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Investors pare back over-extended gains as copper prices fall this week
The market was expected to post a weekly decline on Friday as it pared gains that had been over-extended in the last few weeks, which were backed by concerns about supply. During the morning of trading, investors were searching for direction in the absence of macroeconomic and fundamental data. As of 0301 GMT the most traded copper contract at the Shanghai Futures Exchange rose 0.01% to 85,980 Yuan ($12,070.76) a metric ton, and was set for a weekly decline of 1.41%. The benchmark three-month price of copper at the London Metal Exchange rose 0.34% to $10,719 per ton. It is expected to finish the week with a 1.54% decline. Analysts at Sucden Financial wrote in a report that markets are struggling to establish a clear trend because there have been few fundamental updates. They said that this was particularly true for the copper market, which after falling from record highs faces contradictory signals: a tight supply on the basis but a weak fundamental demand. The October PMI manufacturing reading for China's top consumer missed expectations on Friday. Investors rolled back their overbought bets on Thursday, ending a four-day loss streak. Investors are looking for clues to the Federal Reserve's interest rate decision in December. Some Fed officials advocated for support of another rate cut. However, investors were unsure due to the lack of reliable data during the shutdown. Aluminium gained 0.60% among other SHFE base materials, while zinc increased by 0.53% and tin added by 0.31%. Lead and nickel did not change much. Aluminium, zinc, and lead all rose in price, but nickel and tin remained unchanged. Friday, November 7, DATA/EVENTS - (GMT) 0700 UK Halifax House Price MM,YY Oct 0745 France Total Reserve Assets Oct 1330 US Non Farm Payrolls Oct 1300 US Unemployment Rate October 1330 US Average Earnings Year Oct 1500 US U Mich sentiment Prelim Nov (1 = 7.1230 Chinese Yuan Renminbi). (Reporting and Editing by Harikrishnan Nair; Reporting by Dylan Duan, Lewis Jackson)
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China's production cuts and soft steel demand will cause a weekly decline in iron ore.
The price of iron ore futures fell on Friday, and was set to fall for the week as a result of a weakening steel market and production cuts in China. By 0202 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange fell 1.16%. It was 766 Yuan ($107.54) per metric ton. The contract was expected to finish the week at a loss of 3.95%. On Friday, the benchmark December iron ore at the Singapore Exchange fell 1.79% to $102,05 per ton. The contract has fallen 3.9% this week. Analysts from ANZ said that in order to control deflation in China, the country has been focusing on eliminating overcapacity. The steel industry is a particular focus, as rapid capacity growth in this sector has impacted profitability. SteelHome data showed that blast furnace production was cut in North China, the region with the largest steelmaking industry. This led to a drop in steel production. Galaxy Futures, a Chinese broker, says that ore prices will remain low, as steel demand is expected to continue declining, due to the decline in consumption of real estate, infrastructure and manufacturing in the third quarter. The fourth quarter should not show any significant improvement, because the consumption of these sectors has declined on an annual basis. After the European Commission proposed last month that tariff-free import quotas for steel be cut by almost half, while the duty on steel imported outside of the quota be doubled to 50%, German Chancellor Friedrich Merz called on European patriotism in order to protect the EU’s steel industry. ArcelorMittal is the second largest steelmaker in the world. It beat earnings estimates for the third quarter, and provided a positive outlook to 2026. However, it noted that the overall demand was weak during the quarter, and there were few signs of restocking. Coking coal and coke, which are used to make steel, have gained 0.16% and 0.1% respectively. The Shanghai Futures Exchange saw a rise in most steel benchmarks. Rebar rose 0.43%; wire rod grew 0.06%; stainless steel grew 0.08%. Hot-rolled coils fell 0.06%. ($1 = 7.1230 Chinese yuan) (Reporting by Lucas Liew; Editing by Subhranshu Sahu)
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Supply concerns weigh on oil heads as they suffer a second consecutive loss of production.
After three days of declining prices, oil prices rose on Friday on concerns about an excess of supply and a slowing of demand in the U.S. Prices appeared headed for another week of losses. Brent crude futures were up 21 cents or 0.33% to $63.59 per barrel at 0149 GMT. U.S. West Texas Intermediate Crude was up 22 cents or 0.37% at $59.65 per barrel. Brent and WTI will fall by about 2% in the coming week. This is a second consecutive week of declines as major producers around the world increase their output. Tony Sycamore, IG Markets' analyst, said that the price drop was primarily due to a sudden 5.2 million barrel U.S. stock buildup which reignited fears of oversupply. He added that "risk-aversion flows have boosted the dollar, and the U.S. Government Shutdown continues to cloud the economic activity." The Energy Information Administration reported on Wednesday that U.S. crude stock levels rose more than anticipated due to higher imports, reduced refining, and a decline in gasoline and distillate stocks. The oil prices were also influenced by the concerns over the economic impact of the longest shutdown of government in US history. Private reports indicate a weaker U.S. labour market in October, according to the Trump administration. Sycamore stated that WTI prices will be settled between $58 and $62 per barrel in the short term. The U.S. Government reopening in a week is a potential catalyst for the rally, but persistent buildups and weak demand will limit it. The Organisation of the Petroleum Exporting Countries (OPEC+) and its allies decided Sunday to slightly increase production in December. The group has also decided to pause further increases in the first quarter next year due to concerns about a glut of supply. Saudi Arabia, the world's largest exporter, has responded to OPEC+ by announcing its decision. Sharply reduced In December, the company set lower prices for crude oil for Asian buyers due to an oversupplied market. The sanctions imposed by the European Union and the United States on Russia and Iran also affect supplies to China and India, which are amongst the largest global importers. This provides some support for international markets. Gunvor, a Swiss commodity trader, announced on Thursday that it had withdrawn a proposal to purchase foreign assets from Russian energy company Lukoil. The U.S. Treasury had called Gunvor "Russia's puppet" and indicated Washington was opposed to the deal.
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Tech stocks drop on a weekly basis due to a sour mood
Investors are uneasy with the pace of the artificial intelligence stock rally, and have shifted their focus to safer assets like bonds and the Japanese yen. S&P 500 and Nasdaq futures firmed up a bit in Asia's morning. However, overnight the Nasdaq fell 1.9%. The world's largest tech index has fallen 2.8% this week. If that trend continues, it would be the biggest drop in a single week since March. This is a shock for an juggernaut which had gained more than half its value from the lows reached when tariffs were first announced in April. In morning trading, Japan's Nikkei dropped 1.8%, resulting in a loss of 4.7% for the week, the biggest since late march. Meanwhile, in Seoul, the Kospi declined 1.4%, resulting in a fall of 3.3% for the week, its worst weekly drop since late mars. Softbank Group Corp, a tech investor, fell more than 20 percent this week. Chip and cable manufacturers were also among the worst performers. Bitcoin, which is sometimes used as a barometer for tech sentiments, has fallen 8% this week to $101,092. MOOD SHIFT The pullback of AI-related shares has not been triggered by any obvious event, but the reaction to recent results reveals that some fears are beginning to surface about the possibility of a bubble and profitability questions. Meta's stock plunged late last month after it revealed large capital expenditures as the company builds data centres to support its AI push. Palantir Technologies, a data and AI company, has also seen its shares fall despite exceeding earnings expectations. Herald van der Linde is the head of equity strategies for Asia Pacific, HSBC. "And another one says it. Then a third. A fourth person says that these three are all selling. It's possible that I am selling, too. It's just a change in market sentiment. This could be happening now." Overnight, the S&P 500 index closed down 1.1% and the Philadelphia SE Semiconductor Index fell 2.4%. BONDS, YEN HIGHER Bond markets rose on the back of a demand for safety, and as second-tier U.S. data indicated a wave layoffs which could support future rate cuts in the U.S. The benchmark 10-year U.S. Treasury rates fell 6.4 basis point overnight to 4.09%, after Challenger, Gray & Christmas, an outplacement firm, said that there was a spike in job cuts announced in October. These private surveys have attracted attention on the market, while the prolonged U.S. shutdown has stopped official U.S. data publishing. The dollar fell overnight by nearly 0.5% to $1.1546 a euro. The dollar was last, at 153.17 Japanese yens and 0.8069 Swiss francs. The pound soared after the Bank of England held interest rates, but the possibility of a rate cut in December limited gains. It traded at a slight discount to $1.3128 on the Asian market. Gold held steady at just under $4,000 per ounce. Brent crude remained at $63.64 per barrel. (Editing by Shri Navaratnam).
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Australian shares flat as financials counter energy, real estate strength
Australian shares were little altered on Friday as gloomy performances in the financial sector following a disappointing profit half-year from Macquarie, a top investment bank, partially offset gains in local stocks in energy, real estate and healthcare. As of 2349 GMT the S&P/ASX 200 was flat at 8,826.80, and is on course for its second consecutive weekly loss if current momentum continues. Macquarie Group shares fell 5.5%, their lowest level in over five months. The lender missed expectations on its half-year profits due to a lacklustre commodity division. CBA, the top lender in Australia, lost 0.8% and ended a winning streak of two sessions during which they had gained 2.5%. Westpac shares also dropped 0.8%, after reaching a record-high on Wednesday. The broad financial index fell 0.6% on the Friday, but it was still on track to achieve its best performance for a week since late September. The benchmark index fell 1.4% following a poor close on Wall Street over night amid a sell-off in the tech sector. The shares of WiseTech Global, Xero and each other fell more than 1%. Rio Tinto, Fortescue and BHP all fell more than 1%. Rio Tinto was down by 0.2%, Fortescue by 0.5%, and BHP 0.5%. Gold miners recovered some of their losses by rising 1.1% on the back of a falling dollar, a surge in safe-haven demand and concerns about a long U.S. shutdown and the legality and legitimacy of tariffs. The shares of Northern Star Resources and Evolution Mining rose by 1.1% and 2.2%, respectively. The energy subindex rose by nearly 1%. Woodside Energy and Santos gained 1.6% and 0.6% respectively. The healthcare sub-index rose 0.6% while the real estate index climbed 0.4%. Qantas shares fell 4.1%, their lowest since mid-May. The Australian airline lowered its domestic unit revenue projection for the first half 2026. It also flagged an increase in fuel prices. The benchmark S&P/NZX50 index in New Zealand rose 0.4% to 13,625.29.
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China's Vice Premier urges the end of trade barriers that are holding back green transformation
Ding Xuexiang, vice premier of China, called on fellow leaders to show "true multiculturalism" at the climate summit held in Brazil. Ding, via a translation, said: "We must strengthen international collaboration in green technology and the industry, remove trade obstacles, and ensure free flow of high-quality green products, to better meet global sustainable development needs." Ding told the official Xinhua News Agency on Friday that the developed countries must fulfill their obligation "to lead in emission reduction and honour their funding commitments", as well as provide more assistance to developing countries. He said that China was willing to work with other parties to "persistently encourage green and low-carbon development". In September, Chinese President Xi Jinping stated that China aimed to reduce its economy-wide greenhouse gases emissions by 7% - 10% by 2035 compared to their peak. He said that as part of China's national determined contribution targets by 2035, the country's consumption of non-fossil fuels will represent more than 30%. (Reporting from William James in Belem, and Farah Masters in Hong Kong. Editing by Brad Haynes & Michael Perry).
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Safety fears hinder rescue efforts in South Korea after power plant collapse.
Fire and rescue officials reported that a worker died and six others remain trapped after a large structure collapsed at a South Korean power station being prepared for demolition. On Thursday afternoon, workers were removing parts of a massive steel structure that was a decommissioned heating system when it collapsed. The footage from the scene shows the structure toppled and mangled, surrounded by other structures. Kim Jung-shik, a fire official, told reporters that two people were rescued quickly and then another two were found under the rubble. He said that one worker died early Friday morning and another's condition was still unknown. Rescuers used heat sensors, remote scoping and search dogs to help locate other trapped workers. However, their efforts were hampered by a risk of further collapse, said he. The South Korean president Lee Jae Myung has called for a full-scale effort to rescue the trapped workers. (Reporting and editing by Ed Davies.)
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France launches $2.5 billion initiative for Congo forest protection
A document seen by revealed that European nations have thrown their weight behind a plan worth $2.5 billion to save the Congo forest. This conservation scheme could steal some of the thunder from Brazil's flagship initiative for the COP30. The U.N. Climate talks are being held this year in the Brazilian Amazon to draw attention to the issue of emissions caused by rampant deforestation. The initiative, led by France, is called "The Belem Call to the Forests of the Congo Basin". It has the backing of Germany, Norway and Britain. The initiative's supporters hope to mobilize resources in order to protect the second largest rainforest on earth. Five European nations signed the document in French dated 6 November. The document stated that "the donors are... committing themselves to mobilize over $2.5 billion in the next five year period, on top of the domestic resources which will be mobilized for the protection and management of forests of the Congo Basin by Central African countries." Signatories also said that they aimed to assist African nations in reducing deforestation by using technology, training and partnership. The Congo, the Amazon, the world's biggest rainforest, and the Borneo-Mekong-Southeast Asia basin, the third-largest, all face threats from expanding farm frontiers, logging, mining, and other industries. The Congo's protection has attracted attention, as it absorbs more greenhouse gases net than any other forest. However, the timing was not in sync with Brazil's priority of a global fund for forests that is central to its COP30 agenda. The Brazilian President Luiz inacio Lula da So has hailed the Tropical Forests Forever Facility as the future of climate financing because it replaces grants by a more scalable model. A diplomat who is familiar with both initiatives said that "in theory, they are both very different." He noted that the TFFF offers annual payments without strings to rainforest nations. The source said that the two rainforest funds competing with each other may not be helpful. Norway The TFFF has pledged $3 billion On Thursday, the largest contribution to date was made. France has said that it will contribute up to 500 millions euros to the Brazilian initiative. Reporting by Lisandra paraguassu from Belem, and Simon Jessop from Sao Paulo. Editing by Brad Hayes and Diane Craft.
Europe gets lucky with a moderate, windy winter season: Kemp
With just a couple of more weeks left in the heating season, Europe is on course to end the winter with a record quantity of gas in storage, sending out prices sliding and resolving worries about energy security.
Before policymakers congratulate themselves on successfully managing the crisis triggered by Russia's invasion of Ukraine, they must acknowledge they have been exceptionally lucky with the weather condition.
Back-to-back moderate winter seasons in 2022/23 and again in 2023/24 have minimized heating need for both gas and electrical energy and enabled the region to generate record gas stocks.
The most recent winter has been primarily mild, wet and windy throughout Northwest Europe, slashing heating demand while triggering a rise in wind farm generation, a double conserving on gas.
Chartbook: Europe's weather and gas stocks
There have actually been fairly couple of episodes of dunkelflaute,. the German word explaining cloudy, windless and very cold. weather condition, which zero-out solar and wind generation, forcing the. grid to rely on gas to keep satisfy need.
There is no warranty the area's luck will last; next. winter could be significantly chillier with less wind generation,. resulting in a double dive in gas consumption.
The more comprehensive issue is that increasing reliance on variable. wind and solar, driven by medium and brief term weather. patterns, is inducing increased variability in winter season need for. gas and gas-fired generation.
During the winter season of 2023/24, wind considerably lowered. stress on the electricity and gas products-- but it might simply. quickly contribute to the stress on both systems in future.
NAO FORECASTING
The North Atlantic Oscillation (NAO) is the single most. important element for year to year changes in the seasonal. climate around the Atlantic Basin, according to scientists at. the Hadley Centre in Britain. ¹ Irregularity in the NAO describes the state of the Atlantic. jet stream and is straight related to near-surface winds and. Winter season temperature levels ... across North America, Europe, and. other areas around the Atlantic Basin.
At its most basic, the NAO explains the state of the. atmospheric pressure differential in between Greenland-Iceland. ( generally a location of relatively low pressure) and the. Azores-Bermuda (usually a location of high pressure).
When the pressure difference is greater than average, the. NAO is said to be favorable, and strong westerly winds are. directed across Northwest Europe, bringing great deals of warm, wet. air from across the ocean.
When the pressure distinction is below average, the NAO is. stated to be unfavorable, and westerly winds are directed across. Southern Europe, while Northwest Europe experiences less windy. and drier conditions. ² The NAO is a lot more variable and unstable in the short and. medium term than the more familiar El Niño -La Niña cycle in the. Pacific.
In recent years, however, researchers have actually made development in. successfully forecasting the NAO for several months ahead, which. is the basis for seasonal winter season weather forecasts.
The NAO can be forecast based upon the state of El Niño -La . Niña, the level of ice cover in the Kara Sea location of the Arctic. Ocean and a number of other variables.
It is now possible to anticipate the course of NAO and average. winter season weather with some success as early as November, according. to the U.K. Meteorological Office.
WINDY and mild
The NAO was incredibly favorable in December 2023, and to. lower extent in February 2024, directing lots of warm damp. westerly winds across Northwest Europe in both months.
In Frankfurt in Germany, temperature levels were well above the. long-term seasonal average in December (+2.8 ° C )and again in. February (+5.8 ° C), which dramatically minimized heating demand.
In London, temperature levels were likewise well above average in. December (+2.3 ° C )and February (+3.3 ° C), cutting the need for. both gas-fired main heating and gas-fired electrical heating.
At the exact same time, wind speeds throughout Northwest Europe were. faster than typical, improving generation from onshore and. offshore wind farms.
Increases in wind farm capability and greater average wind. speeds combined to create a rise in wind generation.
Germany's wind generation soared to 19.5 terawatt-hours. ( TWh) in December 2023 from 12.2 TWh in December 2022.
Britain's wind generation reached 9.7 TWh in December. 2023 from 7.4 TWh in the very same month a year previously.
In Germany, the boost in wind output (+7.3 TWh) primarily. lowered generation from coal (-5.1 TWh) and gas (-1.0 billion. TWh).
In the UK, increased wind output (+2.3 TWh). primarily reduced generation from gas (-3.0 TWh).
CONSERVING GAS
The result has been a much smaller sized exhaustion of gas. stocks than normal considering that the start of winter season 2023/24, with. When the NAO, the impact focused in December and February. was highly favorable.
Stocks across the European Union and the United Kingdom. diminished by an average of simply 3.2 TWh per day in December. compared with an average of 4.1 TWh per day over the previous. ten years.
The depletion was the tiniest because December 2019 and. before that December 2015, both of which were characterised by a. strongly favorable NAO.
Stocks diminished by an average of 3.0 TWh per day in. February 2024, compared with a previous ten-year seasonal average. of 4.8 TWh, and the slowest considering that February 2014.
As a result, stocks were 279 TWh (+67% or +2.16 standard. discrepancies) above the prior ten-year seasonal average on March. 10.
The surplus had actually swelled from 167 TWh (+18% or +1.70 requirement. discrepancies) at the start of the winter heating season on October. 1.
Most of the increases took place in December (+29 TWh) and. February (+57 TWh), with a smaller increase in November (+19 TWh),. and the surplus really tightened somewhat in January (-8 TWh).
POLICY LESSONS
Luck with the winter in 2022/23 and again in 2023/24 has. played the most significant role improving gas supply security in Europe,. and was most likely more crucial than policy measures to promote. gas conservation.
Two moderate winter seasons have actually enhanced stocks to a record seasonal. high and pushed prices back to levels dominating before 2021. once inflation is taken into consideration.
Europe's leaders would be ill-advised to rely on being fortunate. a third time. Policymakers and energy market need to consider how. they would cope if next winter was characterised by a. predominantly negative NAO, greater heating need and less wind. generation.
Recommendations:
¹ The North Atlantic Oscillation (U.K. Meteorological. Workplace)
² Experienced Long-Range Forecast of European and North. America Winters (Scaife et al, 2014)
Associated columns:
- Europe's mild winter season leaves gas stocks at record high. ( March 7, 2024)
- Europe's swollen gas stocks drive rates lower (February. 13, 2024)
John Kemp is a market analyst. The views revealed. are his own. Follow his commentary on X https://twitter.com/JKempEnergy.
(source: Reuters)