-year note yield remained at 4.2496% after gaining 7 basis points overnight. Meanwhile, the 10-year yield remained at 4.6757% despite a 5 bps increase overnight. After a bouncing start to the day, the dollar remained steady in Asia on Friday. The dollar was trading at 158.51 Japanese yen after rising by 0.4% overnight to surpass the 200-day avg. of 158. The U.S. employment report may determine the next moves for the yen, after the historic currency market intervention by Japan and the U.S. last week sparked a sharp rise. Spot gold increased 0.1%, to $4,243 per ounce. Spot silver rose 0.5%, to $61,78 per ounce. (Reporting and editing by Shri Navaratnam.)
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Petrobras reports third-highest profit after Middle East conflict boosts oil prices
Petrobras, Brazil's state oil company, reported a 96% increase in net profit for the second quarter, to 52.4 billion Reais. This is the third highest result in its history. Petrobras earnings exceeded the 44.7 billion reais predicted in an LSEG survey. In a separate filing, the company said it would pay out 17.4 billion reais or 1.35 reais for each share in dividends and equity interest to its shareholders. In a press release, Fernando Melgarejo, Chief Financial Officer of Petrobras said: "The operational records that we achieved in this second quarter resulted in one of the best quarterly financial results ever recorded by Petrobras." Earnings before interest, tax, depreciation, and amortization (EBITDA), which are adjusted earnings, grew by 79.6% over the past year, to 93.8 billion reals, exceeding analysts' expectations of 90.1 billion reals. Even though the results exceeded market expectations, Petrobras' earnings have been negatively affected by the decisions taken by the Brazilian government to keep fuel prices low following the?closure of Strait of Hormuz which sent fuel prices in the country up. The firm paid the government 4.9 billion reais between April and June due to a 12% tax on diesel and crude oil exports, which was introduced following the U.S. Iran conflict. The company's cash flow was affected by a delay in receiving 9,7 billion reais in government subsidies as a result of participating in fuel price control. Petrobras has invested $5.3 billion over the last quarter, an increase of almost 20% compared to the same period in 2017. Petrobras said that 82% of this sum was allocated to "exploration and production" to maintain the upward curve in production. Last week, the company released its quarterly report on production and sales. It reported higher oil and natural gas production as well as lower fuel imports, as the Middle East conflict pushed the refineries to the limit. Analysts had predicted 160.4 billion reais for the quarter, but net revenue actually grew by 42.3%.
MORNING BID EUROPE - Hoping for a clean, tidy job report
Stella Qiu gives us a look at what the future holds for European and global markets.
The markets are mostly in a holding pattern, as traders have stayed on the sidelines ahead of a U.S. Payrolls Report that is notoriously difficult to predict from month to month.
The stakes could not be higher, as the markets are unable to decide what the Federal Reserve's next move will be. A rate hike of about 54% is priced in, which makes it a coin flip. This is exactly the type of ambiguity that new Chair Kevin Warsh enjoys cultivating.
There is a consensus that 80,000 new jobs will be created in July, but there are so many different forecasts - ranging from 10,000 to 140,000 – that someone could be horribly wrong. Analysts predict that unemployment will remain at the still-low?rate 4.2%. However, a small group of analysts are predicting 4.3%.
What's the plan? Inflation risks are a concern for policymakers. A similar or better result will allow the Federal Reserve to raise rates next month, if necessary, without affecting the labour market. A much worse outcome would be required for the markets to abandon rate hike betting en masse.
Asia's markets were quieter than usual, reflecting the suspense. Japan and South Korea both fell by about 1% but not as much as the wild swings in recent weeks. Chinese shares managed to make gains, as its massive export machine continued to power ahead.
European futures point to a slightly weaker opening, with the panregional stock index down by 0.2%. Wall Street futures ?were flat.
Oil was the only area of activity, rising 1% on Friday. A?deal between Iran and the U.S. to reopen Strait of Hormuz is further away than initially thought. Washington probably isn't happy with Tehran's reported request to ban "hostile" ships and impose hefty charges on cargo. The risk of further attacks is always present.
Brent crude climbed 1.2% to $83.5 per barrel, adding to a gain of nearly 4% overnight. However, it is still a long way off the recent peak price of $102
The following are key developments that may influence the markets on Friday.
* U.S. Nonfarm Payrolls Report for July
German Industrial Output and Trade Data for June
* French trade data (by Stella Qiu, edited by Christopher Cushing).
(source: Reuters)