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MORNING BID EUROPE - Could consumers hold the Fed at bay while Japan increases?
Tom Westbrook gives us a look at what the future holds for European and global markets. Walmart and Home Depot will be in the spotlight this week as well as the AI spending boom, after Friday's data showed the first drop in U.S. Retail Sales?in nine months. The dollar fell sharply on Monday as traders had an unfamiliar outlook. The market is pricing in rate hikes in Europe and Japan for next month. Meanwhile, the retail data has shifted the outlook of the U.S. market further to the?hold' side. Sterling and the euro are not far from their multi-month highs. The Aussie, kiwi and sterling also have two-month records. The won did not react to the order by U.S. president Donald Trump to the Pentagon on Sunday to "substantially decrease" military exercises with South Korea. Alphabet is working with banks to launch the first Aussie dollar bonds, according to a message from a bookrunner on Monday. This is the latest indication that hyperscalers are looking beyond the U.S. To fund their massive capital expenditures on computing. The message did not mention how much Alphabet might raise or its plans for proceeds. The yen has risen a bit as traders bet on the policymakers increasing their rate hike pace. Analysts at Bank of America are slightly more hawkish, but still believe that four increases will occur between September and the end of July in next year. This would bring?the policy interest rate up to 2%. The markets shrugged off the miss of Japanese economic growth on Monday, and drove up government bond rates. The benchmark 10-year government bond has been sold six consecutive sessions at a yield of 2,925%, which is a nearly 30-year high. The yen flirted on the strong side of 159 dollars per yen. China has moved its monthly activity data to the London session, but Europe's data schedule is pretty sparse on Monday. Canadian inflation data is due later that day, and in the following week we have European confidence indicators and flash PMIs. The following are the key developments that may influence the markets on Monday. - Economic activity in China, housing data. Canada CPI (Editing By Saad Sayeed).
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Copper prices rise due to shortage, and key spreads widen
The week started with a strong start for copper, thanks to tight?availability. This also helped push the key spread even wider, after it reached its highest level in five years last week. Benchmark 'three-month' copper at the?London Metal Exchange rose?1.45%?to $14,365 per metric ton as of 0300 GMT. The Shanghai Futures Exchange's most traded copper contract jumped by 1.77%, to 109 580 yuan (16 254.54) per ton. Stocks of red metal at LME-registered storage facilities The price of refined copper has dropped by almost half over the past three months as material is imported into the U.S. to avoid possible tariffs. Supply problems, such as a maintenance outage at Smelting Gresik's large operation in Indonesia, have heightened concerns about stock shortages. Inventory shortages have helped to push the LME cash-to-three month spread up to its highest level since 2021. The LME Cash-to-Three Month Spread The?widened to an?adverse?of $473.24 per ton, indicating acute shortages of material as traders with negative positions scrambled to secure metal before the exchange's contract settlement day of Wednesday. "Shorts have to buy contracts near to their current positions to close or roll them due to the shortage of metal available," said Craig Lang, principal analyst with commodity research firm CRU. Consumer buying was reduced, which capped the rally in copper contracts. The Yangshan copper premium A barometer of import demand for the world's largest consumer?of?red metal -- China -- fell to $90 per ton on Friday, its lowest level in a whole month. Lang explained that the fall was primarily due to a deteriorating economic situation in China, as well as a softer physical demand near-term from Chinese buyers who are reducing their expenditures because of higher copper prices. Aluminium gained?0.31% among LME metals. Zinc gained 0.61%. Lead gained?0.47%. Nickel gained 0.62%. Tin?ticked higher by 0.14%. The SHFE metals gained 0.54 %, tin 1%, and lead 0.32%. $1 = 6.7415 Chinese Yuan Renminbi (Reporting and editing by Ronojoy Mazumdar).
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Gold prices rise on a weaker dollar and reduced Fed rate hike bets
Gold prices rose on Monday due to a weaker dollar and recent economic data which reduced expectations of a U.S. rate hike in the next month. Gold spot rose 0.4%, to $4.391.07 an ounce at 0248 GMT. Prices reached a two-month high in the last week. U.S. Gold Futures for December Delivery?edged up 0.3% to $4,448.10. The U.S. Dollar index fell by 0.1% making metals priced in greenbacks more affordable for other currency holders. Tim Waterer is the chief market analyst for?KCM Trade. He said that gold has taken off and run to start the week. Soft inflation numbers are keeping the U.S. Dollar under pressure, giving it extra room to move?towards $4,400. "A sustained movement above $4,500?would likely require additional dollar weakness or an even more pronounced pullback in the energy prices." The U.S. Federal Reserve has been expected to raise interest rates in the next month despite an unexpected drop in non-farm payrolls and data that shows only mild inflation in consumer prices. CME's FedWatch Tool shows that traders now price in 30% of a rate hike for September, down from 47% one month ago. Lower interest rates can reduce the cost of holding bullion that does not yield, increasing its appeal to investors. The markets are awaiting the minutes of Wednesday's Fed meeting to get more clues about policymakers' monetary policies. Sources say that on the geopolitical side, U.S. President Donald Trump's envoys, who met with Egyptians, Qataris and Turkish mediators, in Cairo, were aiming to advance the peace plan for Gaza, while Israel continued its airstrikes. Silver spot rose by 1.4%, to $65.53 an ounce. Palladium rose 1.6%, while platinum rose 0.3%, to $1752.36. Reporting by Sukanya and Ashitha in Bengaluru, editing by)
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Hormuz shipping slows as US-Iran talks on peace stall and oil gains are held.
The oil prices remained mostly stable on Monday. They maintained gains made the previous week. Prospects for a lasting U.S. Iran peace deal seem increasingly distant, and there are persistent fears of disruptions to supply in the Strait of Hormuz. Brent crude futures were at $88.55 as of 0128 GMT. U.S. West Texas intermediate crude futures fell 14 cents to $72.26 per barrel. Last week, both contracts rose by?more that 5% following the attacks on tankers of Abu Dhabi National Oil Company?in the Hormuz Strait and on a Saudi Aramco refining facility. The weekend saw the Iranian Foreign Minister Abbas Araqchi say that Iran had not decided to resume discussions with the U.S., while U.S. president Donald Trump urged Americans "to accept slightly higher gas prices as long as the conflict continues". Oil prices have almost fully recovered from their lows in early August as the hopes of a permanent solution between the U.S. and Iran have faded, and geopolitical risks have returned to market, said Priyanka Sackdeva, Phillip Nova's head of?market insight in Singapore. She said: "However I do not see much upside unless there is clear evidence of renewed aggression, e.g. material damage to oil infrastructure or tankers, in the Strait of Hormuz." Data from Monday showed that shipping through the Strait of Hormuz had slowed down over the weekend following an attack on tankers. Shiptracking data from Kpler revealed that five commodity vessels traversed the Strait of Hormuz on Saturday and none for Sunday. This compares to 31 vessel transits over the previous weekend. The United Arab Emirates (UAE) accused Iran of attacking the third vessel operated by ADNOC which?was traversing the strait Friday. This comes after the UAE blamed Iran for two incidents that occurred Thursday evening involving ADNOC ships in the strait. (Reporting and editing by Sethuraman N and Florence Tan; Edwina Gibbs and Sonali Paul)
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Asian shares rise as oil prices remain high due to Gulf War
Investors kept an eye on the oil price, which climbed a lot last week. The lack of progress in ending the Iran War kept inflation risks on the rise. The progress towards peace talks, and the oil tanker traffic in the Strait of Hormuz has remained stagnant. Iran called on the U.S. on Saturday to accept defeat while President Donald Trump asked Americans to accept higher gas prices as long as the conflict continues. The Lebanese Health Ministry reported that at least 11 people died in Israeli airstrikes in southern Lebanon, Saturday. This is among the highest number of deaths since Israel and Lebanon agreed to an agreement mediated by the United States. Brent crude was unchanged at $88.50 per barrel, after a 6% increase last week. U.S. crude fell 0.3% to $82.12 per barrel, despite a 5.4% rise last week. While there is no resolution to the Iran/Hormuz conflict, our base scenario remains that oil will remain in the $70-$100 price range. Iran is preventing the oil from going lower while the U.S. "We will try to calm down the situation whenever oil prices rise above $100," said Shane Oliver in a note. The risk is that there won't be a sustainable peace deal and the flow of oil from the Middle East will remain down by 10%-15% compared to normal levels. We will also have to pay higher oil prices if reserves run out. The broadest MSCI index of Asia-Pacific stocks outside Japan was unchanged on Monday. Japan's Nikkei rose 0.4%. Australia's resource-heavy stocks fell?0.3%. South Korea's stock exchanges are closed for a holiday on Monday. Trump has ordered the Pentagon to reduce the number of joint military exercises that the US conducts with South Korea. On Monday, all eyes will be on China's July activity data after its exports boomed due to robust global AI demand. The forecasts center on a slower growth in industrial production, down from 5.3% to 4.8%. Retail sales are expected to rise by 1.5%. EUROSTOXX futures in Europe rose by 0.2%. S&P futures rose 0.1% after hitting a record last week. Nasdaq's futures also gained 0.2%. Stocks are on a bullish streak due to the decreasing risk that Federal Reserve won't raise interest rates in March, now seen as 69% likely after a series of soft data. U.S. Retail sales declined for the first time in nine months during July, and consumer sentiment was sourer than expected. This combined with soft inflation data took away the motivation to raise interest rates immediately. This week, the main data point is the August S&P PMIs to determine if 'the mid-year acceleration of U.S. Business Activity will be sustained. Investors will be examining the strength of U.S. consumer spending as earnings are lower this week. U.S. Treasury rates dropped on bond markets after a mixed week last Monday. The yield on the two-year U.S. Treasury fell by 2 basis points to 4.156%. It had fallen by 3 basis points last week, to a low of 4.0977%. The yield on ten-year Treasury bonds?slipped one basis point to 4,684% after increasing by 4 basis points the previous week. The U.S. Dollar has been weighed down by the soft data. The euro is up 0.1% to $1.1578. This is just 0.1% off its two-month high of $1.1585. The dollar fell 0.1% against the yen, to 159.15. Gold held steady at $4,381 per ounce after rising 0.8% in the previous week. (Editing by Stephen Coates).
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Hormuz shipping slows as US-Iran talks on peace stall and oil prices remain flat
Early Monday, oil prices barely moved as tanker traffic in the Strait of Hormuz had slowed down over the weekend. There was no sign of a peace agreement between Iran and the United States to end the Middle East conflict. Brent crude futures rose 20 cents or 0.2% to $88.72 at 2350 GMT. U.S. West Texas Intermediate crude futures fell 5 cents to $79.35 per barrel. Last week, both contracts saw gains of more than 5% following the attacks on Abu Dhabi National Oil Company tankers in the strait of 'Hormuz and on a Saudi Aramco refining facility. The weekend saw?Iranian foreign minister Abbas?Araqchi say that Iran has not decided to resume discussions with the U.S., while U.S. president Donald Trump encouraged Americans to accept slightly increased gasoline prices as long as the conflict continues. The status quo is unchanged. The status quo remains. Data from Monday showed that shipping through the Strait of Hormuz had slowed down over the weekend following the attacks on tankers. Shiptracking data showed that five commodity vessels crossed the Strait of Hormuz on Saturday and none for Sunday. This compares to 31 vessel transits the previous weekend. The United Arab Emirates (UAE) accused Iran of attacking the third vessel, operated by ADNOC, that was 'transiting the strait Friday,? the Emirati news agency WAM, after accusing Iran for two other incidents in which ADNOC vessels were involved on Thursday night. (Reporting and editing by SonaliPaul; Florence Tan)
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BlueScope, Australia's blue-chip company, posts earnings that are above expectations
BlueScope, Australia's largest?steelmaker, announced on Monday that it had?more-than-doubled its annual profits, due to a?higher U.S. Steel?spread and a?stronger?performance in its Southeast Asian operations. It also forecasted earnings higher than expected for the first half of 2027. It reported an underlying net loss after tax of A$851.2 ($602.99) million, compared to A$420.8 reported the year before. This was higher than Visible Alpha's consensus estimate of A$844.7. The company stated that "Operating Conditions?remain mixed with continued strength across North America, recovery underway throughout?Australia, and strong momentum in Southeast Asia while Chinese overcapacity continues weighing on?Asian Spreads." BlueScope expects to record underlying earnings, before interest and tax in the first half 2027 between A$860m to A$960m, compared to Visible Alpha's consensus estimate of A$819.5m. Analysts at Jefferies said in a report that "guidance is positive ahead of the consensus, with a continued focus on cost discipline as well as realisations of better US spreads." The 'company' declared a final ordinary?dividend of 65 Australian?cents a share and a?special dividend of 70 Australian cents a share. This brings its capital returns for 2026 to A$3 a share. BlueScope has said it will'return A$3 a share to shareholders in 2027. ($1 = 1.4161 Australian dollars) Reporting by Sherin sunny in Bengaluru, Editing by Edmund Klamann & Christian Schmollinger
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Aftershocks hinder rescue efforts after 53 people are killed in Indonesia earthquake
Authorities said that around 5,000 people were evacuated following a magnitude-7.7 quake in eastern Indonesia, which killed at least 53 and caused landslides. They added that more than 130 people were injured, including many with broken bones. The quake that struck Southeast Asia on Saturday was the deadliest in the nation since a quake in West Java, Indonesia, killed hundreds of people back in 2022. According to Indonesia's national agency for disaster mitigation, BNPB, more than 3,300 people were either in a sport arena or self-evacuated from the eastern Sikka region. Residents were left stranded in tents made of tarpaulin outside homes that had collapsed. Others received medical treatment outside hospitals. Indonesia is a sprawling archipelago of over 290,000,000 people that straddles the "Pacific Ring of Fire", an earthquake-prone zone where tectonic plate collisions cause frequent volcanic eruptions and earthquakes. Fear of Aftershocks Residents in Maumere told of their fear of aftershocks at a port that is now closed, with its debris left behind from walls and roofs that collapsed. On Sunday, the disaster agency reported that nearly 1,000 aftershocks have been recorded since the earthquake. Nearby, residents crowded a nearby sports stadium that was designated as an "evacuation site". Residents waited in line for warm drinks as the sun set. Some mothers sewed pieces of clothing onto tent frames to create makeshift cradles. Some children played outside soccer. Margaretha Movaldes Da Maga Bapa said that the residents of the region were reminded of the 1992 quake. "We've experienced quakes many times." "But this one brings back the trauma from the one in 1992," she said as aid, such as tents and food, filled her office. Suryaman, an official of the rescue agency, said that the priority was to clear rubble from the worst-affected areas in Manggarai East Manggarai?Nagekeo, so as to locate people who may still be trapped. Suryaman stated that the agency has not received any missing person reports, but added that aftershocks and landslides were hampering the search. In a press release, Cabinet Secretary Teddy Indra Wijaya stated that more than 3,500 police and military officers had been deployed in the region. State utility firm Perusahaan Listrik Negara reported Sunday that power supply was nearly restored but that authorities are still working to fix distribution lines. BNPB reported that the East Nusa Tenggara Government declared an emergency in the province. This allows authorities to mobilize resources and funding. Dwikorita Karanawati, a geology expert, said that the region was at risk for earthquakes because of the "Flores?back-arc-thrust fault", a system of major west-east thrust-faults. Geophysics Agency of Indonesia said that the area was devastated by a magnitude 7.5 earthquake in 1992.
Brazil Celebrates UN Recognition of Environmental Gains of Multicropping for Jet Fuel
Brazil's Energy Minister said on Monday that a UN decision recognizing the environmental benefits of Multicropping for Sustainable Aviation Fuel (SAF), was a win for the South American nation, where farmers grow more than one type of crop on the same piece land.
Two sources claimed that the United States planned to object to a recommendation made by the 36 members of the International Civil Aviation Organization (ICAO). This was revealed in reports published earlier this month.
In a press release, Brazil's Minister for Mines and Energy Alexandre Silveira said, "This victory is further proof that Brazil has been the leader in global energy transformation, and we lead with sustainable, equitable and inclusive solutions."
According to the Brazilian government, the ICAO made the decision on Friday, June 27 to recognize the benefits multicropping in producing SAF. The ICAO did not respond to a request for comment.
The U.S. State Department refused to comment.
Tammy Bruce, spokesperson for the State Department, said in March that the recommendation would penalize U.S. farmers and give Brazil unfair advantage over the rest the world. Bruce also stated that it would lower the carbon score of multicropping or farming, which is when two or three crops such as corn and soybeans are grown on the land. This practice is common Brazil. Oliver Griffin and Allison Lampert report from Sao Paulo.
(source: Reuters)