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Euro defence stocks reach record highs, dollar gains due to geopolitics
The European defence stocks rose to a "record high" on Thursday as oil prices and dollar gained ground. Geopolitical tensions rumbled from Venezuela to Greenland, keeping traders guessing. seizure Two Venezuelan-linked oil tanks in the Atlantic were reported alongside the news that U.S. Secretary Marco Rubio will?attend Meet?Denmark leaders Next week we will be discussing Greenland, and there are also some mixed economic statistics. STOXX, Europe's aerospace and defence stock index, has risen nearly 2% in the first hour of a fifth consecutive day of gains. They have already risen 13% so far this year and over 260% since Russia invaded Ukraine in 2022. Euro-dollar exchange rates are on course for their eighth consecutive drop, but mixed U.S. data from Wednesday kept dollar bulls at bay ahead of the closely watched nonfarm payrolls report on Friday. Peter McLean is the Head of Multi-Asset Portfolio Solutions, Stonehage Fleming Investment Management. While it is unlikely that we will see military action in Greenland, there is a clear impetus for increased defence spending in Europe. Brent futures recovered above $60 per barrel on Thursday and U.S. Crude rose 0.5% to $56.30 per barrel. Top U.S. officials stated on Wednesday that the country must control Venezuela's oil revenue and sales indefinitely in order to stabilize the economy of the latter, rebuild its oil industry and ensure it acted in America's interest. Daniel Hynes is ANZ's senior commodities strategist. He said that the market's reaction to Trump's comments about Venezuelan oil control was a bit'misplaced'. Oil prices would rise if the U.S. controlled oil sales continued in the short-term. I think that's why oil prices are rising. Stocks in other markets were mostly lower after a positive start to the new year that lifted global markets. The STOXX 600, a pan-European index, was down by 0.2%. Japan's Nikkei fell 1.6% over night amid increasing tensions with China, and Wall Street futures slipped 0.2%. Charu Chanana is the chief investment strategist for Saxo. Chanana said that "geopolitical headlines" were in charge, pointing out China's export ban for dual-use to Japan and the potential risk of rare earths. Tokyo shares of Japanese chemical producers fell, while those of their Chinese competitors jumped. This was after China's Commerce Ministry announced that it would launch an anti-dumping investigation into the imports of "chemicals used for chipmaking". PAYROLLS NEXT Investors were also watching the U.S. initial weekly jobless claims, due later, and the closely watched non-farm payrolls employment report, due Friday. Both could give further clarity to the Federal Reserve on its rate outlook. Goldman Sachs analysts predict a rise of 70,000 above the consensus in non-farm payrolls for December. They also expect unemployment to drop to 4.5%. The data released on Wednesday painted a mixed image. JOLTS figures for the labour market bolstered the view that "no hiring, no firing" is the best way to look at the job market. However, the ISM services index in December reached a 14-month-high, which was reassuring. The market's expectations for two further Fed rate cuts in 2019 were not altered by the readings. The 10-year Treasury yields were muted, at?4.15%. Germany's bund yields for the 10 year period were 2.8%. This is still down 7 basis points this week. On the currency market, the yen of Japan rose to 156.67 yen per dollar, while sterling bought $1.3458 last time. Silver and platinum fell 2.6% and 3.2% after recent gains. McLean, of Stonehage and Fleming, said that the direction of bond rates is one of the biggest risk factors for this year. "I think it would be positive if the 10-year Treasury yield falls below 4 and continues to fall.
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China warns about battery overcapacity risk
China's Industry?Ministry said Thursday that it has urged a battery manufacturer to optimise the industry capacity and?mitigate overcapacity risks. According to the readout from a meeting posted on Wechat on Wednesday, the ministry stressed the need for market regulation and enhanced supervision in the electric vehicle and battery storage sectors. China Daily, citing sources, reported that 16 companies, including top battery manufacturers, were present. According to the report, energy storage system integrators Beijing HyperStrong Technology and Zhuzhou CRRC Times Electric, as well as Trina Solar – a leading solar manufacturer – were also present. The state planner, the?industry minister and the?energy regulators convened this meeting. The construction of data centers?all over the world has led to a surge in demand for energy storage batteries. The ministry echoed the criticism of the solar industry where a ballooning production capacity resulted in falling prices and losses for the entire industry. (Reporting and editing by Jacqueline Wong Stephen Coates, Louise Heavens).
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Galp and Moeve are in merger talks to combine their fuel retailing and refining businesses into a European giant
Portuguese energy company Galp is in talks with private equity-backed Moeve to merge their refining and?chemicals businesses as well as fuel retail businesses. They announced the deal on Thursday. According to their non-binding contract,?Galp, Spain's Moeve and the United Arab Emirates state-owned investment firm Mubadala, as well as U.S. investment firm Carlyle Group plan to form two new companies. One would run 3,500 retail fuel stations, primarily in Spain and Portugal. It would sell more than 6 million metric tonnes of refined products per year. The other would run Moeve’s Huelva, Algeciras and Galp’s Sines oil refineries. Three facilities with a combined capacity of 700,000 barrels a day. Moeve will be the majority shareholder in the unit with?Galp to hold a stake of more than 20%. Galp's upstream business in oil and gas production, which includes stakes offshore Namibian oil fields that are closely watched, will not be included? in any merger. Biraj Borkhataria, RBC analyst, said: "We anticipate the main takeaway from the market will be that it may increase the likelihood that Galp is a candidate for a 'take-out' given the cleaner Portfolio." At 0921 GMT the share price of Galp was up by 1.4%, beating a wider index of European energy companies, which fell 1.4%.
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Vietnam trade is tepid due to farmers holding back their sales. Indonesia premiums are rising.
The coffee trade in Vietnam was subdued on Thursday, as farmers held off sales in anticipation of higher prices. However, exporters were rushing to meet their delivery obligations as the demand increased. Premiums in Indonesia also rose. Farmers in the Central Highlands sold beans for 97,500 to 98.200 dong per kilogram ($3.71 to 3.74). As of Wednesday's closing, Robusta coffee delivered in March was down $68 to $3,939 per kg. A trader in the coffee belt stated that "demand is high as exporters have resumed their activities after the holidays. However, supply is limited." The trader said that farmers are not under pressure to sell beans at this time as they also have income from durian. They therefore tend to keep the beans and demand higher prices. A trader from the area said that the 'output is estimated to be 5%-10% higher this year and weather conditions are favourable for coffee plantations. Traders provided 5% black-grade 2 robusta with a discount between $140 and $150 per ton compared to the contract signed in March. Vietnam will export 1.58 million tonnes of coffee by 2025. This is up 17.5% on a year ago, according to government data. Export revenue increased 59% last year, reaching $8.9 billion. The data shows that coffee shipments in December grew by 40.8% compared to a year ago, reaching 180,000 tons. A trader said that Sumatra Robusta beans from Indonesia were being offered at a premium of $215 to the February contract. This is up from the $120 premium two weeks earlier. A second trader reported that beans would be offered at a premium of $200 for the contract in March, up from a $300 premium prior to the holidays. Coffee farmers in West Lampung, Indonesia, said that recent heavy rains could have caused cherries to fall from plants, possibly affecting the supply.
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Gold drops as selling pressure is sparked by the rebalancing of commodity indexes
Gold prices fell on Thursday, as investors prepared for futures sales?linked?to? a commodity index reshuffle. A stronger U.S. Dollar added pressure to the price of gold by making it more expensive for overseas buyers. As of 0921 GMT, spot gold dropped 0.6% to $4.427.28 per ounce. U.S. Gold Futures for February Delivery fell 0.6% to $4435.40. "Gold and Silver remain under pressure, as the annual commodity index rebalancing begins. In the next five business days, COMEX metal futures may see sales in the region of $6-$7 billion. This is according to Ole Hansen of Saxo Bank, who heads commodity strategy. The annual rebalancing of the?Bloomberg Commodity Index is designed to align the index with the current global commodity market. This year's window is from January 9-15. Hansen said that the U.S. - Venezuela conflict had added a georisk premium at the start of the week, but it is now fading as attention shifts to the rebalancing. Investors weighed mixed economic data in advance of Friday's nonfarm employment report. The data on Wednesday revealed that U.S. employment dropped to its lowest level in 14 months, while hiring returned to its usual sluggish tone. This indicates a waning labor demand. Investors await the non-farm payrolls report from the United States for further clues about monetary policy. Markets have already priced in two interest rate reductions by the Federal Reserve during this year. The U.S. has seized two Venezuelan-linked oil tanks in the Atlantic Ocean. Spot silver fell 3.1%, to $75.73 an ounce after reaching an "all-time" high of $83.62 per ounce on December 29. HSBC expects gold to reach $5,000 per ounce in 2026 due to geopolitical risk and increasing fiscal debts. Silver is expected trade between $58 - $88 by 2026 as a result of supply deficits and robust investment demand. Palladium fell 4.4%, to $1,687 an ounce. Spot platinum dropped 4.2%, to $2,209.50. (Reporting and editing by Varun H. K. in Bengaluru)
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NYT: Trump's comments on Venezuelan oversight could last for years
In an interview with the New York Times published early Thursday, U.S. president Donald Trump stated that "only time will show" how long the United States will continue to maintain their oversight of Venezuela. Trump replied: "I'd say it will be much longer." When asked by The Times how long he thought the situation would last, Trump responded, "I'd say much longer." Trump said of Venezuela that "we will rebuild it in a profitable way." He added, "We're going?to be taking oil and using oil." We are bringing down oil prices and we will be giving Venezuela money, which it desperately needs. According to The Times, Trump said that the U.S. and Venezuela's interim president Delcy Rodriguez are "getting on very well". Trump unveiled his new design on Tuesday A plan to refine and sell Up to 50 million barrels Venezuelan oil remained in Venezuela due to a U.S. ban, a sign that Washington has been coordinating with the Venezuelan government ever since President Nicolas Maduro was captured in an armed raid last weekend. Trump said that Venezuelan officials were giving him "everything we think is necessary".
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Swiss inflation for December is positive
The Swiss National Bank released data on Thursday showing that the annual inflation rate in Switzerland edged into positive territory?in December. Analysts polled by the company had predicted a 0.1% rise in consumer prices. This was an increase from a 0% rate recorded in November. The SNB targets an inflation rate of between 0 to 2%. However, the central bank recently said that it would be willing to allow inflation to fall below this?target temporarily. The SNB declined to comment on the latest figures. The average inflation rate in 2025 is 0.2%. This is much lower than rates of 1.1% and 2.1% for 2024. Prices for electricity, gasoline and used cars decreased last year, while housing rents and the price of?chocolate, meals and meals rose. The Federal Statistics Office reported that the prices of Swiss domestic products would increase on average by 0.7% during 2025. However, this was offset by a 1.6% drop in imports. The Swiss Consumer Price Index remained unchanged from November to December. The poll predicted a 0.1% decline. (Reporting and editing by FriederikeHeine and Thomas Seythal, with John Revill)
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Iron ore prices fall after a four-day rally, as investors take profits
Iron ore futures fell on Thursday, after a four session rally. Investors booked profits due to fears of a possible government intervention in China, the top consumer. Prices were nearing the psychologically important level of $100 per metric tonne. The May contract for iron ore on China's Dalian Commodity Exchange ended the daytime trading session down by 0.37% to 813 yuan (116.42 dollars) per ton, after reaching 831.5 earlier in the morning, the highest price since July 22, 2025. The benchmark February Iron Ore on the Singapore Exchange fell by 1.05% at 0715 GMT to $107.9?a ton after reaching its highest level since September 30, 2024, at $109.4. After China's central bank announced that it would?ease monetary policy, the?price rise was fueled by expectations of improved demand. The sharp increase in prices has made investors apprehensive, as they fear that Beijing may intervene in the future to control prices like it did in 2023. Analysts say that some steel mills have also resisted purchasing cargos due to higher prices. According to data from Mysteel, the volume of iron ore traded at China's major ports fell 54.9% on a Wednesday. Base metals such as copper and nickel also retreated on Wednesday from their previous highs, which weighed down the overall sentiment of metals. Coking coal and coke, which are both steelmaking ingredients, have continued to rise on the DCE. They were up by 4.75% and 2.56 %, respectively. Steelhome, two analysts and several major Chinese coke producers have confirmed that they discussed a 15%-35% production cut at a Wednesday meeting, citing severe losses. The benchmarks for steel on the Shanghai Futures Exchange are mixed. Rebar gained 0.44%. Hot-rolled coils increased 0.48%. Wire rods lost 0.48%. Stainless steels dropped 1.13%. $1 = 6.9832 Chinese Yuan (Reporting and editing by Sumana Cheema and Sonia Cheema; Amy Lv and Ruth Chai)
Automakers question feasibility of California 2035 EV sales mandate plan
Significant automakers said on Wednesday that a California plan to end the sale of gasolineonly vehicles by 2035 might be impracticable in 11 other states that adopted it, citing insufficient customer need.
The Alliance for Automotive Innovation, which represents most significant automakers except Tesla, raised concerns in comments filed with the U.S. Epa on California's proposal.
The California Air Resources Board (CARB) asked the EPA for a waiver under the Clean Air Act to execute its plan to end sales of gasoline-only lorries by 2035.
California's EV requirements may be practical a minimum of in the early years for California but said the feasibility for other states with substantially lower existing EV sales is far less specific, the automobile industry group said.
The onus for complying with the rules rests with car manufacturers It is uncertain whether clients in each jurisdiction will accept (zero-emission lorry) technologies and buy them in sufficient quantities. These are mainly beyond the control of car manufacturers, the group that represents General Motors, Toyota, Volkswagen and others stated.
CARB stated in response: States that have adopted California's program comprehend that tidy automobiles improve public health and resolve a worldwide difficulty.
AAI stated that in order to meet the 2035 goal sales of electrical, plug-in electric hybrid or hydrogen fuel cell lorries will need to more than double in all but one state adopting California's guidelines and triple in 5.
EPA did not right away comment.
Independently, the American Petroleum Institute, an industry group, prompted EPA to reject California's strategy, which it stated represents the ultimate regulative intervention.
President Joe Biden's administration has actually prevented setting a. date to phase out the sale of gasoline-only automobiles.
The EPA in April independently proposed rules to cut automobile. emissions through 2032, forecasting that 60% of brand-new automobiles. produced by car manufacturers would require to be EVs by 2030 and 67% by. 2032 to meet requirements. reported this month the EPA. plans to soften annual requirements through 2030.
California's rules begin in the 2026 model year and would. cut smog-causing contamination from light-duty lorries by 25% by. 2037. They mandate 35% of brand-new automobiles sold must be electric or. plug-in hybrid by 2026. That proportion will increase to 68% by 2030. and 100% by 2035.
California's guidelines require by 2035 that 80% of all brand-new. cars offered in the state be electric and no greater than 20%. plug-in hybrid electric.
Chrysler parent Stellantis stated in December it. would momentarily cut one shift at its Detroit assembly plant. that develops Jeep sport energy cars, citing California EV. regulations.
(source: Reuters)