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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)
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UK industrial plan focuses on clean energy and advanced manufacturing
The UK's industrial strategy, published on Monday, outlines a key reform that will reduce the electricity bills for thousands of businesses by 2027. Below are the main components of its plan. ADVANCED MACHINING Up to 3.76 billion pounds (2.8 billion pounds) will be invested in R&D programs over the next 5 years to stimulate innovation, automation and digitisation. CLEAN ENERGY INDUSTRIES By 2035, Britain aims to double the current levels of investment in clean energy industries. CREATIVE INDUSTRIES Create a 150-million-pound fund for growth and provide financial support to screen, music and video games. LIFE SCIENCES Making Britain the third largest economy in life sciences through investment and reforms, including 600 million pounds to fund a Health Data Research Service, which will create a secure and AI-ready platform for advanced health data. Professional and Business Services The government announced that it would include the sector for the first in a national industry plan, as it aims to capitalize on UK strengths in areas like accountancy and legal services. The government said that it would fund artificial intelligence, work with other governments to establish mutual recognition of professional qualifications in order to boost exports, and launch five new hubs for professional business services in England and Scotland. DIGITAL AND TECHNOLOGY The UK wants to be one of the three top places in the World for technology business development. It has promised reforms that will boost R&D, skills and improve regulations, as well as collaborate more closely with other nations and the private sector. It stated that it would prioritize frontier technologies, such as advanced connectivity and artificial intelligence. EU COOPERATION Britain announced that it would work more closely with the European Union to reduce red tape, make it easier for businesses to trade and to enable investment in North Sea projects. The strategy stated that "we will explore the UK's involvement in the EU internal electricity market as well as continue technical regulatory discussions on new energy technologies." ($1 = 0.7437 pounds) (Reporting by UK bureau)
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Gulf stock markets continue to grow despite regional conflict
Investors were anxiously waiting to see if Iran would respond to U.S. strikes on its nuclear sites. The price of oil has risen to its highest level since January, as supply fears were stoked by the United States joining Israel to attack Iran's nuclear sites. The market participants are expecting further price increases amid growing fears that a retaliatory move by Iran could include the closing of the Strait of Hormuz through which approximately a fifth of world crude oil supply passes. Saudi Arabia's benchmark stock index rose 0.7%. Al Rajhi Bank gained 0.6%, and Saudi Arabian Mining Company added 2%. Hani Abuagla is a senior analyst at XTB MENA and said that regional stock markets had recovered to a certain degree as investors saw the U.S. intervening in Iran's affairs, which could force Iran into peace negotiations. Dubai's main stock index rose 1%. This was led by blue-chip developer Emaar Properties, which saw a 2.4% increase and the sharia compliant lender Dubai Islamic Bank, which saw a 1.7% rise. Gulf States, which are home to several U.S. bases, were on alert Sunday. Their leaders called on all parties involved to exercise maximum restraint after U.S. attacks on Iran raised the possibility of an even wider conflict. Saudi Arabian and UAE nuclear authorities said that they did not detect any signs of contamination after the Iranian strikes. Abu Dhabi's index increased by 0.2%. Abuagla says that most markets have experienced a significant drop in value, and some investors may have even priced in the worst possible outcome. If the current conditions do not change too drastically, then we could see a market normalization. The index rose 1.3% in Qatar. The largest lender of the Gulf, Qatar National Bank, grew by 0.8%, while Qatar International Islamic Bank jumped 3.6%. (Reporting and editing by Alex Richardson in Bengaluru, Ateeq Sharriff in Bengaluru)
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Ukraine reports that seven people were killed and dozens injured in the Russian attack on Kyiv.
Officials from Ukraine said that Russian missile and drone attacks on and around Kyiv over the weekend killed seven people and injured dozens. They also caused fires to break out in residential areas, and damaged an entrance to a bomb shelter in a metro station. Tymur Tkachenko of Kyiv’s military administration said that at least six people died in the busy Shevchenkivskyi District of Kyiv, where a section of a residential building high-rise was destroyed. He added that four children were among the 25 injured in the attack. Tkachenko stated that "the Russians' style has not changed - they hit people wherever there are. "Residential building, exits from the shelters - that's Russian style." Moscow has intensified drone and missile attacks on Kyiv, and other Ukrainian cities, in recent weeks, as the talks to end this war, which began in February 2022 with Russia's full scale invasion, have failed to produce any results. Both sides deny that they have targeted civilians. However, thousands of civilians - mainly Ukrainians - have died in the conflict. Russia has not responded to the latest attacks. Ihor Klimenko, the interior minister of Kiev, said that people may still be trapped under the rubble. The overnight attacks in six out of the 10 districts caused extensive damage. "To be honest, I wasn't scared. "It was more like I was frozen in time," said Liudmyla, a 75-year old local resident. "You are frozen, thinking about all of it. UK VISIT The Ukrainian air force claimed to have shot down 339 out of 352 Russian drones, and 15 out of 16 missiles that were launched in an attack on four Ukrainian provinces. When visiting Britain, Ukrainian President Volodymyr Zelenskiy will discuss Ukraine's defense and put additional pressure on Russia in order to stop such attacks. The photos posted by Ukraine's State Emergency Service show rescuers guiding people away from burning buildings and structures in the darkness. Officials said that the entrance to the Sviatoshynskyi metro station, in Kyiv, was also damaged along with a bus stop adjacent. During the war, the deep metro stations of Kyiv were used as safe bomb shelters. Kyiv Polytechnic Institute reported that the attack caused damage to its sports complex, academic buildings and dormitories. Officials said that a woman aged 68 was killed in the wider Kyiv area, which surrounds the Ukrainian Capital. At least eight other people were also injured. Last week, hundreds of drones attacked Kyiv and killed 28 people. More than 150 were injured. Reporting by Pavel Polityuk, Gleb Garanich and Anastasiia Menko. Writing by Lidia Kelley in Warsaw and Aidan Lewis. Editing by Tom Hogue and Raju Gopalakrishnan.
India's imports of soyoil fell to a four-month low due to port congestion in June
Industry officials have said that India's imports of soyoil in June will likely fall 18% from the previous month to their lowest level in 4 months. This is because congestion in a major port will cause vessels to be unloaded in July rather than June due to congestion.
Nearly two-thirds (67%) of the world's largest importer of edible oils is met by imports. Delays in unloading ships could lead to a shortage on the local market, which would increase prices.
According to Rajesh Patel of GGN Research and edible oil trader, the June soyoil exports will likely fall to 325,000 tons from an earlier estimate of 400,000 tonnes, due to congestion at Kandla Port.
Kandla Port in Gujarat's western state accounts for one quarter of India’s total imports of vegetable oil. This is because many nearby edible oil refineries choose this port to import their products.
"At the moment, edible oil ships are subject to waiting periods between 9-10 days. According to the list of incoming ships, this wait could increase to 15 days, said B.V. Mehta. He is the executive director of Solvent Extractors' Association of India.
Mehta stated that delays result in high demurrage charges, which increase import costs overall and raise the price of edible oil for consumers.
A New Delhi-based trader at a global trading house said that the congestion at Kandla also affects palm oil imports. However, any impact on their supplies will be minimal, as a significant amount is being discharged in ports in eastern India.
India imports a lot of palm oil, mainly from Indonesia, Malaysia and Thailand. It also imports sunflower oil and soyoil from Argentina, Brazil and Ukraine. (Reporting and editing by David Evans; Rajendra Jadhav)
(source: Reuters)