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Oil nears two-week highs due to geopolitical risks and an expected US interest rate reduction
Oil prices were at a two-week high on Monday, as investors waited for a possible U.S. Federal Reserve rate cut to boost economic growth and increase energy demand. They also monitored geopolitical risks that threatened Russian and Venezuelan supplies. Brent crude futures were up 9 cents or 0.14% to $63.84 per barrel at 0321 GMT. U.S. West Texas Intermediate crude rose 8 cents or 0.13% to $60.16. Both contracts closed the Friday trading session at their highest level since November 18. LSEG data shows that the markets are pricing an 84% probability of a quarter point cut during the Fed meeting scheduled for Tuesday and Wednesday. Board member comments suggest that the meeting will be the most divisive for years. Investors are now more focused on the bank’s internal dynamics and policy direction. The pace of progress in Europe's Ukraine peace talks is slow. There are still disagreements over the security guarantees for Kyiv, and about the status of Russian occupied territory. U.S. officials and Russian officials have also differing opinions on the peace plan presented by the Trump administration. In a note to clients, ANZ analysts stated that "the various possible outcomes from Trump's recent push to end war could release a shift in oil supply of over 2 million barrels per daily." Vivek Dhar, an analyst at Commonwealth Bank of Australia, said that a ceasefire was the primary downside risk for the outlook of oil prices. However sustained damage to Russia’s oil infrastructure represents a significant upward risk. Dhar wrote in a note to clients that "we think the oversupply concern will be realized, especially when Russian oil and refined products flows circumvent sanctions. Futures prices should then track toward $60/bbl by 2026." People familiar with the situation have told me that the Group of Seven and the European Union were in discussions to replace the price cap on Russian crude oil exports by a complete maritime services ban. This would further reduce the supply of the world's largest oil producer. The U.S. also increased pressure on Venezuela, a member of the Organization of the Petroleum Exporting Countries. This included strikes against boats that it claimed were attempting smuggle illicit drugs out of Venezuela. It also talked of military action in order to topple President Nicolas Maduro. Analysts and trade sources said that independent Chinese refiners are also increasing their purchases of Iranian oil sanctioned from tanks onshore, using newly-issued import quotas. This is helping to ease a glut in supply. (Reporting and editing by Florence Tan, Jamie Freed, and Christopher Cushing).
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Shanghai copper prices rise ahead of Fed rate decision
Shanghai Copper began the week on Monday with a higher price, as the U.S. Federal Reserve is expected to cut interest rates. As of 0215 GMT, the most active copper contract at the Shanghai Futures Exchange had risen 0.52% to 92,040 Yuan ($13,020.78) a metric ton. The benchmark three-month price of copper at the London Metal Exchange fell 0.23% to $11,593 per ton. The markets are pricing in an interest rate reduction of a quarter point by the U.S. on Wednesday. Only 19 out of 108 economists voted against any change. Copper prices rose in Asia as signs of lower supply were evident. The weekly stock report of the SHFE showed that the amount of delivered copper in SHFE sheds had decreased by 9.22% at the end of the last week. This was the second week in a row of declining prices. Last week, cancellations were also observed in copper stocks available or on warrant in LME warehouses. Copper inventories at the U.S. Comex Exchange The number of short tons (which is equivalent to 396,306 tons of metric weight) has continued to rise after reaching a record in late November. Analysts at Chinese broker GF stated that the strength of copper is due to a structural mismatch in supply and available stock as a persisting Comex-LME Premium has diverted metal towards the U.S. tightening the supply in the remainder of the world. The disruption of mines in China and the agreement by major smelters to reduce output by 10% have also fueled supply concerns. Aluminium, tin, and zinc were all unchanged. Lead and nickel also showed little change. Aluminium was down by 0.33% on the LME, while nickel was down by 0.50%. Tin was also down by 0.67%. Zinc was not much changed, and lead was up 0.22%. Monday, December 8, DATA/EVENTS - (GMT) 0700 Germany Industrial Production MM, YY SA October 0745 France Reserve Assets Nov ($1 = 7,0687 Chinese yuan renminbi). (Reporting and editing by Lewis Jackson, Sonia Cheema, Dylan Duan)
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Iron ore prices fall as China's demand falls
Iron ore futures fell on Monday due to a sagging Chinese demand and increased equipment maintenance. However, the lingering bets for stimulus limited losses. As of 0219 GMT, the most-traded contract for January iron ore on China's Dalian Commodity Exchange fell by 0.7% to $782 yuan (US$110.63) per metric ton. It hit 778 yuan earlier in the session. This was the lowest price since November 17. As of 2109 GMT, the benchmark January iron ore traded on the Singapore Exchange fell 0.57% to $100.8, after earlier touching $102.35, the lowest price since December 1. Analysts said that several steelmakers have undertaken equipment maintenance due to the seasonal decline in steel demand around this time. This has resulted in a decrease in demand for steelmaking feedstock. Data from Mysteel consultancy showed that the average daily hot metal production, which is a measure of iron ore consumption, fell 1% since last week, to 2,32 million tons. This was the lowest level since September 5. Analysts said that the price of the main steelmaking ingredient was not affected by analysts' expectations that possible stimulus measures would be announced at top-level meetings in late this month. First Futures analysts said that a wave in restocking by steel mills, prompted by lower prices could also limit the downside. Coking coal, coke and other ingredients for steelmaking fell by 6.35% and 6.41 %, respectively. Zhuo Guiqiu said that iron ore prices were also affected by the weakening of coal markets. The Shanghai Futures Exchange has seen a decline in most steel benchmarks. Hot-rolled coils fell by 0.96% and rebar and wire rod by 1.39%. Stainless steel gained 0.28%. ($1 = 7.0687 Chinese Yuan) (Reporting and editing by Amy Lv, Lewis Jackson)
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Official: India does not plan to increase coal power beyond 2035.
A top official in the power ministry said that India has no immediate plans to increase coal power generation beyond 2035. Pankaj Agarwal told an audience at a power ministry function that India wants to meet its energy needs. "By 2035, our goal is to have coal capacity of 307 Gigawatts." He said that it was "premature" to predict what the future holds beyond 2035. India proposed this year to increase its coal power by 46%, from its current 210 GW. It also doubled its non-fossil energy capacity of 500 GW. Agarwal stated that the coal power plans were in line with India's energy needs. India has reduced power production for the majority of this year due to grid challenges caused by the integration surplus clean energy in the grid. Agarwal said that the country could decide to add more coal capacity once it has studied the power demand growth and the rate of integration of renewable energy into the grid for three years. He said that India should evaluate grid challenges as well as the costs of storing clean energy in batteries before adding additional coal capacity after 2035. The annual decline in India's coal-fired electricity generation, which accounts for 75% of its output, was the highest since 2020, as the mild weather decreased cooling demand. Even so, some Indian utilities have signed long-term contracts to purchase coal-fired generators in order to meet the projected increase in evening demand. Reporting by Sethuraman NR from Delhi and Jayshree Upadhyay from Mumbai; editing by William Mallard
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Australian firefighter dies as bushfires destroy two states
Authorities said that an Australian firefighter died overnight after being struck by a branch while he was trying to contain a bushfire north of Sydney. The bushfire had destroyed many homes and burned large areas of bushland. After receiving reports of a fallen tree, emergency crews raced to the bushland in Bulahdelah (a rural town 200 km north of Sydney) after a report that a man had been injured. Officials said that the 59-year old man died on the spot after suffering a cardiac event. The Prime Minister Anthony Albanese stated that the "terrible new is a somber reminder" of dangers that emergency service personnel face as they protect homes and their families. Albanese made a statement that said, "We honor this bravery every day." As of Monday morning, more than 50 bushfires were burning in the state of New South Wales. Over the weekend, a fast-moving blaze destroyed 16 homes on the Central Coast of New South Wales. The region is home to 350,000 people as well as commuters just north from Sydney. Rouchelle Doust and her husband, a resident of Koolewong in the hardest-hit area, tried to save their house as the flames advanced. Doust, a reporter for the Australian Broadcasting Corp, said: "He was up there with his bare foot trying to put out the fire, and he kept trying. I was screaming at him to get down." "Everything is in there: His grandmother's things, his mother’s stuff and all mine - it's gone. Overnight, conditions improved, and officials were able to lower alerts to advice, the second lowest danger rating. A 700-hectare (1.729 acres), blaze in Dolphin Sands on the island of Tasmania destroyed 19 homes, and damaged 40 others. Officials said that although the fire was contained, residents were warned to stay away as conditions remained dangerous. Authorities in Australia have warned that bushfires are likely to be a major problem during the summer months of December through February. Extreme heat is expected across the country after several years of relative calm. New South Wales, Australia is one of the most susceptible regions to wildfires. Some experts say climate change increases the danger. The "Black Summer" Australian fires in 2019-2020 burned an area as large as Turkey, and 33 people were killed.
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Asia stocks cautious on the countdown to Fed
Investors bet on a Federal Reserve rate cut this week. However, the meeting may be the most contentious one in recent history with some policymakers openly opposing an easing. The markets indicate that there is an 85% probability of a reduction by a quarter point in the funds rate range between 3.75% and 4.0%. A steady decision, therefore, would be a shock. Only 19 of the 108 analysts polled predicted no change and the remainder a reduction. Michael Feroli of JPMorgan's U.S. Economics wrote in a memo that "we expect at least two dissents" in favor of no action, and that a small majority of the FOMC members will indicate that a cut in December was appropriate. Since 2019, the Federal Open Market Committee only had three or more dissensions in a single meeting. This has happened nine times since 1990. Feroli believes the Fed will also cut rates in January to protect against a prolonged weakening of the labour market before taking a long policy pause. The markets currently only see a 24% probability of a move in January, and further easing will not be fully priced until the end of July. All three central banks, in Canada and Switzerland, are meeting this week. They all appear to be holding their ground. The Swiss National Bank would like to ease further to counter the strength of their franc but is already at zero percent and does not want to go below that. Markets have given up on the idea of another Reserve Bank of Australia easing and are even pricing in a rate increase for late 2026. The recent support of stocks has been due to the hopes for further Fed stimulus, but Wednesday's risk for a hawkish outlook made trading cautious. S&P 500 and Nasdaq Futures both remained unchanged in early trading. Costco's earnings this week will give a better idea of consumer demand. BONDS UNDER SUBSTANCE In Asia, Japan's Nikkei dipped 0.3%, after making a modest 0.5% gain last week. South Korean stocks fell 0.3% after a 4.4% jump last week, following confirmation of a reduced U.S. duty on exports. In quiet trading, MSCI's broadest Asia-Pacific index outside Japan fell a mere 0.1%. The Chinese blue-chips should be taking their cues from the November trade data, which will provide fresh evidence about how its exports fare in the face tariffs. Bond markets have seen a pressure on longer-dated Treasuries due to the possibility of hawkish Fed guidance, even if the Fed does decide on a rate cut this week. The attacks of President Donald Trump on the independence of the Fed could also lead to rates being too low, which would fuel inflation in time. Ten-year yields were released on Monday The rate was a little higher, at 4,146%. It had risen 9 basis points in the previous week. It was unchanged at 155.37yen after reaching a three-week high at 154.34 yen on Friday. The euro was stable at $1.1638. It is just below its recent high of $1.1682. Commodities are generally supported by bets on more U.S. stimulus policy. Copper has reached all-time-highs due to a combination of supply concerns and infrastructure investment related to AI. After spiking to $4,259 an ounce on Friday, gold was at $4,202, and silver was only a few cents off its lifetime high. The possibility of lower interest rates, combined with geopolitical uncertainties that could limit supply from Russia and Venezuela, also helped to support oil prices. Brent crude oil rose 0.2%, to $63.85 per barrel. U.S. crude oil increased 0.2%, to $60.18 a barrel. (Editing by Shri Navaratnam).
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Australian shares fall as mining and gold stocks lose their shine
Australian shares fell on Monday. Miners and gold stocks were the worst hit, but investors are bracing themselves for tighter monetary policies from the central banks this week. As of 2311 GMT the S&P/ASX 200 was down by 0.2%, at 8,620.4, after a winning streak of four sessions. The benchmark index closed Friday 0.2% higher. A poll conducted last week indicated that the Reserve Bank of Australia will likely leave its cash rate unchanged on December 9 at its final meeting in 2025. Recent data showed a resurgence of inflationary pressures, and the economy had grown at its fastest pace in the past two years. Swaps now indicate that the central banks will keep rates unchanged until the early 2026 period, with an increasing probability that they may increase them thereafter. Investors will also be waiting for local employment data due Thursday. Market watchers around the world expect the U.S. Federal Reserve will reduce its cash rates this week by 0.25%. After six sessions of gains, the iron ore price slump in Sydney caused miners to retreat as much as 0.5%. BHP Group Rio Tinto and Fortescue, mining giants, shed between 0.2% and 1,4%. Australian gold miners dropped as much as 1,4%, hovering at a near two-week low. This was despite the bullion rising on expectations of an upcoming U.S. interest rate cut, which boosted sentiment. Northern Star Resources, a gold miner, has shed up to 1.1% of its value. Both energy stocks and healthcare stocks fell by 0.3%. Rate-sensitive financials, including real estate, were mostly unchanged. National Storage REIT, a stock in the benchmark index, rose nearly 3% and reached a new record high after the company announced that it would proceed with the Brookfield-GIC consortium's buyout of A$4 billion (2.65 billion). Over the Tasman sea, New Zealand’s benchmark S&P/NZX50 index slipped 0.2% to 13,509.39.
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Oil prices hold at two-week highs due to geopolitical risk and an expected US rate reduction
Oil prices were at a two-week high on Monday, as investors waited for a Federal Reserve rate cut to boost economic growth and increase energy demand. They also viewed geopolitical risk that could threaten oil supplies coming from Russia and Venezuela. Brent crude futures increased by 4 cents or 0.06% to $63.79 per barrel at 0008 GMT. U.S. West Texas Intermediate Crude was up $7 cents or 0.12%, and stood at $60.15 per barrel. Both contracts closed the Friday session at their highest level since November 18. LSEG data shows that the markets are pricing in a 84% chance for a quarter-point reduction at the Fed's meeting on Tuesday and Thursday, despite the fact that it is expected to one of the most contentious meetings in recent years, and investors are focusing on the U.S. Central Bank's policy and internal dynamics. The progress of the peace talks in Europe is slow. There are still disagreements over security guarantees for Kyiv, and about the status of Russian occupied territory. ANZ analysts wrote in a report that the outcome of the current negotiations may have a significant impact on oil prices. The various possible outcomes of Trump's latest effort to end the conflict could result in a change in oil supply that is greater than 2,000,000 barrels per day. Sources familiar with the issue have told us that the Group of Seven and the European Union, are currently in discussions to replace the price cap on Russian crude oil exports by a complete maritime services ban. This could reduce the supply of the second largest producer of the world. The U.S. also increased pressure on OPEC-member Venezuela, including by striking alleged drug smugglers' boats and threatening military action against President Nicolas Maduro. Chinese independent refiners are increasing purchases of Iranian oil sanctioned from tanks onshore, according to trade sources and analysts, which has helped ease a glut in supply. (Reporting and editing by Jamie Freed; Florence Tan)
Iberdrola approves an interim dividend and raises its full-year profit forecast
Iberdrola, the Spanish utility company, announced an interim dividend of 0.25 euro per share after announcing a full-year adjusted profit guidance of 6.6 billion euros (7.7 billion dollars). The company saw double-digit growth.
Iberdrola reported a net profit of 5.7 billion euro last year.
Iberdrola's reported net profit fell by 3% for the first nine-months of the year, due to the effects of the sale in Mexico of assets in 2024. However, the adjusted net profit without one-offs jumped up by 17% from January to September.
Iberdrola Chairman Ignacio Sanchez Galan stated that the improved outlook is due to increased investments in the United States of America and Britain. Iberdrola’s network business has driven gains in operating profits and cash flow.
The biggest utility company in Europe by market value plans to invest more than 100 billion euro's worth of money through 2031, as it shifts its focus towards more regulated power grids such as those in Britain and the United States.
The company released its latest strategic update last month. It outlines a significant increase in investments into power networks and a more selective approach towards renewable energy projects.
It has committed to investing 58 billion Euros through 2028, two-thirds of which will be in power networks in Britain and America. Additional investments of 45 billion Euros are expected between 2029-2031.
(source: Reuters)