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Stocks and dollar drop after weak data, yields rise
U.S. stock prices ended lower on Monday, and the dollar hit a two month low against the Euro, as weak U.S. data, such as an unexpected decline in retail sales, led markets to reduce their bets about a Federal Reserve rate hike. Thirty-year Treasury Yields, on the other hand, have risen to their highest level since 2007. This is due to concerns about the U.S. Fiscal Pathway combined with heavy AI related corporate debt issuance. Investors waited anxiously for the quarterly reports of large retailers, including Home Depot, which is due to be released on Tuesday, as well as retail giant Walmart, which will be released on Thursday, in order to get information on the state of the U.S. consumers. Phil Blancato is the chief market strategist of Osaic Wealth. He said that recent concerns about softer data had caused the market to be a little tepid. Blancato said that August is a time when volume tends to be low, as many traders are on vacation. Blancato stated that there is a combination of the summer doldrums and waiting for consumer data. The Dow Jones Industrial Average dropped 0.51%. The S&P 500 fell 0.52%. And the Nasdaq Composite declined 0.31%. The MSCI index of global stocks fell by 0.35% while the pan-European STOXX 600 Index declined by 0.22%. Stocks were also affected by uncertainty over the economic impact the Iran War, which began in early February. Investors were telling themselves that wars will always end. David Morrison is a senior market analyst at Trade Nation. He said that no one had priced in the possibility of this war continuing as we near the end of the summer. The oil prices rose by over $2 on Monday, mainly due to investor concerns about global supply. This was fueled by the pessimism of investors regarding diplomatic efforts to end the war. Brent crude rose 2.59% to $90.81 a barrel. U.S. crude gained 2.74% on the day. Dollar fell as traders delayed their expectations of the Fed's next moves. Last week's benign consumer and producer price data, which showed a slight increase in inflation, gave traders hope that the worst price pressures had passed, even though the uncertainty surrounding the war continues. Unexpectedly, retail sales dropped last month. This has led to concern that the U.S. may not be as resilient than previously believed. The dollar index (which measures the greenback's value against a basket of currencies, including the yen, the euro and others) was down by 0.06% to 99.6. The euro rose 0.09% from $1.1579 to $1.1614. This is the highest since June 17. The markets are now pricing in 35% of the chance that a Fed decision will be made next month. This is down from 55% about a week ago, and 69% of the odds for a Fed action by December. Treasury yields gained, however, after the U.S. Government had to pay its highest rates ever for the sale of 30-year bond at an auction last week. The yield on the benchmark 10-year U.S. notes increased by 2.79 basis points, to 4.724%. The yield on 30-year bonds rose 4.43 basis points, to 5.3103%. This is the highest level since 2007. Three soft economic releases should have driven long-end yields down. The 30y bond auctions were held at the highest yields since 2001. And now, yields have risen even more. Anshul Pradoshan, Barclays Capital's analyst, wrote in a Monday note that the reason for this was a worsening fiscal forecast, AI-driven supply of corporate duration, and an increasingly price-sensitive customer base. Spot gold increased 1.02%, to $4420.41 per ounce.
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Gold prices rise on a weaker dollar and eased Fed rate hike fears
Gold prices increased on Monday, supported by a weaker Dollar and diminishing expectations of an U.S. Federal Reserve interest rate hike. Investors continued to monitor the geopolitical tensions within the Middle East. By 1:34 pm EDT (1734 GMT), spot gold had risen 0.9%, to $4417.24 an ounce. U.S. Gold Futures?for December Delivery settled 0.8% higher at $4,473.70. Bart Melek is global head of commodity strategies at TD Securities. He said that gold prices are based on a stagflationary climate, with softer jobs and the expectation that the Fed would tolerate current inflation levels. The?US Dollar has fallen to an important psychological level of 100." Gold is now cheaper for those who hold other currencies than the dollar. The markets have reduced their bets that the Federal Reserve will raise rates after a weaker than expected U.S. payrolls data and lower consumer inflation figures last week. Investors await the minutes of the Fed's meeting in July, which are due on Wednesday, to get a sense of the central bank's outlook. CME's FedWatch Tool shows that traders see a 33% chance of a rate hike in September, down from 51.2%?a month ago. Lower interest rates tend to benefit gold, as they reduce the opportunity costs of holding bullion. A senior Iranian official said that Tehran will 'intensify tensions across the Strait of Hormuz, and in other parts of the region, if diplomatic efforts between the United States fail, signaling an 'offensive approach. Silver spot rose 2.1% per ounce to $66.01. Platinum rose 1.3%, to $1770.3 an ounce, while palladium increased 1.1%, to $1326.92. (Reporting and editing by Vijay Kishore, Tasim Zahid, and Sumit Saha from Bengaluru)
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Stocks mixed as dollar drops on Fed rate bets and yields rise
U.S. shares were mixed Monday, and the dollar fell to its lowest level since June, after weak U.S. data, such as an unexpected decline in retail sales, led markets to reduce their bets that the Fed would soon raise interest rates. The 30-year Treasury yields meanwhile rose to their highest level since 2007 as concerns about the U.S. Fiscal trajectory combined with a heavy AI-related corporate bond issuance to drive yields higher. The S&P fell by 0.26% while the Nasdaq Composite gained 0.17% thanks to a positive revenue forecast from AI laboratory Anthropic. The Dow Jones Industrial Average dropped 0.35%. The MSCI index of global stocks fell by 0.15% while the pan-European STOXX 600 Index declined by 0.22%. Chip stocks have been hit by concerns over the return on AI investments in recent weeks. However, robust quarterly results as well as upbeat forecasts that point to a resilient demand has pushed the tech heavy Nasdaq towards record territory. "People can see where'money' is spent and where returns come from... And those things mean that the immediate concern over a potential AI bubble then bust has waned somewhat," said Danni?of Financial Analysis at AJ Bell. Stocks outside the tech sector were also affected by uncertainty over the economic impact the war against Iran would have. "(Investors were) telling themselves that wars always end. David Morrison is a senior market analyst with Trade Nation. He said: "I don't believe anyone priced in the possibility that this could continue as we near the end of summer." This week's earnings are lighter, but investors will be watching closely to see if there is any sign of consumer strength. S&P's August Purchasing Managers’ Indices (PMIs) will be the key release, which will reveal if the mid-year recovery in U.S. Business Activity is still holding. As traders pushed their expectations of the Fed's next step back, the dollar fell. Last week's benign consumer and producer prices data, which showed a slight increase in inflation, gave rise to optimism that the worst price pressures had passed, even though the uncertainty surrounding the Iran conflict continues. Unexpectedly, retail sales dropped last month. This raised concerns that the U.S. may not be as resilient than previously believed. The dollar index (which measures the greenback versus a basket including the yen, the euro and other currencies) fell by 0.08% at 99.51. The?euro rose 0.15%, to $1.1586. It reached $1.1614 at its highest level since June 17. The odds of the Fed moving in December are 67%, while they were 55% just a week ago. The oil prices rose on Monday due to the lack of progress made in diplomatic efforts for a resolution of the Iran War, but the absence of major supply disruptions limited the gains. A senior Iranian official said that Iran had decided to change its policy from defensive to offensive due to the inability to reach a permanent agreement to end its war with the United States. U.S. crude increased 1.25%, to $83.43 per barrel. Brent rose to $89.77 a barrel, an increase of 1.41% for the day. Treasury yields gained, however, after the U.S. Government also had to pay the highest rates since 2001 for the sale of 30-year bond at an auction held last week. The yield on the benchmark 10-year U.S. notes increased 1.6 basis points, to 4.712%. The 30-year bond rate rose 2.94 basis points to 5.2954%. This is the highest yield since 2007. Three soft economic releases should have driven long-end yields down. The 30y bond was?auctioned with the highest yield since 2001. Now, yields are even higher. Anshul Pradosh, Barclays Capital's analyst, said that the reason for this is a worsening fiscal forecast, AI-driven supply of corporate duration, and more price-sensitive buyers. Spot gold increased by 1.05%, to $4,421.94 per ounce. Reporting by Karen Brettell and Avinash P. Editing by Jacqueline Wong and Gareth Jones.
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Gold prices rise on weaker dollar and eased Fed rate hike fears
Gold prices rose on Monday due to a weaker US dollar and the fading expectation of an increase in U.S. Federal Reserve rates. Investors also continued to monitor the geopolitical tensions within Middle East. By 11:56 am EDT (1555 GMT), spot gold had risen 1.2% to $4,426.52 an ounce. U.S. gold futures for delivery in December edged up 1.1% to $4,484.10. Bart Melek is the global head of commodity strategies at TD Securities. He said that gold prices appear to be pricing in a stagflationary climate, with softer unemployment and expectations that Fed will tolerate 'current inflation levels. The US dollar is at a psychologically significant 100-level. Gold is now cheaper for those who hold other currencies than the dollar, as it has fallen to its lowest level in over two months. The markets have reduced their bets for a Federal Reserve rate increase after the weaker than expected U.S. employment report last week and the subdued data on consumer inflation. Investors await the minutes of the Fed's meeting in July, which are due on Wednesday. These will provide clues about the central bank’s outlook. CME's FedWatch Tool revealed that traders see a 33% chance of an increase in September rates, down from 51.2% one month ago. Gold, which does not pay interest, tends to benefit from lower rates of interest as they reduce the cost of holding gold. A senior Iranian official said that Tehran would "intensify tensions" in the Strait of Hormuz, and throughout the region, if diplomatic efforts were to fail with the United States, signaling an offensive approach. Silver spot rose by 2.8%, to $66.44 an ounce. Platinum rose 2%, to $1783 an ounce, while palladium increased 1.5%, to $1332.49 an ounce. (Reporting and editing by Vijay Kishore, Tasimzahid and Sumit Saha from Bengaluru)
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NexGen Energy, a Canadian mining company, holds talks with BHP to seek $1 billion for its uranium project
Leigh Curyer, the CEO of Canadian uranium mining company NexGen Energy, said that they "talk regularly" with mining giant BHP about their Rook I mining project in Saskatchewan. NexGen has put the first shovel into the ground for the construction of one of the largest uranium mining projects in the world. The company will be looking to raise $1 billion of capital over the next nine-month period. The miner will consider financing options such as prepayment agreements with utilities, debt finance and equity investment in the project. Curyer, when asked if NexGen was in contact with BHP regarding a possible equity partnership, replied in an interview that NexGen had an open dialogue. He also noted BHP has purchased a large piece of land near the Rook Project in the Athabasca Basin. "We always talk to them." Curyer said that they have an open dialog in terms of technical details. He said BHP wanted to give their portfolio more weight in countries with stable political systems. Let's see what the future holds. Two sources with knowledge of the matter said that under the previous CEO, Mike Henry, BHP's Business Development team dominated NexGen in the last year. According to an investor, who refused to be identified due to BHP policy, the new CEO of the company - Brandon Craig - plans to "really look at" uranium. However, he acknowledged that the "scale" was difficult. BHP declined comment. The demand for AI has risen dramatically, resulting in a huge expansion of data centres that consume a lot of energy. This in turn increases the need for more power generation, including nuclear plants. BHP produces around 5% of global uranium as a by-product from its Olympic Dam Copper operations in South Australia. BHP had previously said that it would not expand further. At least two other miners, such as Denison and Paladin, are also advancing their uranium mining projects in the Athabasca area. BHP is gaining a foothold in this region. BHP is building the largest potash mine in the world in Saskatchewan. According to Canada's Natural Resources Ministry, the Athabasca Basin has the largest and highest-grade uranium deposits in the world. Cameco and Orano Mining, which account for the majority of uranium exported, are located in the region. NexGen's Rook Mine is expected to be in production by 2030. Over the last year, its market capitalisation doubled from C$9.68 to C$9.68billion. This has led to some investors suggesting that it might now be too expensive for BHP. Rook I is located in the heart of Athabasca, around the Patterson Lake, and aims to become one of the world's biggest uranium producers. Kevin O'Leary, a Canadian actor and investor who hosted the ground-breaking on Thursday called the project "a great energy story". Canaccord, a broker, said that it expected the demand for uranium in 2035 to triple from its current level of 2025. Melanie Burton is in Australia, Divyarajagopal is in Athabasca Saskatchewan. Caroline Stauffer, Chizu Nomiyama and Caroline Stauffer edited the article.
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Gold rises on weaker dollar and fading Fed rate hike predictions
Gold prices rose on Monday due to a weaker US dollar and the fading expectation of an increase in U.S. Federal Reserve rates. Investors also continued to watch geopolitical tensions across the Middle East. By 09:25 am EDT (1325 GMT), spot gold had risen 0.28%, to $4387.95 an ounce. ?U.S. Gold futures for delivery in December edged up 0.2% to $4,444.40. Bart Melek is global head of commodity strategies at TD Securities. He said that the gold market seems to be pricing in a stagflationary climate, with softer unemployment and expectations that Fed will 'tolerate current levels of inflation. The US dollar is at a psychologically significant '100 level. Gold is now cheaper for those who hold other currencies, as the dollar has fallen to its lowest level since more than two months. The markets have reduced their bets for a Federal Reserve rate increase after the weaker than expected U.S. employment report last week and the subdued data on consumer inflation. Investors await the minutes of the Fed's July meeting due on Wednesday for hints on the central bank’s policy outlook. CME's FedWatch Tool shows that traders see a 33% chance of an increase in September rates, down from 51.2% one month ago. Lower interest rates tend to reduce the opportunity costs of bullion, including gold, which pays no interest. A senior Iranian official said that Tehran would increase tensions along the Strait of Hormuz, and in other parts of the region, if diplomatic efforts with the United States fail. This was a sign of a more aggressive stance. Silver spot rose 1%, to $65.31 an ounce. Platinum rose 0.8% to $1762.43 an ounce, while palladium increased 1% to $1326.26. (Reporting and editing by Vijay Kishore in Bengaluru, Sumit Saha from Bengaluru)
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Russian ESPO blend crude oil returns to premium compared with Brent due to China's demand, traders claim
Four traders reported that Russia's Far East ESPO blend crude for October -delivery to China -is trading at a?premium of up to a $1 per barrel over ICE Brent. This is largely due to the strong Chinese demand and uncertainty about?oil _supplies originating from the Middle East or Iran. The traders say that Asian buyers are looking for alternatives to Middle Eastern crude oil amid fears of continued disruptions in shipments across the Strait of Hormuz. Oil prices rose on Monday, despite the lack of progress in diplomatic efforts to end the Middle East conflict. One of the traders said, "We don't know how long the Mideast Crisis will last or how much Iran Oil will be shipped out. So the Russian supply is most reliable." The traders reported that ESPO blend cargoes delivered in October have been actively traded. Nearly all volumes were sold at a premium of around $1 per barrel to ICE Brent, based on the price paid by buyers for the cargoes to be delivered into Chinese ports. This compares to September-delivery cargoes which traded at a $1 per barrel discount last month, and then reached parity with ICE Brent. Last time ESPO blend traded?at a higher price than Brent was June. Two traders claim that the strong demand from Chinese refiners has pushed India out of the market as a major buyer of Russian crude oil. Indian?refiners have been unable to secure ESPO 'allocations for October because Chinese buyers had snapped up the available cargoes. Traders said that both China's independent oil refiners as well as?major government-owned oil companies were?active buyers ESPO blending cargoes. Reporting by Siyi Liu in SINGAPORE and Aizhu in MOSCOW. Additional reporting by Nidhi in NEW DELHI. Mark Potter edited the article.
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Nvidia invests $1.5 billion into SB Energy as part of OpenAI datacenter deal
Nvidia is investing $1.5 billion into a 'SoftBank-backed SB Energy, and will secure up to 8 gigawatts in AI computing capacity on a 'campus' being built by OpenAI. This is not the first time that Nvidia has financed the ecosystems that consume its chips. The strategy has fueled demand, but it also attracted scrutiny for the 'circular flow of funds' from the chipmaker towards its biggest customers. As they rush to secure the infrastructure required for increasingly power-hungry AI, leading tech firms are increasingly linking together chip, power and data center development. Nvidia, the chip giant, has acquired land and electricity at Ohio's PORTS -Pike Technology Campus to build an AI datacenter that will utilize its graphics?processors & networking gear. The initial capacity is 4.25 GW. SB Energy and SoftBank will invest at least $4.2 billion to support AI data centers in Ohio grid infrastructure. SB Energy, which is also backed by OpenAI, develops large-scale data center and power infrastructure projects. The company was founded in 2019 and is building several 'data center campuses' to meet the rising demand for AI workloads. (Reporting and editing by Devika Syamnath in Bengaluru)
Stocks mixed as dollar drops on Fed rate bets but yields rise
After a string of weak?U.S. economic data, U.S. stock prices were mixed and the dollar dropped to its lowest level since June. After a series of weak economic reports, including a surprise drop in retail sales the?markets? reduced their bets that a Fed rate hike was imminent.
The 30-year Treasury yields meanwhile rose to their highest levels since 2007. Concerns over the U.S. Fiscal trajectory, combined with heavy AI related corporate debt issuance, drove yields higher. The S&P 500 dropped 0.11%, while the Nasdaq Composite gained 0.08% thanks to a positive revenue forecast by AI lab Anthropic. The Dow Jones Industrial Average dropped 0.21%.
The MSCI index of global stocks was unchanged on the day while the pan-European STOXX 600 Index dropped 0.06%.
Chip stocks have been battered by concerns over the payoff of AI investments in recent weeks. However, robust quarterly results as well as upbeat forecasts that point to resilient demand has pushed tech-heavy Nasdaq 'back towards record territory.
"People can see where their money is going, and where they are getting the returns... so the concern over a possible AI boom, then 'bust' is fading," said Danni Hwson, AJ Bell’s head of financial analyses.
Investors will be watching closely to see if there are any signs of consumer strength. S&P's Purchasing Managers’ Indices (PMIs) for August will be the key release. This will reveal whether or not the pickup in U.S. economic activity at mid-year is still holding up. As traders pushed their expectations of the Fed's future move back, the dollar fell. Last week's release of consumer and producer prices for July gave rise to optimism that the worst price pressures are behind us, even though uncertainty about the Iran conflict continues. Unexpectedly, retail sales dropped last month. This has raised concerns that the U.S. may not be as resilient than previously thought.
The dollar index (which measures the greenback versus a basket including the yen, the euro and other currencies) fell by 0.17%, to 99.42. Meanwhile, the euro rose 0.22%, at $1.1595.
The odds of the Fed moving in December are 66%, down from 55% just a week ago. The oil prices increased on Monday due to the lack of progress made in diplomatic efforts to end the 'Iran War, but the absence of major supply disruptions limited the gains. A senior Iranian official said that Iran had decided to change its defensive policy to one of "fully offensive". This was due to the inability to reach a permanent agreement to end its war with the United States.
U.S. crude climbed 0.12% to $82.50 per barrel. Brent rose to $88.85 a barrel, gaining 0.36% on the day.
Treasury yields gained, however, after the U.S. Government also had to pay its highest rates since 2001 for the sale of 30-year bonds in an auction held last week.
The yield on the benchmark 10-year U.S. notes increased by 0.41 basis points, to 4.7%. The 30-year bond rate rose by 1.24 basis points, to 5.2784%. It reached its highest level since 2007.
Three soft economic releases would have pushed long-end rates lower. The 30y bond auctions were held at the highest yields since 2001. Now, yields have even increased. Anshul Pradoshan, Barclays Capital's analyst, said that the reason for this is a worsening fiscal forecast, AI-driven supply of corporate duration, and an increasingly price-sensitive customer base.
Spot gold increased by 0.78%, to $4,409.94 per ounce. Reporting by Karen Brettell and Avinash P. Editing by Jacqueline Wong and Gareth Jones.
(source: Reuters)