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Britain's Industrial Strategy cuts green levy for lower energy bills
The British industrial strategy, which was made public on Sunday, will lower green levies and energy bills to thousands of companies in an effort to increase the competitiveness of steel companies and other manufacturers. Under the strategy for the decade 2025-2035, the government plans to cut the bills of electricity-intensive industry by up to 25% from 2027, which it said could benefit more than 7,000 businesses. The government's priority is to boost Britain's anaemic economic growth. The high energy costs faced by many businesses were cited as a major obstacle by lawmakers and business leaders. The United States under Donald Trump has been leading the way in promoting the domestic industry by using protectionist tariffs, and removing potentially costly environmental regulations and charges. Britain and the European Union are also being pressed to support their own manufacturers. The industry body Make UK said that the government should abolish climate levies placed on businesses. The government has responded by exempting the energy-intensive firms. Clean energy is still included in the Industrial Strategy as one of eight sectors that Britain has previously identified as being strong. Other sectors include advanced manufacturing, defense and creative industries. The government has heard the businesses' biggest request: to reduce energy costs and improve skills. The government stated that the energy measures will be funded by reforms in the energy system without increasing household bills or taxes. After a consultation, the scope and eligibility of the scheme will be finalised. Business and Workers The Industrial Strategy is Britain's First in Eight Years, after the Centre-Left Labour Party stated that it would provide a better approach to assist industry with everything from skills, to power and water to investment. Keir starmer, the British Prime Minister and other ministers have said that Britain has both stood aside and interfered far too much. Workers were not given much support during the deindustrialisation process, but they also had to deal with what they call overregulation. The focus of the strategy on energy costs, skills and the engineering industry is welcomed by business and engineering groups. However, the pro-growth campaign group Britain Remade has called for greater efforts to improve grid connectivity and reform the planning system. The strategy will see the government increase the capacity of the British Business Bank, a state-owned institution, to channel investments into smaller businesses, allocate an additional 1.2 billion pounds ($1.61billion) per year for skills by 2028-2029, and reduce regulatory burdens placed on business. Less than 9% is devoted to manufacturing. The industrial strategy includes financial and professional services as well as the creative sector of Britain, but some business groups in sectors like hospitality have criticized it for its narrow focus.
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Budapest: Hungary and Slovakia reject Russian sanctions package
Hungary and Slovakia decided to not support the EU plan for an 18th package of sanctions against Russia. Hungarian foreign minister Peter Szijjarto announced this on Monday during a live press conference broadcast on Facebook. The minister stated that Hungary and Slovakia have decided to block the package of sanctions in response to European Union plans for phasing out Russian energy imports. Szijjarto stated, "We did it because the European Union... wants to prevent member states including Hungary and Slovakia from buying cheap Russian natural gas or cheap Russian oil, as they had done in the past." Hungary and Slovakia still rely on Russian oil and gas supplies, and maintain warm relations with Moscow. On June 10, the Commission proposed new sanctions against Russia, targeting its energy revenues, banks, and military industry, for its invasion of Ukraine over three years ago. Robert Fico, the Slovak prime minister, responded by saying that Slovakia would not support the sanctions package unless the European Commission provided a solution for the situation Slovakia might face if the EU phased out Russian energy imports. For sanctions to be approved, the bloc must vote unanimously. On Sunday evening, Viktor Orban, the Hungarian prime minister urged EU to take action. Proposed ban on Russian energy The expected increase in energy prices after the U.S. attack on Iran has taken this off the agenda.
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EU suspends discussions on law to combat companies' false 'green' claims
The European Union stopped Monday negotiations on a proposed law that would require companies to prove their claims of being climate-friendly. This was after the European Commission warned it could overburden smaller companies, and threatened to put the plan on hold. This dispute is part of a series of moves by Brussels to simplify or weaken its green agenda. The EU wants to limit a backlash to ambitious environmental policies and reduce regulation for struggling industries. A spokesperson for Poland which currently holds the rotating EU presidency said that it decided to cancel Monday's round of negotiations between EU countries and legislators who were trying to finalise EU's green claims laws. The spokesperson stated, "We're hitting the pause" button. There are too many questions and we want clarity from the European Commission about its intentions. Then we can decide what to do next. They said it was unclear if the negotiations would resume. The European Commission which proposes new EU law said that it intends to withdraw the proposed law on green claims because EU countries indicated they want to expand the law so as to cover 30 millions of the EU's smaller companies. The current discussion around the proposal goes against the Commission’s simplification agenda", a spokesperson for the Commission said on Friday. He was referring to the Commission’s efforts to simplify EU regulations for European businesses. Last week, the Commission was also under pressure by centre-right EU legislators who demanded that this policy be scrapped. The EU law was designed to eliminate misleading green labels on products ranging from clothing, cosmetics, and electronic goods. Labels like "natural", "climate-neutral" or "recycled contents" would be regulated. In 2023, the Commission proposed new rules after assessing 150 product claims for environmental characteristics and finding that half of them were "vague, inaccurate or unfounded". Reporting by Kate Abnett, Editing by Alex Richardson
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Holcim, the cement maker, completes a $30 billion North American Spin-off
Holcim completed the spin-off its North American building materials business Amrize, which was valued at $30 billion in the early trading of Monday. The Swiss listed company stated that it wanted to focus its attention on the differences in market dynamics between North America and the rest of world. Amrize's shares opened at 46 Swiss Francs on the Six Swiss Exchange. This gives it a market cap of 24.7 billion Swiss Francs (30.24 billion dollars), which is in line with expectations that the company would be valued at around $30 billion. Holcim shareholders sold off some of their stock, causing the shares to drop 8.8%. Holcim's shares dropped 33% since Friday, reflecting the separation of its North American business. However, they were still 10.5% higher than the reference price estimated for the new standalone business by brokers. Martin Huesler, analyst at Zuercher Kantonalbank, said that some Holcim shareholders will have immediately sold their Amrize stocks. Many Swiss investors are also more interested in Holcim's decarbonisation story. Holcim has established itself as a supplier of lower carbon building materials by producing CO2 reduced cement and reusing waste. Huesler said that the combined stock price for Amrize, Holcim, and the two companies is higher than the Friday closing price of 93.68, which is a good sign for the spin-off. The decision to spin off was made in January 2024 and is not related to the rise in U.S. Tariffs. Holcim stated in March that it would aim to achieve an average annual earnings growth before interest and tax of between 6% and 10% by 2030. This was driven by mergers and purchases. Amrize's sales, which were $11.7 billion in 2020, are expected to increase by 5-8% per year. It wants to grow its core operating profits by 8-11% from $3.2 billion in 2025-2028. ($1 = 0.88168 Swiss Francs) (Reporting and Editing by Miranda Murray, Barbara Lewis and Oliver Hirt)
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Investors ponder Iran risks as they wiggle between oil and shares
Investors awaited a possible Iranian retaliation following U.S. strikes on Iran's nuclear sites. The fallout could have a negative impact on global trade and inflation. The markets remained calm, with the dollar receiving a modest bid as a safe-haven and no signs of a rush towards bonds. Oil prices rose just 0.4% after having risen as high as 5.7% overnight. Paul Jackson, Invesco’s global head for asset allocation research said: "If you keep your head while others around you lose theirs, you may not understand the situation." He said that time would tell whether a lack in market reaction was naivete or an accurate assessment of the current situation. The STOXX 600, a pan-European index of stocks, fell 0.2% on Monday. Some market participants had hoped that Iran would back down and curtail its nuclear ambitions, or that a regime change could bring a less hostile administration to power. "That said," said Charu C. Chanana of Saxo, Chief Investment Strategist, "any sign of Iranian retaliation, or threat of the Strait of Hormuz, could quickly change sentiment, and force markets reprice geopolitical risks more aggressively." At its narrowest, the Strait of Hormuz measures only 33 km (21 mi) in width. Around a quarter of all global oil and natural gas trade passes through it. JPMorgan analysts warned that previous episodes of regime changes in the region resulted in an average 30% increase in oil prices over time and as high as 76%. Goldman Sachs has warned that prices could temporarily reach $110 per barrel if the waterway is closed for one month. Brent crude and U.S. Crude are both currently up 0.4%, at $77.32 a barrel and $74.10, respectively. Gold remained largely unchanged at $3,365 per ounce. RESILIENCE The world share markets were moderately resilient. S&P 500 and Nasdaq Futures both rose 0.2%. The broadest MSCI index of Asia-Pacific stocks outside Japan dropped 0.9%. Shares in Taiwan fell by 1.42%, while blue chips in China closed up 0.3%, and Japan's Nikkei declined 0.1%. Japan's manufacturing data showed on Monday that the country returned to growth after nearly a full year of contraction. However, demand conditions are still present. The dollar rose 1.25% versus the yen, and reached 147.885, its highest level since May 15. Meanwhile, the euro fell 0.2% to $1.1497. The dollar index rose marginally to 99.339. The yields on 10-year Treasuries rose by about 2 basis points, to 4,389%. The markets still only see a small chance that the Fed will lower rates at its July 30 meeting, even after Fed Governor Christopher Waller broke rank and called for an easing in July. The majority of other Fed members including Chair Jerome Powell have been more conservative on policy. This has led markets to bet that a reduction is more likely in September. Powell will face two days of lawmakers' questions, likely relating to U.S. Tariffs and the attack against Iran's nuclear site. The U.S. weekly unemployment claims and core inflation figures are due, as well as early readings of June factory activity around the world.
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Aluminum reaches three-month highs following US airstrikes against Iran
Aluminum prices rose to a three-month high on Monday, as U.S. strikes on Iran's nuke facilities raised the possibility of higher energy costs and disruptions in shipments from the Middle East. In some areas, energy can account for 40-45% or more of the costs associated with aluminium smelting. Investors' fears about an escalation of conflict in the Middle East and disruption to oil supplies increased after President Donald Trump said that the U.S. would attack other targets without a peace agreement with Israel. Benchmark aluminium rose 0.5% to $2,561 per metric tonne by 0916 GMT, after reaching its highest level since March 21, at $2654.50. Alastair Munro is a senior base metals analyst at broker Marex. He said that Middle East countries produce 9% of all aluminum in the world. "If the Strait of Hormuz was blocked, this could have an impact on shipments." Analysts say that if Iran closes the Strait of Hormuz then global supplies will be further disrupted, as Middle East production depends on imports of bauxite, alumina and aluminium raw material. The LME market focused elsewhere on large holdings in cash copper contracts, warrants (title documents that confer ownership) and premiums for short-term copper contracts. LME data shows a company with a dominating position of over 90% 0#LMEWHC> on copper warrants and contracts for cash. The premium or the backwardation of the Cash Copper Contract over the Three-Month Forward The price of a ton closed on Friday at $274, which is the highest level since October 2022. Prior to last month, the premium was only $3. Copper inventories at LME-approved warehouses are on the decline. . A large amount of copper that was stored on the LME was shipped to the U.S. where the prices skyrocketed after President Trump ordered a probe into potential tariffs on imports of copper. London's exchange reacted on Friday, imposing restrictions for holders of large positions on near-term contracts. Copper for three months was down by 0.1%, at $9,619 per ton. Lead rose by 0.4%, to $2,000; tin fell 0.1%, to $32,665; and nickel retreated 1%, to $14,840. Zinc production, which uses a lot of energy, increased by 1.1% to $2,660 per ton.
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Hedge Fund leverage reaches five year high by buying bank stocks Goldman Sachs
Goldman Sachs data shows that hedge fund leverage reached a five-year peak last week. Speculators bought banks, trading firms and insurance companies, just after U.S. rates remained unchanged and before the U.S. attack on Iran's nucleus sites. On Wednesday last week, the U.S. Federal Reserve kept interest rates unchanged and said they are not in a hurry to reduce interest rates. On Saturday, the U.S. launched an attack on Iranian nuclear sites, sending oil prices to a record high on Monday. Further price increases are expected on concerns that a retaliatory Iranian action could include a closing of the Strait of Hormuz through which approximately a fifth of world crude oil supply passes. Gross leverage (a measure of hedge fund trading) rose to 294%. This is the highest since 2020. Leverage stood at 271.8% when the year began. Goldman Sachs Prime Brokerage Data, a note sent to clients, revealed that hedge funds increased their short positions in Europe and Asia while maintaining modest long positions in North American stocks. A short position is a bet that the stock price will fall. Last week, financial stocks such as banks, insurance companies, and trading firms were the most popular. These firms, especially banks, benefit from the higher interest rates. They collect payments for lending money to corporations and consumers. Goldman Sachs' note revealed that hedge funds purchased financial firm stock in North America, Europe and Asia but had a slight short position in Asia. It said that hedge funds also ended the week having a net-long position in energy shares. In Europe, returns have exceeded 10%. The note stated that global systematic returns had reached almost 12%. (Reporting and editing by Amanda Cooper, David Evans and Nell Mackenzie)
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Dollar firms as gold eases, but all eyes are on Iran's next move
Market participants were cautious on Monday, as the dollar remained firm. They also stayed alert for possible Iranian retaliation against U.S. attacks on Iran's nuclear sites. As of 0820 GMT, spot gold was down by 0.2%, at $3,359.99 per ounce. U.S. Gold Futures dropped 0.3% to $3375.20. Gold is now more expensive for foreign buyers due to the dollar's 0.4% rise against its peers. Ole Hansen is the head of commodity strategy for Saxo Bank. He said that higher energy prices may delay a Fed rate reduction and strengthen dollar. He added that "continued and numerous geopolitical uncertainty will likely continue to support and prevent prices from experiencing a deeper price correction." Iran and Israel exchanged air and missile attacks as the world awaited Tehran's reaction to the U.S. strike on its nuclear sites, and U.S. president Donald Trump suggested regime change in Iran. The U.S. dropped bunker-bustering bombs weighing 30,000 pounds onto the mountain that overlooks Iran's Fordow Nuclear Site. The U.S. attack on Iran's nuclear facilities has injected new uncertainty into the outlook of inflation and economic activity. This comes at the beginning of a week full of economic data, central banker comments and two days of Congressional testimony by Federal Reserve Chairman Jerome Powell. The U.S. Central Bank held its interest rates at the same level last week but reduced its outlook for future rate cuts due to an increasingly challenging economic outlook. Investors expect a 50 basis point Fed rate cut by the end this year. Bullion is more likely to perform in periods of low interest rates and uncertainty. Palladium rose 2.5% to 1,070.33 dollars, while platinum gained 2.3% to $1,293.90. (Reporting by Anushree Mukherjee in Bengaluru; Editing by Vijay Kishore)
MORNING BID AMERICAS-Record highs are plentiful, except in typical location
A look at the day ahead in U.S. and worldwide markets from Mike Dolan
Tape stock exchange highs have actually illuminated throughout the world once once again - though not yet for the typical suspects in the S&P 500. and Nasdaq.
In spite of a rare stumble for the artificial intelligence style. after Nvidia's outcomes underwhelmed today, the rest of the. stock market complex shrugged it off and has actually instead lapped up a. delicious diet plan of vigorous economic development in addition to falling inflation. and rates of interest.
A lot so that if you adjust the S&P 500 for the outsize. contribution of Huge Tech megacaps, it now reveals the. equal-weighted index striking record highs with. year-to-date gains of more than 10%.
Underlining the point, the Dow Jones Industrial Average. hit another record close on Thursday and both Germany's. DAX and Europe's broad STOXX 600 hit new highs. on Friday too.
And that expanding of what numerous had actually feared was an excessively. concentrated market is another indication of some normalisation of. market behaviour, together with a return of volatility assesses back. closer to long-term averages and a resumption of the negative. correlation between stock and bond returns.
For lots of, that's a lot more sustainable constellation and. the financial picture backs that up going into Monday's Labor Day. holiday.
Second-quarter U.S. GDP growth was revised greater on. Thursday, while ingrained PCE inflation evaluates were marked lower. and weekly out of work readings were bit altered.
The release on Friday of the July monthly PCE reading is. next up and is expected to be likewise benign, permitting the. Federal Reserve to go ahead with its very first quarter-point. rates of interest cut next month - while market prices keeps a. overall of 100 basis points of alleviating to year-end.
Wall St stock futures were higher once again ahead. of the final trading day of the month and Treasury yields fell. back a touch from Thursday's minor gains.
Soothing the bond market in a week of heavy new debt sales. was an affirmation late Thursday of Fitch's AA+ U.S. sovereign. credit rating with a steady outlook.
Borrowing expenses across the economy are receding more. normally, with the average rate on popular U.S. 30-year. mortgages falling to 6.35% today, the lowest considering that May 2023.
Specifically, Fitch's review said the U.S. fiscal profile is. likely to remain largely unchanged no matter who wins the. upcoming presidential election, mentioning structural strengths. consisting of high per capita earnings and monetary versatility as. strengthening the credit rating.
And regardless of a flurry of election trades previously in the. summer season, the significant switch of fortunes in viewpoint polls and. betting markets has actually barely flickered on the general setting of. resilient U.S. markets at large.
Democratic Vice President Kamala Harris' late entry in the. presidential race after President Joe Biden's withdrawal in July. tightened the race versus Republican candidate Donald Trump. A. Reuters/Ipsos survey today revealed she leads 45% to 41% and. another released in Friday's Wall Street Journal validated she. was marginally ahead - with betting markets now seeing her as. clear favorite.
Harris' very first interview with a significant wire service since. becoming the Democratic nominee was aired on CNN on Thursday,. however there was little to disturb market views of what her. Presidency would look like.
In Europe, the inflation and rates of interest image was. perhaps even much better.
Euro zone inflation was up to its most affordable level in three years. at 2.2% this month, simply shy of the European Central Bank's 2.0%. target and improving the case for a 2nd ECB interest rate cut. of the year in September - even before the Fed gets going.
A day earlier, Germany's EU-harmonized headline inflation. rate really struck the 2.0% target for the very first time in practically. 3-1/2 years.
Money markets presently see a 60% possibility the ECB will cut. rates a 3rd time by October - somewhat lower than on Thursday. Euro/dollar steadied as an outcome following today's. sharp recoil from 1 year highs.
The inflation image in Japan is slightly different.
Core inflation in Japan's capital accelerated for a 4th. straight month in August, tracking comfortably above the main. bank's 2% target and support market expectations of more. rates of interest hikes ahead.
Dollar/yen held stable just above 145.
But China's yuan was a much larger mover - striking. its finest levels in more than a year and authorities fight to. fortify recently sliding government bond yields and August. business studies are due for release on Saturday.
Increased dollar selling by Chinese corporates - triggered. by moving dollar expectations - might change into a stampede. in the short term, enhancing the yuan even more, China. International Capital Corp stated in a note.
In corporate news, AI refused to be left out of the. spotlight. Apple and Nvidia are supposedly in. talks to invest in OpenAI as part of a brand-new fundraising round. that could value the ChatGPT maker above $100 billion, according. to media reports on Thursday.
Secret advancements that ought to provide more instructions to U.S. markets later Friday:. * United States July PCE inflation gauge, individual earnings and usage,. Chicago August service study, last Aug reading for University. of Michigan belief; Canada Q2 GDP modification. * European Central Bank board member Kerstin af Jochnick speaks. in Frankfurt. * US corporate incomes: Marvell Innovation
(source: Reuters)