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Gold falls as US inflation data weighs down on Fed rate-cutting hopes
Gold prices ?extended losses on Wednesday as ?uncertainty in the Middle East and stronger-than-expected ?U.S. Gold prices?extended losses on Wednesday as?uncertainty in the Middle East and stronger-than-expected?U.S. As of 0423 GMT spot gold was down 0.3% at $4,702.09 an ounce. This is a further retreat from the three-week high reached in the previous session. U.S. Gold Futures for June Delivery gained 0.5%, to $4.710.70. The markets have priced in the possibility of a rate hike by the Fed as early as this year. Kyle Rodda is a senior financial analyst at Capital.com. Data revealed that U.S. consumer inflation rose further in April. The annual rate posted its biggest gain in three year, further reducing the hopes that the Fed would cut interest rates in this year. According to CME Group’s FedWatch, traders have priced in a rate cut by the Fed this year. Markets now see a 30% probability of a hike before December. Investors will be watching the Producer Price Index later today, as well as the meeting between U.S. president Donald Trump and Chinese president Xi Jinping scheduled for Thursday and Friday in Beijing. Trump said Tuesday that he does not think he needs China's assistance to end the Iran war, even though hopes of a lasting deal were fading and Tehran tightened its grip on the Strait of Hormuz. Indian gold and silver futures rose after New Delhi increased import tariffs from 6% to 15% as part of its efforts to?curb overseas purchases and ease pressure on the country’s foreign exchange reserves. Silver spot rose by 0.2%, to $86.68 an ounce. It had previously reached its highest level since 11 March. Palladium remained at $1,490.86 while platinum fell 1% to $2106. (Reporting and editing by Subhranshu sahu, Rashmi aich and Pablo Sinha from Bengaluru)
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Gold falls as US inflation data weighs down on Fed rate-cutting hopes
Gold ?prices edged lower on Wednesday as ?uncertainty in the Middle ?East ?and stronger-than-expected U.S. inflation data dimmed hopes for Federal Reserve rate cuts. As of 0231 GMT, spot gold dropped 0.4% to $4695.99 per ounce. U.S. Gold Futures for June Delivery gained 0.4%, to $4705.30. The latest inflation data from the U.S. has diluted, if it doesn't extinguish, hopes that the Fed will cut rates. Now, the markets have begun pricing in the possibility of a rate hike by the end of this year. Kyle Rodda is a senior financial analyst at Capital.com. Data showed that U.S. Consumer inflation increased in April. The annual rate posted its biggest gain in three years. This further reduced hopes that the Fed would cut interest rates in this year. According to CME Group’s FedWatch, traders have priced in a rate hike this year. The tool shows that the markets are now pricing in a 30% likelihood of one by December. U.S. president Donald Trump said Tuesday that he doesn't?think he'll need China to help him end the war against Iran, despite the fact that hopes for a lasting deal have dwindled. Meanwhile, Tehran has tightened its grip on the Strait of Hormuz. Scott Bessent, U.S. Treasury secretary, said that President Trump and Xi Jinping will discuss the Iran War, and urged China "to join us in this global operation" to reopen the Strait of Hormuz for international shipping. India raised its import tariffs for gold and silver from 6% to 15% as part of an effort to reduce overseas purchases and relieve pressure on the country's reserves. Silver spot rose?0.2%, to $86.71 an ounce. It had reached its highest level since the 11th of March earlier in this session. Palladium fell 0.2% to $1,487.47, while platinum dropped 0.8% at $2,109.53. (Reporting and editing by Subhranshu sahu, Rashmi aich and Pablo Sinha from Bengaluru)
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Asia markets fall as US inflation and a shaky Iran truce weigh
The stock market started Wednesday's Asian session in a negative mood, as the U.S. inflation rate was higher than expected and underscored the growing economic impact of the Middle East conflict. MSCI's "broadest" index of Asia-Pacific stocks outside Japan fell 0.6% for the second consecutive day, as Korean shares dropped as much as 3.2%. They then recovered. In recent weeks the Korean market has been on fire, breaking records on a rally led by artificial intelligence that some traders believe was due for a correction. Nikkei was down by 0.2% in Japan, while S&P e-mini futures were 0.1% lower. Tony Sycamore is a market analyst with IG in Sydney. He said: "A higher-than-expected report on inflation and persistent geopolitical conflicts reminded investors of the sticky prices and high?energy costs that aren't going anywhere anytime soon." As the conflict in the Middle East remains in a stalemate, U.S. president Donald Trump stated on Tuesday that he did not believe he would need China's assistance to end the war against Iran. This was ahead of the meeting he is scheduled to have with Chinese President Xi Jinping this week. We've seen the movie before and know that it won't end in a breakthrough deal that resets U.S. China relations," said Phillip Wool. Wool is chief research officer and head portfolio management at Rayliant Investment Research. "That's a pretty low standard for success. As long as Xi and Trump can get along, and as long as the?trade detente is maintained, this should be enough for both sides to consider it a successful meeting." Brent crude fell 0.6% to $107.13. Brent crude fell 0.6% to $107.13. Samsung Electronics shares in Seoul fell 5.7% on Wednesday after the electronics giant failed to reach an agreement with its South Korean union. This set the stage for over 50,000 workers to go ahead with a strike, which threatens to disrupt the production of AI chips and other products. The S&P 500 fell 0.2% and the Nasdaq Composite 0.7% overnight after U.S. Consumer inflation rose by?the highest in three years? in April. This raises the possibility that the Federal Reserve may be forced to increase rates sooner than expected. According to CME's FedWatch Tool, the markets have priced out any possibility of a Fed rate cut this year. Meanwhile, expectations of a 25 basis point hike at the December meeting are now at over 35%, up from below 22% in the previous week. The yield on U.S. Treasury 10-year bonds remained unchanged at 4,469%, its highest level since July. The U.S. Dollar Index, which measures the strength of the greenback against a basket containing six major counterparts, remained steady at 98.322, marking its third consecutive day of gains. The dollar rose 0.1% against the yen to 157.77, after the Japanese currency briefly surged on Tuesday due to "rate-check" speculation. This is often seen as an indication of a possible intervention. Sources claim that Tokyo intervened to stop the yen from falling in the last two weeks. Gold was also up 0.1%, at $4,718.4805, bitcoin was down 0.2% at $80.508,37, and ether was down 0.4% at $2,275.36. (Reporting and editing by Shri Navaratnam.)
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Trump's China trip sends oil prices soaring as the Iran ceasefire teeters.
The oil prices dropped on Wednesday, after having risen for a?three-session period. Investors awaited the outcome of the fragile ceasefire agreement in the Iran 'war. Brent crude futures dropped 82 cents or 0.76% to $106.95 a bar at 0051 GMT. U.S. West Texas intermediate futures also fell 66 cents or 0.65% to $101.52. Since the U.S., Israel and Iran began their attacks on Iran in February, and Tehran closed the Strait of Hormuz effectively, both benchmarks have been largely around or above $100 per barrel. The oil prices increased by more than 3% on Monday, extending gains made earlier as the hopes of a lasting U.S.Iran ceasefire waned, reducing the prospects of reopening the strait through which about a quarter of the world's oil and liquefied gas flows. Trump said on Tuesday that he doesn't think he needs China's assistance to end the Iran war, even though hopes of a lasting deal have dwindled and Tehran has tightened its grip in the Strait. China is still the largest buyer of Iranian crude oil, despite the?pressures from the Trump administration. Trump'meets with his Chinese counterpart Xi on Thursday and Friday in Beijing. The Eurasia Group stated in a note to clients that "the length of disruption and the size of the supply losses - already over 1 billion barrels" means oil prices will likely remain above $80 a barrel for the remainder of the year. As oil prices rise, fuels become more expensive. Economists predict that the war with Iran will have a second-round effect in the months to come. The Federal Reserve is expected to keep interest rates flat for some time. Capital Economics stated in a client note that "the marked increase in inflation in advanced economies has not yet caused real spending to shrink, but the widespread drop in consumer'sentiment' and hiring intentions point to even worse things to come." The cost of borrowing money increases with higher interest rates, which could reduce demand for oil. According to sources citing American Petroleum Institute data, the Iran War continues and U.S. crude inventories have fallen for a fourth straight week. The U.S. Energy Information Administration (the statistical arm of the U.S. Department of Energy) is due to release official inventory data at 10:30 am. A poll predicts a decrease in stocks on Wednesday at 1430 GMT ET. (Reporting from Tokyo by Katya Glubkova; Editing by Sonali P.)
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Officials say that six people were killed in Dnipropetrovsk after the ceasefire expired.
Officials in the region said that Russian forces attacked Ukraine's Dnipropetrovsk Region on Tuesday and killed at least six people. This was after a ceasefire brokered by the United States. Ukrainian officials confirmed that Russia had launched more than 200 drones over night, ending hopes of a possible extension to the three-day ceasefire which ended on Monday. Volodymyr Zelenskiy, the Ukrainian president, announced that his country's troops had attacked gas facilities in Russia’s central Orenburg Region, located more than 1,500 kilometers (900 miles), away from its borders. Two people were killed and four injured in a drone attack on a building in Zelenskiy’s hometown of Kryvyi Rih (central Ukraine), including the nine-month old granddaughter of the couple who died. Regional governor Oleksandr Hansha and head of the military Administration, Oleksandr Vilkul, both confirmed the incident on Telegram. The leg of the child was cut off. Zelenskiy also denounced, in a Telegram post, the strike, calling it "cynical, and devoid all military logic". He said that "after the end of the partial 3-day ceasefire," Russia continued to kill and maim Ukrainians. The pressure must not be eased on Russia. Hanzha reported that a bombing raid northeast of Kryvyi Rih resulted in the deaths of four people and injuries to three others. In a bulletin issued late at night, the General Staff of Ukrainian military said that 170 combat encounters had been recorded in the last 24 hours on the 1,250 km (775 mile) front. According to the report, the most intense fighting took place near two key points of Ukrainian defences in the east - Kostiantynivka & Pokrovsk. The report said that Russian forces had carried out 25 and 24 combat missions respectively. Ukraine and Russia agreed to a ceasefire in honor of the anniversary of the Soviet victory against Nazi Germany during World War Two. This was part of an American-led peace push under President Donald Trump, after more than four long years of conflict. Trump said that he was hopeful the truce will be extended on Friday. Both sides claimed that fighting continued on the front lines, despite the fact that neither side had reported any large-scale airstrikes during the ceasefire. They both accused each other of artillery and drone attacks. DÉFENSE AGAINST BALLISTIC MISILES Zelenskiy said in his video nightly address that Kyiv is working with its allies to develop technologies for defense against ballistic missiles. He added that 13 countries, including NATO representatives, had taken part in "talks" on Tuesday. Andrii Sybiha, Ukrainian Foreign Minister, said that Kyiv proposed to extend the truce but Moscow escalated instead by attacking civilian infrastructure with over 200 drones. Zelenskiy reported that drones were intercepted?over a number of regions, but also reported damage to energy installations, apartment buildings and a kindergarten. Vitali Klitschko, the mayor of Kyiv said that debris from a drone that had crashed on the roof a 16-storey building in Obolon, the district to the north, caused a fire. Cherkasy, in the centre, was the scene of two injuries. Damages were also reported in Zhytomyr, to the west, as well as in the Chernihiv region on the Russian border. Two people were hurt in the strikes on Dnipro, a city located in the southeast of Ukraine. Also, Kherson is located to the south. Vitaliy KIM, the regional governor, said that Russian drones had also struck energy infrastructure in Mykolaiv, causing blackouts. (Reporting and editing by Anna Pruchnicka, Ron Popeski Cynthia Osterman, Daniel Wallis, Daniel Flynn)
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Ananym says BWX Technologies shares could double if they commercialize the reactor design.
Ananym Capital Management, an activist investor, believes that BWX Technologies stock could double over the next few years if it commercializes a nuclear reactor design that was mothballed to meet soaring energy demands. Alex Silver, co-founder of the two-year old investment firm, spoke publicly about BWX Technology at the Sohn Investment Conference on Tuesday in New York. Ananym believes that BWX Technologies, which archived the design of a small modular pressurized reactor nearly a decade ago, could now be competitive as the 'demand for clean energy by data center operators has exploded. BWX Technologies of Lynchburg in Virginia, with a market cap of $19 billion?supplies nuclear units to the U.S. Navy and produces and maintains commercial nuclear components, as well as radioisotopes used for diagnostic and therapeutic treatments. The shares of the company, which closed Tuesday at $206,83 on the New York Stock Exchange have increased by 93% in the last 12 months. Gains have been driven by the growing demand for energy, increased defense spending, and government and commercial investments in nuclear power. MULTIPLE WAYS TO VALUE FOR SHAREHOLDER Ananym says the company can create more value for its shareholders in several ways. Ananym said that BWX Technologies stock could increase by 45% if the company continues to be a supplier of so-called "picks and shovels" for large reactors and small modular reactors with boiling water. BWX Technologies, however, has the opportunity to develop mPower alone, or through a joint-venture, which would push the share prices even higher. Ananym stated that this would not be a cannibalization of existing sales, as there are many buyers for small modular reactors with boiling and pressurized water. The Trump administration already has a goal of increasing nuclear energy capacity by four times by 2050. Silver and Charlie Penner are two of Ananym?s founding partners. Both have impressive resumes as activists. Penner was successful in challenging Exxon Mobil’s board of directors in 2021, while working at Engine No. Prior to that, he was a 'partner' at Jana Partners. Silver was the founding?partner of P2 Capital Partners. They have urged Baker Hughes to separate its Oilfield Services & Equipment division. Reporting by Svea Autumn-Bayliss, New York; editing by Matthew Lewis
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India increases gold and silver duties to 15% in order to curb imports and support the rupee
India raised its import tariffs for gold and silver to 15%, up from 6%. This is part of a move to reduce overseas purchases and to ease pressure on the country's reserves. The higher duties may dampen the demand for precious metals in India, the second largest consumer. However, they could help India narrow its trade deficit and strengthen the rupee, which is one of Asia's most volatile currencies. Industry officials warn that higher import taxes may revive smuggling after India cut tariffs mid-2024. The government has increased the import tax from 6% to 15% by imposing a basic duty of 10% and an Agriculture Infrastructure and Development Cess (AIDC). As expected, the government has raised duties in order to reduce the current account deficit. This could have an impact on demand as the gold and silver price were already high. On Sunday, Prime Minister Narendra Modi urged the public to 'avoid gold purchases for one year in order to protect their foreign exchange reserves. India imports almost all its gold. India's gold demand has increased, especially for investment, amid recent price increases and poor returns on equity over the last year. The World Gold Council reported last month that inflows to India's gold ETFs (exchange-traded funds) increased 186% on an annual basis during the March quarter, reaching a record of 20 metric tonnes. India has tried to reduce gold imports over the past few weeks. It imposed a 3% integrated good and services tax on imports of gold and silver, which prompted banks to halt imports. Imports in April fell to their lowest level in nearly 30 years. Since then, banks have resumed importing after paying the 3% IGST. However, imports will likely fall again due to the increased import duties. Grey markets will likely become active as the 'incentives for bringing in gold illegally is high. Smugglers can make significant profits at the current prices, said a Mumbai-based dealer of gold bullion for a private bank. He declined to give his name as he wasn't authorised to talk to the media. Reporting by Rajendra Jadhav; Editing by Mark Porter & Jamie Freed
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As Middle East peace hopes fade, stocks fall and oil rallies
Wall Street's major equity indexes fell on Tuesday, and the dollar rose as U.S. inflation increased and oil gained for the third consecutive day. Hopes for a Middle East Peace Deal to allow ships through?the Strait of Hormuz faded. In April, U.S. Consumer Prices (CPI), rose sharply for the second consecutive month. This resulted in the largest increase in annual?inflation? in nearly three years. It boosted expectations that the Federal Reserve will keep interest rates the same for some time. Oil prices have risen due to the U.S. War on Iran. This has led to higher gasoline, jet fuel and diesel. Economists predict that there will be a second round of effects in coming months. The data came after U.S. president Donald Trump announced on Monday that the ceasefire agreement with Iran, which had been in place for a month, was "on life-support" because of Tehran's response when the U.S. proposed an end to the war. Brent crude closed at $107.77 a barrel, an increase of 3.42%. There have been rumors that the conflict in Iran could flare up again. Emily Roland, Manulife John Hancock Investments' co-chief investment strategy, said that the rising oil prices were a result of this. She also noted that rising Treasury yields put pressure on stocks. Some of this was on the back of the CPI report that came out this morning, which was actually pretty tame beneath the surface. Investors had hoped for progress in the Iran conflict following a meeting between Trump, and Chinese President Xi Jinping. But Trump has said he doesn't think he needs China's assistance to end the war. "China is unlikely to change its stance in the future, as it has avoided any involvement." Jack Janasiewicz is the lead portfolio strategist for Natixis Investment Management Solutions. The MSCI index of global stocks fell by 4.97 points or 0.45% to 1,103.32. The STOXX 600 pan-European index had earlier finished lower by 1.01%. Wall Street saw the Dow Jones Industrial Average rise 56.09 points, or 0.1%, at 49,760.56. The S&P 500 dropped 11.88 points, or 0.1%, at 7,400.96, and the Nasdaq Composite declined 185.92, or 0.71% to 26,088.20. The PHLX semiconductors index dropped 3% on Wednesday after reaching a record-high on Tuesday. Manulife's Roland stated that the fall in semiconductor stocks affected sentiment. He also pointed out a decline in South Korean technology shares, "which had been on a tear in recent months." The idea was floated by Kim Yong Beom, the presidential policy advisor. He argued on social media that the excess earnings of the AI era should be distributed to all citizens. South Korea would be the first to do this. The KOSPI in Seoul retreated after hitting a record low just below 8,000 point, and finished 2.3% lower. This pulled down other regional markets. RISE IN GLOBAL BOND Yields On the bond market U.S. Treasury rates rose due to concerns over continued disruptions of energy supplies in the Middle East, and data that showed rising U.S. Consumer Prices. The yield on the benchmark U.S. 10 year notes increased 4.9 basis points from 4.412%, late Monday. Meanwhile, the 30-year bond rate rose 3.8 basis to 5.0253%. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve, increased 4.2 basis points, to 3.989%. The rise in global bond yields was largely due to a selloff of gilts as a result of the increasing pressure on British Prime Minister Keir starmer who, on Tuesday, refused to resign. He said he'd "get on with the governing" in spite of a "destabilising 48 hours" where calls to set out a timeline for his departure grew after he suffered heavy losses at local elections. The UK 10-year gilt rate rose by 0.4 basis points to 5.107%, while the 2-year gilt rate fell by 0.1 basis point to 4.551%. Sterling fell 0.54%, to $1.3533. It was one of the worst performing major currencies for the day. The U.S. Dollar advanced for the second consecutive session, after economic data and amid uncertainty about the durability of the U.S. - Iran ceasefire. The dollar index, which measures greenbacks against a basket including yens and euros, rose by 0.35%, to 98.31. However, the euro fell 0.38%, to $1.1737. The dollar gained 0.31% against the Japanese yen to reach 157.64. Gold prices are under pressure due to a combination of inflation fears and fading hope for a peace agreement. Spot gold dropped 0.43% to $4.713.93 per ounce. U.S. Gold Futures dropped 0.4% to $4700.00 per ounce. Reporting by Sinead carew in New York; Amanda Cooper in London; Tom Westbrook, in Singapore; Jihoon lee, in Seoul. Editing by Alison Williams and Deepa Babington.
MSCI pulls six companies out of its index after review
Indonesia's Financial Services Authority said that on Wednesday, there was no panic sale of shares following MSCI's removal of?six companies from its Indonesia Global Standard Index. They added that they would continue their efforts to reformate the stock market.
After a review of the MSCI Indonesia Index, the index provider announced that Amman Mineral International and Chandra 'Asri'Pacific had been removed from it. Dian Swastatika Sentosa was also removed, as well as Barito Renewables Energy, Petrindo Jaya Kreasi, and Sumber Alfaria.
On Wednesday, the Jakarta Composite Index fell by up to 1.92% and reached its lowest level in more than a year. Shares in the majority of affected companies also dropped by over 10%.
Sumber Alfaria Trijaya was the exception, with its shares trading at 2.47% less, after it was added to MSCI Indonesia Small Cap Index.
This revision follows comments made by MSCI last month that it would extend its review to Indonesia's stock market until June to assess the reforms announced in the Southeast Asian nation.
Indonesia took action in January after an alert from the index provider triggered a stock market crash and exodus of foreign investors.
Hasan Fawsi is the OJK chief of capital markets supervision. He told reporters that OJK will continue to push forward with reforms.
He said that the drop on Wednesday was "within normal range" and that the volume and frequency in which stock transactions occurred suggested no panic.
Once the May 29 rebalancing takes effect, it could lead to forced sales of passive index tracking funds.
Gary Tan, portfolio manager at Allspring Global Investments, said: "We expect to see continued pressure in the May 29th rebalance as well as early June due to passive funds adjusting."
He said that the sales were concentrated in names that are tightly held, with low free-floats and no active foreign ownership.
Index provider warned that Indonesia's status could be changed from "emerging" to "frontier", citing concerns about highly concentrated ownership structures and problems with transparency.
Prajogo Pangestu, an Indonesian businessman, has controlling stakes at Chandra Asri Barito Renewables?Petrindo Jaya Kreasi.
Dian Swastatika Sentosa belongs to the Sinar Mas Group. This is one of the largest conglomerates in the country, owned by the billionaire Widjaja Family.
Emails seeking comment from the?companies were not responded to immediately.
The Financial Services Authority of Indonesia (OJK), which oversees the financial sector, is currently scrutinizing some of these companies due to their high concentration of ownership and failure to meet the new threshold free-float rules.
MSCI removed 13 Indonesian companies from its Small Cap Index list on Tuesday. These included state miner Aneka Tambong, palm oil conglomerate Astra Group’s Astra Agro Lestari and Sinar Mas Group’s Bumi Serpong Damai.
MSCI announced in April that it would continue to limit the increase in shares available to foreign investors as well as the number of Indonesian securities.
It will not add Indonesian stocks to the investable market indexes, and it will not allow upward migration between size segments. Reporting by Gayatri Sroyo, Rae Wee, and Ankur Banerjee. Writing by Fransiska Nanangoy. Editing by Martin Petty & David Stanway.
(source: Reuters)