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The latest rains in Belgium offer new hope for the fight against Belgium's largest wildfire
The rain began to fall on eastern Belgium Monday morning, providing crucial assistance to firefighters battling to contain Belgium’s 'biggest wildfire ever' which has threatened to reach a border with Germany. Belgian weather agency IRM predicts rain in the region between 5-9 millimetres and more on Tuesday. The High Fens in east Belgium, which has been burning since Friday is expected to drop to 19 to 20 degrees Celsius. The captain of the Belgian radio station RTBF, Olivier Guist, said that "this will change everything. In addition to the water associated rainfall there will be an increase in humidities." About 500 firefighters from the United States, Germany, and Luxembourg are working to contain a fire that has already consumed about 3,000 hectares (7.400 acres) of the sparsely populated hills covered with peat, moorland and woods. Heatwaves across Europe have intensified the drought, leaving vegetation tinder dry, causing severe wildfires to spread and making areas like High Fens vulnerable. The local authorities in Butgenbach, Waimes and other nearby towns ordered 600 people to evacuate on Saturday. They also told them not to return home yet. Local prosecutors have opened an investigation to determine the cause of this fire. Monschau, a German town near the Belgian border, asked its residents to leave on Sunday. They noted that smoke pollution would be likely but the fire wasn't expected to enter German territory. After Belgium asked for emergency reinforcements, the EU has deployed three helicopters and water bombing aircraft around Europe. Data from the European Forest Fire Information System revealed that the wildfire was the largest in the country on record. It is more than twice the size of the 2011 blaze, which burned 1,400 hectares. Bart Biesemans and Yves Herman report, Inti Landauro writes, Toby Chopra edits.
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Diversifying investments help emerging markets emerge from the 'valley tears'
The flow of money into emerging markets has not been affected by war, tariffs or AI fluctuations. Instead, reforms, local capital markets that are deeper and a diversification away from U.S. investments have reshaped the asset class. Investor demand has not been deterred by global shocks, which once caused sharp sell-offs in developing economies. Emerging market debt is at its highest level for more than a decade and governments are issuing record amounts of bond. The improvement of policy, the strengthening of foreign exchange reserves and the growth in domestic investor pool have all helped to cushion countries against shocks. David Hauner is the head of Bank of America's emerging markets fixed income strategies. He said that from 2015 to 2025, emerging markets were like a valley of tears: a strong dollar, U.S.exceptionalism, many crises, defaults and COVID. The current recovery is a result of the dire circumstances that preceded it. "There were so many outflows, a few month's worth of inflows will not compensate for that...it is still just scratching the surface on the under-investment which has occurred over the last decade." The war that began in February has closed the Strait of Hormuz, a key passageway, and increased global oil prices. This, in turn, has led to higher food prices and inflation. There are still concerns that the Federal Reserve could increase interest rates, strengthening the dollar to the detriment of emerging market currencies. U.S. Treasury Yields, the basis for pricing emerging market borrowing costs, are at multi-year highs. Investor interest hasn't been affected by the turmoil yet. Jetro Siekkinen is the head of emerging markets fixed income at LGT Capital Partners. He cited the debt-to GDP ratios as evidence. In contrast, emerging markets have spent years bolstering central bank independence and foreign currency reserves. Credit ratings have been upgraded for many, including Pakistan and Ghana. Siekkinen stated that "diversification (away) from U.S. Treasuries is driving the latest performance of emerging market and frontier as well." CASH IS COMING IN Foreign capital flows? back those views. Institute of International Finance data shows that foreign investors invested $214.4 billion in emerging market debt from January to July. This is up from $177.7 million during the same period of last year. In July, emerging market nations sold around $19 billion in bonds, which is twice the average monthly issuance over the last decade. This puts the year-to date issuance to a record of $187 billion. Despite turmoil, Capital Economics' aggregate EM currencies risk indicator is still near its multi-year lows. Some, like BlackRock Investment Institute have cooled on emerging market stock and hard currency debt. AI mini-boom-and-bust cycle has also increased volatility in the emerging markets equities, which are now dominated by South Korea and Taiwan's tech-heavy shares. IIF data showed that equities had been sold for $86 billion through July, which is nearly 10 times what they were at the same time in 2025. Investors warn emerging and frontier market are more vulnerable to El Nino and food inflation. Siekkinen stated that they are very selective and don't follow benchmarks. They cite debt concerns in certain countries and lower yields elsewhere as reasons for their non-adherence. UNDER ?EXPOSED, AND BUILDING LOCAL CAPITAL COVID taught emerging markets a hard lesson when the flight of investors contributed to defaults in debt from Sri Lanka to Ghana. The upheaval has accelerated efforts to increase the domestic capital pool, and reduce reliance on foreign investors. The majority of emerging economies, especially those with larger populations such as South Africa and Brazil, now finance themselves through the domestic debt market. According to research from JPMorgan & UBS, the total amount of local-currency debt outstanding by 2024 will be around $13 trillion, compared to $1.4 trillion in international hard-currency debt. Hauner stated that local currencies on markets such as Brazil, Colombia and Egypt are in a particularly strong position. Magdalena Polan of PGIM's EM?Macro research said that local investors help buffer developing nations against global risk. Polan stated that the pattern of shocks spreading into EM financial market is different today. Polan said that large local investors played a stabilizing role. This means that markets don't sell off quickly and there are few liquidity crunches. Polan and Hauner say that inflation risks from El Nino and rising fertiliser prices are the two biggest threats to investment. Some people say that there is still room for improvement. Lamine Bougueroua is a fund manager at Carmignac. She said, "We expect the outperformance of EM Local Debt to continue between now and year-end." Investors realize they have over-allocated to U.S. assets and are now allocating more to EM. With geopolitical uncertainties, it is important to diversify as much as possible. (Reporting and Editing by William Maclean, Karin Strohecker and Libby George)
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Gold prices rise on the weaker dollar and reduced Fed rate hike bets
Gold prices rose on Monday due to a weakened dollar and recent softer economic data, which reduced expectations of a U.S. rate hike in the next month. Gold spot rose 0.4% at $4,391.49 an ounce as of 0520 GMT. Last week, prices reached a record high. U.S. Gold Futures for December Delivery edged up 0.3% to $4,448.40. The U.S. dollar index fell by 0.2%, making metals priced in greenbacks more affordable to other currency holders. Tim Waterer is the chief market analyst for KCM Trade. He said, "Gold has taken the ball and run away with it this week. Soft inflation numbers are keeping the U.S. Dollar under pressure, and giving gold more headroom to move towards the $4400 level." "A sustained movement?above 4,500 would probably need additional dollar 'weakness or an even clearer drop in energy prices." The unexpected drop in nonfarm payrolls for the U.S. in July combined with data that showed only mild inflation in consumer prices has led to a reduction in expectations of a rate hike by the U.S. Federal Reserve next month. CME's FedWatch Tool shows that traders now price in a 30% chance for a rate hike in September, down from a 47% probability a month ago. Lower interest rates lower the opportunity cost of holding bullion that does not yield, increasing its appeal to investors. The markets are now awaiting the minutes of the Fed meeting for July, which is due on Wednesday. These will provide further insight into policymakers' monetary policies. A diplomatic source revealed that on a geopolitical level, U.S. president Donald Trump's envoys had met with Egyptian, Qatari, and Turkish mediators on Sunday in Cairo, to discuss advancing?his Gaza Peace Plan, while?Israel continued airstrikes?in the enclave. Silver spot rose 1.4% per ounce to $65.57. Palladium rose 1.4%, while platinum fell 0.1%, to $1,746.43. Platinum dropped by 0.1%, to $1,746.43. (Reporting and editing by Rashma Aich in Bengalur; Ashitha Shivaprasad and Sukanya Mittra from Bengalur)
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Dollar slips on markets that reduce Fed rate risk
Asian shares edged higher on Monday, led largely by Chinese stocks, ahead of important economic data. Investors kept a watchful eye on oil prices, after a large gain last week, amid a deadlock in the Gulf conflict. After a string of weak data, including a surprise drop in retail sales and a lackluster run of economic reports, markets have given up on betting that the Federal Reserve will soon raise interest rates. According to CME Group's FedWatch, a rate hike in the next month has been priced at 30%. This is down from 50% a week ago. The broadest MSCI index of Asia-Pacific stocks outside Japan rose by 0.5% while Japan's Nikkei gained 0.3%. The Hang Seng index rose 1.6% and Chinese blue-chips gained 0.8% ahead of the release of China's July activity data. Investors could be in for a surprise, as forecasts call for a slower industrial growth rate of 4.8% from 5.3%. The South Korean stock exchanges were closed Monday due to a holiday. The Korean won was not affected by the directive from Donald Trump, U.S. president to the Pentagon to reduce the number of joint military exercises. After last week's gains, oil prices are mixed. Iran called on the U.S. on Saturday to accept defeat while Trump encouraged Americans to accept higher gasoline prices as long as the conflict continues. The Lebanese Health Ministry said that at least 11 people died in Israeli airstrikes in southern Lebanon, on Saturday. These strikes were some of the most deadly in recent weeks, since the country signed a peace agreement with Israel, mediated by the United States. Brent crude rose 0.2%, to $88.67 per barrel, after gaining 6% the previous week. U.S. crude fell 0.2%, to $82.19, after gaining 5.4% the week before. The U.S. will try to calm down the situation whenever oil prices rise above $100. This is the base case, according to Shane Oliver, Chief Economist at AMP. The risk is that there won't be a sustainable peace deal and the flow of oil from the Middle East will remain down by 10%-15% compared to normal levels. We will also have to pay higher oil prices due the depletion of reserves. FED RATE RISK DISAPPEARS EUROSTOXX futures in Europe rose by?0.3%. S&P futures rose 0.1% after hitting a record high last week. Nasdaq Futures also gained 0.3%. Stocks have been gaining momentum due to the decreasing risk that the Federal Reserve will increase interest rates next week. U.S. Retail sales declined for the first time in nine months and consumer sentiment deteriorated more than expected in July, contributing to low inflation. Investors will be examining the strength of U.S. consumer spending. Earnings this week are lighter, but still include Home Depot and Target. This week, the main data point is the August S&P PMIs to determine whether the acceleration of U.S. businesses at mid-year can be sustained. U.S. Treasury rates dropped on bond markets after a mixed week last week. The yield on the?two-year U.S. Treasury fell 2 basis points, to?4,154%. It had fallen 3 basis point last week to reach a seven-week low of 4.0977%. After a 4 basis point increase last week, the yield on ten-year bonds fell 2 basis points this week to 4.680%. The dollar has been impacted by the soft data, and the euro hit a two-month peak of $1.1588. Australian and New Zealand dollar also reached 10-week highs at $0.7105 apiece and $0.5910 respectively. Gold prices rose 0.4% this week to $4,391 per ounce, after a 0.8% increase last week. (Editing by Stephen Coates & Jacqueline Wong).
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As business losses increase, Europe's heatwaves expose a gap in insurance coverage
Since more than a century, the cafes of Padua, Italy, have invited customers to enjoy an aperitivo (early evening drink) and socialise outside before dinner. The traditional time slot of 6-7 pm has all but disappeared in Europe as people are seeking air conditioning indoors. This is affecting sales at many hospitality businesses. Extreme heat is often excluded from traditional business interruption policies, which exposes a growing gap in protection for businesses across Europe. Moody's published estimates stating that the European heatwaves last summer cost EUR43 billion ($50billion) in economic output, but only EUR500 million in insured payouts. Federica Luni is the president of the hospitality association APPE Padova. She said that in Padua aperitivo starts later. "This means the outdoor seating areas and terraces are often left unused. A survey of 600 hospitality businesses in the city, and province, revealed that more than 80% of them reported a decline of 20% or more of their turnover during the heatwave. Luni stated that a 20% drop in margins would wipe out all your profit. Heatwaves are taking a greater toll on the European economy. They reduce productivity, cut consumer spending, and increase operating costs. Such losses are difficult for insurers to cover, as they usually stem from indirect disruptions of operations rather than physical damage. Swenja Surminski is the managing director of climate and sustainability for Marsh. Extreme heat does not cause physical damage as severe as a flood or storm, but it can have a similar impact on the economy. In a survey conducted by the European insurance regulator in 2023, 28% of small and medium-sized businesses had business interruption protection as part of their property insurance. 17% of these firms also had non-damage interruption coverage for events like strike action. As the costs of extreme heat rise, so does the protection gap. The economic costs of extreme heat are increasing. Trains get delayed, farm yields drop and cooling costs in factories rise. Workers struggle to remain productive during extended periods of extreme temperatures. When reporting their second-quarter earnings, companies such as the Swedish shopfitting company ITAB Group and Italian cement producer Buzzi warned of the potential impact that hot weather could have in future. COMPOUND RISK Heat is often a compounding risk that interacts with drought, wildfire, and water shortages, rather than triggering one identifiable loss event. This makes it more difficult to model and to insure than other?natural disasters. Europe is the continent that has experienced the most rapid warming. Climate Monitor reported that the average temperature in Western Europe on August 11 was almost 10 degrees Celsius above the 1961-1990 average. According to data compiled by the environmental disclosure platform CDP, 35% of the companies that it tracks identified heatwaves as an important risk factor, with businesses in manufacturing and services, infrastructure, and food sectors leading this group. Insurance may cover certain physical losses resulting from events such as power outages. However, many businesses say that compensation is not enough to compensate for lost sales or reduced customer activity. Luni stated that the real loss was the revenue and business activity you didn't have because of the outage. In order to bridge this gap, insurers are increasingly looking at parametric products which pay out automatically if temperatures exceed certain thresholds. These policies are not indemnity-based, and do not require an 'extended loss-adjustment procedure. According to KBV Research's report, the European market for parametric insurance is expected reach $7.93billion by 2031. The growth rate between 2025-2032 was 9.5%. These policies are already used in agriculture where heat can reduce crop yields and livestock productivity. Industry experts see scope to expand these policies into other sectors, including transportation and worker protection. "Parametric Insurance?can play a real role," said Aidan Kerr. He is the head of UK & Ireland Public Sector Solutions at Swiss Re. Surminski, Marsh's Surminski, said that many companies would need to adapt their operations in order to be able to handle more extreme heat. This could include investing in cooling technology, redesigning the workplace and stress testing supply chains. Take action to prevent losses, rather than addressing them after they have occurred.
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MORNING BID EUROPE - Could consumers hold the Fed at bay while Japan increases?
Tom Westbrook gives us a look at what the future holds for European and global markets. Walmart and Home Depot will be in the spotlight this week as well as the AI spending boom, after Friday's data showed the first drop in U.S. Retail Sales?in nine months. The dollar fell sharply on Monday as traders had an unfamiliar outlook. The market is pricing in rate hikes in Europe and Japan for next month. Meanwhile, the retail data has shifted the outlook of the U.S. market further to the?hold' side. Sterling and the euro are not far from their multi-month highs. The Aussie, kiwi and sterling also have two-month records. The won did not react to the order by U.S. president Donald Trump to the Pentagon on Sunday to "substantially decrease" military exercises with South Korea. Alphabet is working with banks to launch the first Aussie dollar bonds, according to a message from a bookrunner on Monday. This is the latest indication that hyperscalers are looking beyond the U.S. To fund their massive capital expenditures on computing. The message did not mention how much Alphabet might raise or its plans for proceeds. The yen has risen a bit as traders bet on the policymakers increasing their rate hike pace. Analysts at Bank of America are slightly more hawkish, but still believe that four increases will occur between September and the end of July in next year. This would bring?the policy interest rate up to 2%. The markets shrugged off the miss of Japanese economic growth on Monday, and drove up government bond rates. The benchmark 10-year government bond has been sold six consecutive sessions at a yield of 2,925%, which is a nearly 30-year high. The yen flirted on the strong side of 159 dollars per yen. China has moved its monthly activity data to the London session, but Europe's data schedule is pretty sparse on Monday. Canadian inflation data is due later that day, and in the following week we have European confidence indicators and flash PMIs. The following are the key developments that may influence the markets on Monday. - Economic activity in China, housing data. Canada CPI (Editing By Saad Sayeed).
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Copper prices rise due to shortage, and key spreads widen
The week started with a strong start for copper, thanks to tight?availability. This also helped push the key spread even wider, after it reached its highest level in five years last week. Benchmark 'three-month' copper at the?London Metal Exchange rose?1.45%?to $14,365 per metric ton as of 0300 GMT. The Shanghai Futures Exchange's most traded copper contract jumped by 1.77%, to 109 580 yuan (16 254.54) per ton. Stocks of red metal at LME-registered storage facilities The price of refined copper has dropped by almost half over the past three months as material is imported into the U.S. to avoid possible tariffs. Supply problems, such as a maintenance outage at Smelting Gresik's large operation in Indonesia, have heightened concerns about stock shortages. Inventory shortages have helped to push the LME cash-to-three month spread up to its highest level since 2021. The LME Cash-to-Three Month Spread The?widened to an?adverse?of $473.24 per ton, indicating acute shortages of material as traders with negative positions scrambled to secure metal before the exchange's contract settlement day of Wednesday. "Shorts have to buy contracts near to their current positions to close or roll them due to the shortage of metal available," said Craig Lang, principal analyst with commodity research firm CRU. Consumer buying was reduced, which capped the rally in copper contracts. The Yangshan copper premium A barometer of import demand for the world's largest consumer?of?red metal -- China -- fell to $90 per ton on Friday, its lowest level in a whole month. Lang explained that the fall was primarily due to a deteriorating economic situation in China, as well as a softer physical demand near-term from Chinese buyers who are reducing their expenditures because of higher copper prices. Aluminium gained?0.31% among LME metals. Zinc gained 0.61%. Lead gained?0.47%. Nickel gained 0.62%. Tin?ticked higher by 0.14%. The SHFE metals gained 0.54 %, tin 1%, and lead 0.32%. $1 = 6.7415 Chinese Yuan Renminbi (Reporting and editing by Ronojoy Mazumdar).
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Gold prices rise on a weaker dollar and reduced Fed rate hike bets
Gold prices rose on Monday due to a weaker dollar and recent economic data which reduced expectations of a U.S. rate hike in the next month. Gold spot rose 0.4%, to $4.391.07 an ounce at 0248 GMT. Prices reached a two-month high in the last week. U.S. Gold Futures for December Delivery?edged up 0.3% to $4,448.10. The U.S. Dollar index fell by 0.1% making metals priced in greenbacks more affordable for other currency holders. Tim Waterer is the chief market analyst for?KCM Trade. He said that gold has taken off and run to start the week. Soft inflation numbers are keeping the U.S. Dollar under pressure, giving it extra room to move?towards $4,400. "A sustained movement above $4,500?would likely require additional dollar weakness or an even more pronounced pullback in the energy prices." The U.S. Federal Reserve has been expected to raise interest rates in the next month despite an unexpected drop in non-farm payrolls and data that shows only mild inflation in consumer prices. CME's FedWatch Tool shows that traders now price in 30% of a rate hike for September, down from 47% one month ago. Lower interest rates can reduce the cost of holding bullion that does not yield, increasing its appeal to investors. The markets are awaiting the minutes of Wednesday's Fed meeting to get more clues about policymakers' monetary policies. Sources say that on the geopolitical side, U.S. President Donald Trump's envoys, who met with Egyptians, Qataris and Turkish mediators, in Cairo, were aiming to advance the peace plan for Gaza, while Israel continued its airstrikes. Silver spot rose by 1.4%, to $65.53 an ounce. Palladium rose 1.6%, while platinum rose 0.3%, to $1752.36. Reporting by Sukanya and Ashitha in Bengaluru, editing by)
MORNING BID EUROPE-Yen stuck in twilight zone
Ankur Banerjee gives us a look at what the day will bring for the European and global markets. The yen is back in the intervention area, but it's fate now seems to depend on the Fed's policies and the Bank of Japan's aggressive hikes, after the joint operation with the U.S.' failed to stop the currency's fall.
The currency is heading for its worst three-month period, with the rate hovering around 159.37 dollars per U.S. Dollar, moving ever closer to 160, which could trigger another round of intervention. Tokyo spent billions to prop up the yen between April and May, as well as with the U.S. by the end of July. It has said repeatedly that it is ready to step in again if necessary.
The yen has remained weak, in part because of the interest rate differential between Japan and the other major currencies. The math is not enough.
The yield on the 10-year U.S. Treasury is still close to 4,7%, while it's only 2.9% for Japanese government bonds. This gap is large enough to maintain the carry trade, no matter how much money is thrown in defense of the yen. The markets now bet that it's the Bank of Japan who will help stop the yen from falling, and traders are betting on an increased pace of interest rate hikes by a central banking institution which some analysts claim has been relatively slow to increase rates. Mitsuhiro Furusawa, Tokyo's former top currency diplomat said that most market players believed the BOJ would raise rates in September. I agree with him. But what is important is for the central bank to communicate the likelihood of an accelerated pace of rate hikes.
A recent run of 'benign U.S. inflation data has also helped the yen, lowering the odds of an imminent rate increase from the Federal Reserve. However, the risk remains as long as a deal to end the conflict in the Middle East is still elusive.
European stock futures indicate a modestly increased open, as risk appetite was bolstered this week by economic data which showed little pricing pressure.
The following are key developments that may influence the markets on Friday.
France: July inflation figures
* EU: Q2 GDP and employment data (Editing Sonali Paul).
(source: Reuters)