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Stocks drop as yen firms, Gulf attacks push oil to $100 per barrel
The yen was trading at seven-month highs on Tuesday, and stocks were down after an attack on oil facilities in the Gulf drove prices of crude to close to $100 per barrel. Copper prices also hit record highs. Brent crude futures reached their highest level in six weeks and were nearing $100 per barrel after Houthis, Yemen's Iranian-backed Houthis, attacked energy installations and cities in Saudi Arabia. This highlighted the danger of the conflict spreading across the region, and complicating fuel supply to the world markets. Diesel prices have risen to record levels and gasoline prices are also higher than they were before the war. Even the prices of crude oil for immediate delivery, which is a physical product, are above the futures price. This shows the impact of the conflict on the global energy market. Inflation has risen in recent weeks and this is partly due to the increase in bond yields which have reached multi-year highs. This puts pressure on central banks to raise interest rates. The European Central Bank will almost certainly raise rates in the euro zone by a quarter-point on Thursday of this week. Meanwhile, the chances of the Bank of Japan raising rates next week have increased, setting the yen up for its biggest rally in the past two years. The STOXX 600 fell 0.2% in Europe, while the futures for the S&P 500 dropped 0.4%, and those of the Nasdaq declined 0.1%. This suggests that tech stocks will suffer less losses when Wall Street opens later this week after a long weekend. Unwinding Yen Carry Trades The U.S. data on inflation could be decisive for setting expectations about the outcome of next week's Federal Reserve meeting. Money markets indicate that traders currently attach a 58% chance to a rate increase. The yen's rise may be the biggest story on global markets. Oil was the focus of attention Tuesday, but it is likely that the yen will continue to surge. Due to its low yield, traders borrowed yen to buy higher-yielding assets, including currencies, bonds, and equities. This strategy is known as carry trading. This trade is beginning to unravel as the BOJ prepares to raise rates. Japanese bond yields are at or near records highs, and capital has begun to flow back home. The last time carry trades reversed and the yen appreciated so quickly was in 2024. A surge of volatility hit global equities. The yen gained almost 4% in the last week, which is its biggest weekly gain since July 2024. On Tuesday it was trading at around 154.4 and the dollar was roughly unchanged for the day. Francesco Pesole, a ING strategist, said that despite the fact that short-term fundamentals suggest the move has been overdone, it is still risky to stand against it, especially given the potential for further carry trade unwinding. Data showed that the real Japanese wages increased by 2.4% from a year ago in July, the largest increase since May 2021. Capital Economics analysts in a report said that wage growth is increasing and the Bank of Japan should accelerate the pace of tightening. Copper, a commodity?beyond? oil, hit a record high on Tuesday as global supplies tightened. The metal continued to flow into the U.S. in anticipation of potential tariffs. The price of three-month copper at the London Metal Exchange rose by 1.1% to $14,673 per ton after reaching as high as $14,694. The benchmark 10-year Treasury note yielded 4.8% on the bond market. This was up by 2 basis points for the day, and is not far from its highest level since November 2023.
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IFX reports that Kazakhstan has suspended proceedings to recover $5 billion from NCOC Oil Consortium
Interfax reported that Kazakhstan's Ministry of Justice suspended enforcement proceedings against the North Caspian Operating Company, which operates the Kashagan Oil Field. NCOC is a joint-venture between Shell, TotalEnergies,?ExxonMobil, and China's CNPC. It runs Kazakhstan's 'offshore Kashagan' field. It did not respond immediately to a request for comment. NCOC is embroiled in a long-running?legal dispute with the Kazakh Government, who accuses NCOC of?environmental violation related to sulphur storing, and ordered NCOC pay a large penalty. NCOC and its contractors have rejected the fine, as well as the allegations that led to it. The case is now being heard by international arbitration. Reports in July stated that Kazakhstan warned the NCOC head of criminal prosecution if he did not pay fine. Kazakhstan is responsible for 2% of the global oil supply. Critics and international oil giants have accused Kazakhstan that it is attempting to gain more control over its 'oil industry through "resource nationalism", a charge Astana denies.
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HSBC increases Brent crude price forecast for 2026 to $90/bbl
HSBC raised its Brent crude prices forecasts?for the rest of this year and the next. It cited a?prolonged interruption to shipping through the Strait of?Hormuz due to the collapse?of a U.S. - Iran?memorandum of agreement. Kim Fustier is a senior global oil &gas analyst at HSBC. In a?note, she said: "We?think that the market is adjusting towards a disrupted?new normal? in which the strait has not been fully closed or fully opened, but is persistently impaired." The bank increased its Brent forecasts for 2026 to $90/barrel, up from $80. This includes a $95/bbl estimation for the fourth quarter in 2026. The bank raised its?forecast for 2027 to $85/bbl, up from $65. It also increased its long-term assumptions to $75/bbl starting in 2028. Tuesday, oil prices reached a multi-week high after Iran-backed Houthis launched an attack on Saudi energy plants and Tehran warned the United States of "economic war". Brent crude futures rose earlier to $99.46, its highest level since July 24. U.S. West Texas intermediate crude also reached $94.73, the highest level since June 8. Analysts said that flows in the waterway, which is critical to the region's economy, have stabilised at about 30% of the?pre-conflict level since the collapse of the US-Iran agreement in July. However volatility continues day-today. We expect liquids to flow through Hormuz from 6mbd to 8mbd at the end of this year and to 9.5mbd in mid-2027. This is still well below the 19-20mbd pre-conflict transit. The market will remain tighter for longer than previously thought, they said. HSBC does not expect that the market will return to equilibrium until mid-2027. This implies further inventory drawdowns in the coming quarters. The bank has also increased its assumptions about refining margins for 2026-2028, and expects product tightness to continue through 2027 despite crude balances improving.
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Holtec Nuclear's US IPO targets $10.2 billion in valuation as the fall window opens
Holtec, a nuclear technology company, said that it aims to achieve a valuation up to $10,2 billion for its U.S. initial IPO, which will take place as Wall Street begins 'its post Labor -Day dealmaking spree. The Camden-based New Jersey company wants to raise up to $900,000,000 by selling 50 million shares at a price between $15 and $18 each. As markets recover from the summer slowdown, fall is traditionally a busy time for new deals. Holtec's listing is the latest in a series of nuclear IPOs this year, as companies move away from blank-check deals and towards traditional IPOs. X-energy 'and Standard Nuclear have gone public this year through traditional IPOs, while Westinghouse also?confidently filed for a New York listings. The demand for nuclear energy has risen rapidly, as the construction of data centers drives up electricity consumption and renews interest in nuclear reactors. Holtec was founded in 1986 by Krishna Singh and specializes in heat transfer, reactor components, spent-fuel storage, and decommissioning of nuclear plants. According to the filing, the company reported a net profit?of 205.6 million dollars on revenue of 269.9 millions dollars for the six-month period ended June 30. This compares with a net loss of $139.1million dollars?on revenue $286.6million dollars a year ago. The company is developing small modular reactors, with the first two units to be deployed on its Palisades site. Holtec also works on restarting decommissioned 800-megawatt Palisades plant. This would be the U.S.'s first commercial reactor to resume operations after ceasing?operations. J.P. Morgan is the joint book-running manager, along with Guggenheim Securities. Citigroup and BofA Securities. Holtec's stock will be listed on Nasdaq Texas and Nasdaq under the symbol HNUC.
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The EU Flag Project Liquidity Concerns have selected some critical mineral companies
A document seen by revealed that some?key developers of critical minerals projects selected by the EU had called for urgent financing. It said?liquidity restrictions may put others in danger and?limit its ability to reduce its dependency on China. After Beijing placed export controls on critical minerals for energy transition, electronic and defence, the?European?Union selected 47 projects in Europe last March and 13 others outside the bloc by June 2025. In an "Urgent Action Call", 23 of 60 projects stated that "the goal must be to unlock urgently projects, especially those working towards a final investment decision who face acute liquidity and the market pressures and immediate danger." The document didn't specify any specific companies. In response to a question, the EU stated that they have been able to mobilize 1,7 billion euros ($1,97 billion) of financing for strategic project since December. They are also fully aware of the challenging market conditions. When asked about the letter containing this document that was sent to European Commission president Ursula von der Leyen, and Stephane Séjourne, industry commissioner, a?Commission spokeswoman said Europe?was?moving decisively towards strengthening its supply of essential raw materials. The spokesperson added that it was done by "putting into place the framework for identifying strategic projects, accelerating permitting, and crucially mobilising the funding needed to make these projects a reality". The financing issues of EU projects are meant to be part of the strategy of increasing its output of minerals, such as 'lithium, cobalt, and rare earths, required for development such?as AI Data Centres and Electric Vehicles (EVs). This contrasts sharply with U.S. deals worth nearly $40 billion. The document sent to European Commission stated that "Fifteen month after the first Strategic Project Selection, projects are affected by unfulfilled promises on financing, access to markets and permits, as well as lack of vision, strategic and coherence among European approaches." Viridian Lithium collapsed in March due to a lack of EU funding, according to Luc Pez. He added: "The choice of Viridian Lithium as an EU strategic program was a curse." "Our private investors were waiting for Europe's commitment to the project but it never materialised." Pez stated that the numbers were small but crucial, referring to the lithium project. The project aimed at supplying 10% of EU's battery mineral needs. PROGRESS MADE IN?BETTER ENGAGEMENT The EU chose the projects to help it meet its targets in the Critical Raw Materials Act of 2024, which states that the bloc aims to mine 10% and process 40%, while recycling 25%, by 2030. The EU spokesperson stated that "The Critical Raw Materials Act" is not a financing instrument, but it does propose several measures for project development. The EU claimed?last summer that the projects would be aided with streamlined permits, financing, and assistance in selling their output. But the European Court of Auditors stated, "in February, efforts to diversify imports of essential minerals have yet to produce tangible results." A director from one of the project's who attended the meeting said that at a meeting with Kerstin Joorna last month, the director general of GROW, the department of the Commission which includes the industry, "some progress was made in terms of better engagement, but no urgent financing solution was suggested." The director declined to identify himself due to the sensitive nature of the issue. He said that it was not clear how many projects were experiencing liquidity problems. The director stated that "Several projects had already been put on hold, so the promoters chose not to endorse the Call to Action to avoid attracting additional attention."
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Gambia protesters set fire to tyres in order to denounce power outages
Residents and a witness reported that police used tear gas to disperse protesters gathered in multiple locations overnight, including near President Adama Barrow’s official residence. The protesters were protesting what they called prolonged power outages. Around Banjul's capital, protesters burned tires in the streets and built barricades while shouting, "Barrow must leave!" The witness said that plumes of smoke were filling the air. Some residents have reported blackouts that lasted up to 48-hours. This is ahead of the presidential elections expected in December, in which Barrow will be seeking a third-term. Protesters from the town of Farato, in a sign of increasing frustration with the government gathered outside Vice President Mohammed B.S. Jallow destroyed banners in an office of the ruling?National People's Party. A police spokesperson failed to respond to a comment request on Tuesday. Barrow had been scheduled to tour the National Water and Electricity Company Ltd facilities on Tuesday morning and then address the nation by 8 p.m. UTILITY WARNED ABOUT DEMAND SURGE DUE HEAT NAWEC stated in a press release on August 15, that they were experiencing "an unexpected?surge" in electricity demand at peak times, which was attributed to the high temperatures. The report also mentioned "a technical issue affecting one the largest power-generating units on the import side", but did not elaborate. No dates were provided for the load-shedding that would be required in "several parts of the country", but no other details were made. NAWEC didn't respond to a comment request on Tuesday. "There is no lighting everywhere. There is no light. "People have been complaining about electricity", said?Ousainu jammeh, a Banjul resident from the Westfield district. Jammeh claimed that tear gas had "landed" in his house. Jammeh, after the protests had died down in the early morning hours, joined a crowd of young men to use water to put out fires and remove barricades. On Tuesday, traffic had returned to its normal level in Banjul.
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Iran-backed Houthis strike four Saudi cities as Middle East war expands, 73 injured
Yemen's Tehran backed Houthis launched an attack on four cities in the south of U.S. ally Saudi Arabia, Tuesday. The attack injured more than 70 people while setting oil installations ablaze. It appeared to be?a major extension of the six-month old Middle East conflict. The 'Houthis', who control the majority of Yemeni populated areas, including the capital, claimed that they had launched a wide-ranging operation into Saudi territory. The Houthis used drones and rockets to attack a Saudi airbase located in Khamis Mushair in southern Yemen, as well as targets of the Saudi Arabian state oil company, in Abha and Najran, near the Yemeni border, and Jazan, an important Red Sea port. Saudi authorities said that women and children among those injured were also ablaze at the site. According to reports, the large number of injured suggests that the attacks are among the largest carried out by Saudi Arabia since Israel and the United States launched their war on Iran in February. Images of the aftermath were not available immediately. The Houthis released images of an explosion they claimed was caused by Saudi Arabian trucks they struck near the border. After a?month of calm in August the fighting has resumed in the Gulf, as Iran and the U.S. exchange fire. This has sent global oil prices up to levels not seen since July. Brent crude prices rose more than 2% on Tuesday to above $99 per barrel. The Houthi attacks in southwestern Saudi Arabia could worsen the global economic impact of the war by disrupting Middle East oil supplies beyond the Strait of Hormuz blockade. Saudi Arabia leads an Arab coalition that has been fighting against the Houthis (in Yemen) for more than a decade. The war in Yemen had slowed down over the past few years. However, a ceasefire has now broken, and the Houthis are threatening shipping near the mouth of the Red Sea. 'MARITIME EXCLUSION ZEA' In a recent statement, Colonel Turki Al-Malki of the Saudi-led Coalition said: "The coalition will take any necessary operational?measures in order to deter and confront this terrorist militia's hostile approach." Yahya Saree, a Houthi spokesperson, accused Riyadh that it had escalated the conflict by launching airstrikes on Yemen and warned the Houthis they would respond. The Gulf War has become a battle of wills, as the U.S. and Iran try to force each other into submission through economic pressure. Washington is trying increase the flow of crude oil to the world market by guiding ships to the Strait of Hormuz, at the mouth of Gulf. It also tries to cut off Iran's exports through a blockade that extends just beyond the Strait. Tehran has announced new measures for sealing off the strait. It will reveal details soon of a "maritime inclusion zone" that will stretch from the perimeter the U.S. Blockade through the strait to the Gulf. Washington launched a weekend attack on Iranian tankers in response to Iranian attacks against U.S. warships. Iran claimed it used more powerful ballistic missiles against American ships. Mohsenrezaei, the?secretary to Iran's Supreme National Security Council?, said on X. "A maritime exclusion zone will be established across the Persian Gulf from the blockade perimeter to combat economic warfare." The operational posture towards U.S. bases and warships has been fundamentally recalibrated." Iran has missiles and drones capable of threatening oil tankers that are transiting through the Strait of Hormuz. They have also been used against U.S. military bases in the region. Before the war, about a fifth (or 5%) of all oil and gas shipments in the world passed through this strait. The fighting has led to a global shortage of crude oil, and even more acutely the fuels produced by refining it. Diesel fuel is now more expensive than ever in the United States, with an average retail price exceeding $5.90 per gallon. This has harmed the prospects of President Donald Trump and his Republicans. "Oil will fall precipitously like all other prices (but even more!) When we win the war against Iran, oil prices will drop precipitously. Three Dollars per gallon is possible, but the final price will be below two dollars. Trump posted on Twitter that it will all be done quickly and Iran won't have a nuclear weapon.
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Sibanye considers cutting back on the ageing platinum shaft; over 1,000 jobs are at risk
Sibanye Stillwater announced on Tuesday that it plans to restructure its South African Platinum Group Metal (PGM) operation's Kwezi shaft?to reduce losses. This could have a?significant impact?on 1,114 jobs. In a press release, the diversified miner stated that the Kwezi shaft was nearing the end of its lifespan and it is expected to lose money in the second half of 2026 due to declining output. The company said that it would begin consulting with unions about the proposed restructuring. This could affect up to 781 employees and approximately 333 contractors. The company reported that a project designed to extend the life of a?shaft and access deeper mineral reserves had been delayed and met with objections. Sibanye stated that "without those additional reserves, the remaining ore body is depleted more quickly, reducing its long-term viability." Kwezi shaft recorded cumulative losses of 299 millions rand (18.62 million dollars) in 2024. Although higher PGM prices helped to support positive margins in the first half of 2026 the shaft is expected to lose money during the second half. Kwezi produced 20 658 ounces of PGMs in the first half of 2026. This represents less than 3% Sibanye South Africa's production. Sibanye is facing a'strike at certain parts of its U.S. Platinum Group Metals operations in Montana. Last week, unionised workers at the Stillwater East mine and Columbus metallurgical plant walked out of their jobs amid negotiations for a new labor agreement.
AMERICAS Yen MORNING BID at Work
The calm on global markets was broken Monday and Tuesday as U.S. stocks returned from Labor Day holidays. A fresh surge in the Japanese yen brought it to its highest levels since February.
This move was more of a repositioning before what appears to be a 'near certainty' Bank of Japan rate hike next week.
The case for a BOJ interest rate increase was strengthened on Tuesday following an upgrade of Japan's second quarter GDP estimates, and the largest annual rise in real wages since five years.
Recently, there have been rumors that the BOJ may consider a rate increase greater than the usual 25 basis points. However, this is still an unconventional opinion.
The yen, along with the Chinese yuan and South Korea won is currently gaining ground against the dollar. The markets may become a bit 'nervous' about the ripple effect of the unwinding of yen-funded carrying trades on world markets. Tokyo's Nikkei index, the benchmark for Tokyo stocks, fell almost 2% Tuesday.
The global economy remains robust. The eurozone's second quarter GDP has also been revised upwards this week, just like Japan. The strong U.S. job market for August and the revised euro zone GDP for the second quarter all support the case for an additional series of interest rate increases this month, possibly at the Federal Reserve.
Oil's return to $100 per barrel is a factor that has exacerbated the rate increase. This was after Iran declared "economic war" against America and Houthis backed by Tehran attacked Saudi Arabian energy facilities.
Copper has been a strong supporter of the growth story, as have stocks. The industrial metal is often viewed as a "bellwether" for global growth. It hit an all-time high on Monday despite being influenced by U.S. trade tariffs.
There will be tension between the strong growth and the rising interest rates in order to avoid overheating of the stock market and its unrestrained gains. Wall Street is returning from its holiday today and most stock indexes are down before the bell.
China's exports increased 25% on an annual basis in August, boosting both its global surplus and its surplus to the U.S. Canada's retaliatory duties on U.S. products took effect Tuesday, intensifying the war of trade between the two countries.
Chart of the Day
Exports of the second largest economy in the world grew 25% in U.S. dollars in August, matching expectations and increasing from the 23.9% increase in the previous month.
China's trade deficit rose to $119 billion, even though imports also increased. The surplus for the first eight-month period reached $805.51, which puts the annual number in line to surpass $1 trillion for the second consecutive year.
China's surplus in trade with the U.S. grew to $29 billion despite the trade tensions. Exports to the U.S. jumped 34% on a year-on-year basis.
Watch today's events
* U.S. 3-year note auction (1 ?p.m. EDT)
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(source: Reuters)