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Gold falls as the dollar strengthens, but Fed turmoil limits losses
Gold prices fell on Wednesday due to an increase in the dollar. However, renewed concerns about the independence of the U.S. Central Bank after President Donald Trump threatened to fire Federal Reserve governor Lisa Cook, lent support to gold. As of 0508 GMT spot gold was down by 0.5% to $3,375.06 an ounce after reaching its highest level since Tuesday, August 11. U.S. Gold Futures for December Delivery eased by 0.2% to $3425.30. Gold is less appealing to other currency holders because the dollar index has risen by about 0.3%. "Short-term investors are making a little profit now." Gold is still supported, especially now that we are starting to see the Federal Reserve adopt a more dovish position," said Kelvin Wong, senior market analyst at OANDA. We could still see in the near future that there is potential upward pressure for the level to reach $3,400. Above it will be $3,435." Trump announced that he would remove Cook due to alleged irregularities in the mortgage loan process, a move which could test the limits of the presidential authority over the U.S. Fed. Cook responded that Trump does not have the authority to dismiss her from central bank and she won't resign. Trump has repeatedly criticized Fed Chair Jerome Powell's slowness in acting and urged the U.S. Central Bank to reduce rates. The focus now shifts to Personal Consumption Expenditures Prices Index, the Fed’s preferred inflation measure, which is due on Friday, for more clues on the interest rate path following dovish comments from Powell at the Jackson Hole Symposium last week. According to CME FedWatch Tool, the markets are pricing in a 87% chance that the Fed will cut rates by a quarter point at its September 17 meeting. Gold that does not yield is usually a good investment in an environment with low interest rates. Other than that, silver spot fell 0.4%, to $38.42 an ounce. Platinum was unchanged at $1,348.20, and palladium rose 0.5%, to $1,098.96.
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Wall Street Journal, August 27,
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. A senior Exxon Mobil executive talked with Rosneft in Russia this year about returning the Sakhalin Project if the U.S. gave the greenlight as part of the Ukraine peace process. Elon Musk’s SpaceX has launched its giant Starship for a 10th test flight, aiming to overcome setbacks in development and achieve long-awaited technical milestones that are key to the Mars Rocket's reusable construction. Cracker Barrel has announced that it will keep its old logo and scrap plans to create a new one after social media backlash including criticism from U.S. president Donald Trump. Stephen Miran, an economic advisor, and David Malpass, former World Bank Group president, are two potential candidates. - Trump Media & Technology Group, Crypto.com and a blank check acquisition company have agreed on a deal to launch a venture which will follow a treasury style strategy to acquire the native token of the cryptocurrency platform CRO. (Compiled by Bengaluru Newsroom)
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EU auto groups call for changes to CO2 emissions targets that are 'no more feasible'
The European Union's targets for reducing CO2 emissions are no longer achievable, according to the leaders of European automotive manufacturers and suppliers associations. The European Commission's President Ursula von der Leyen will host executives from the automotive industry on September 12, to discuss the future for the sector. This sector is under threat by both Chinese competition with electric vehicles, and U.S. Tariffs. In a letter sent to von der Leyen by Ola Kaellenius, the CEO of Mercedes-Benz, and Matthias Zink CEO at Schaeffler AG for powertrain and chassis, they said that they were committed in achieving EU's goal of net zero by 2050. They said that EU manufacturers are now dependent on Asia for their batteries. This is due to the uneven charging infrastructure and higher manufacturing costs, as well U.S. Tariffs. They argued that the bloc should go beyond targets for new vehicles, like 55% reductions in CO2 emissions from 2021 for cars, 50% for vans, by 2030, and 100% for both by 2020. Vans have a 9% market share in the new EU car market. Electric cars are around 15%. In today's world it is simply not possible to meet the rigid CO2 targets set for cars and vans in 2030 and 2035. They wrote that penalties and legal mandates would not be the driving force behind the transition. The letter stated that "EVs are the frontrunners but must be accompanied by (plug-in hybrid) vehicles, range-extenders, highly efficient internal combustion engine vehicles, and hydrogen and decarbonised fossil fuels." The two chiefs of associations said that CO2 regulations for heavy-duty trucks, buses and other vehicles must be reevaluated. The Commission decided in March to grant automakers an extra year to reach the CO2 reduction targets originally set for 2025. The centre-right group of von der Leyen has also called on the EU to lift its ban on combustion engine by 2035. Reporting by Philip Blenkinsop, Brussels Editor: Matthew Lewis
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India's heavy rainfall causes floods and 30 people are killed in a landslide along a pilgrimage route
The ANI news agency reported on Wednesday that heavy rains triggered a landslide along a famous Hindu pilgrimage path in India's north-eastern region of Jammu. At least 30 people were killed, and floods prompted an official warning for people to remain indoors during the night. The weather officials predict more rain, thunderstorms and gusty winds in the mountainous region Ladakh. Meanwhile, heavy rain is expected to fall on the federal territory Jammu and Kashmir. Omar Abdullah said that the authorities were fighting to restore the telecom services, as the communication was "almost inexistent". ANI, which has a small stake in the company, reported that at least 30 people were killed by a landslide on Tuesday near the shrine Vaishno Devi. Last week, 60 people were killed and 200 others missing in Kishtwar, Indian Kashmir. The authorities also ordered the closing of educational institutions in Jammu. According to weather officials, 368 mm (14.5 inch) of rain fell on Tuesday. Rakesh Kumar, Jammu District official, told reporters that the rivers Tawi Chenab and Basantar had overflowed their alert levels causing flooding in low-lying area. Television images showed cars falling into a large hole after a collapsed bridge on the Tawi River. Some highways connecting Jammu with the rest of India also suffered damage. In recent weeks, monsoons have also ravaged Pakistan, India's arch-foe and neighbour. Pakistan warned on Tuesday that the eastern province of Punjab was in "very high or exceptionally high" risk of flooding due to a combination heavy rains, and India's decision of releasing water from two dams. Officials said that the number of people displaced in the province has now exceeded 150,000. Nearly 35,000 left on their own accord after heavy rains since August 14 triggered flood warnings. (Reporting and editing by Clarence Fernandez; Tanvi Mehta)
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The French crisis is back, and so is the MORNING BID Europe
Ankur Banerjee gives us a look at what the future holds for European and global markets The markets have chosen to temporarily ignore the Trump v Fed drama, and instead focus on the political crisis in France. This has led to a steep selloff of stocks and bonds for the second largest economy in the eurozone. The gamble taken by Francois Bayrou, French Prime Minister Francois Bayrou to gain support for his unpopular plan of debt reduction has backfired Tuesday, causing the country's political and financial instability to worsen. FRENCH WORRIES Investors are keeping an eye on France’s blue-chip CAC40, which has dropped more than 3% in the past week. They will also be watching the banking stocks as they have taken the biggest hit. The bond market's reaction is also crucial, after the gap between French 10-year yields and German 10-year rates, which measures the premium that investors need to pay to own French debt, increased on Tuesday to 79 basis points, its highest level since April. We've been in this situation before. In 2024, France's last Prime Minister, Michel Barnier was ousted by a vote of no confidence over the budget after only three months, following a second snap election held in July. The stock futures market and currencies were relatively calm during Asian hours, but the light economic calendar may cause political and fiscal concerns to take center stage. The bond market is rumbling again, with the U.S. Treasuries Curve steepening. This comes after Donald Trump ordered the firing of Federal Reserve governor Lisa Cook on Monday. It was an unprecedented decision that could result in a legal battle. Cook plans to sue to stop her dismissal. The markets are nervous, but they have largely shrugged off any attack on the Fed’s independence. In fact, the yield of the 30-year Treasury Note has not threatened to break 5%. This is what would be expected. Investors may be complacent, or they might be waiting for institutional money to move away from U.S. assets. History tells us that everything is fine until it isn't. Look at Turkey. NVIDIA The earnings report of Nvidia on Wednesday will no doubt be the main event. It will determine the risk appetite for the near term and whether AI darlings' sky-high valuation is justified. The fate of Nvidia China's business depends on the outcome of the ongoing trade war between Washington and Beijing. Investors will pay attention to this. LSEG data revealed that the $4.4 trillion AI chips maker is expected to report a rise of 53% in its second-quarter revenue, to $46 billion. However, this may not satisfy investors, as the jump is still a long way from the triple-digit increases it has seen for many quarters. This is the problem for a stock which has increased 35% in the past year and moves the market with every move. Options traders have priced in an increase of $260 billion to the market capitalisation of the company after the results. The following are key developments that may influence the markets on Wednesday. * Germany GfK consumer sentiment for September
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Instant View- Trump's tariffs against India are now in effect
The U.S. President Donald Trump doubled tariffs on Indian goods to up to 50% as planned on Wednesday. This escalating tension between the two world's largest democracies, and strategic partners. COMMENTARY: RADHIKA RAO SENIOR ECONOMIST DBS BANK The impact of the second 25% duty on Wednesday, despite India's modest exports to the U.S. being only 2.3% of its GDP, will be asymmetric. The central bank will be on alert for signs of growth risks, as well as possible relief in credit and liquidity. Other counter-efforts, such as seeking alternative markets and strengthening trade & investments ties via multilateral and bilateral trade agreements, will also be important. The door to negotiations could reopen in late year, depending on other geopolitical events. RAJESWARI SENGUPTA is an Associate Professor at the INDIRA GANDHI INSTITUTE FOR DEVELOPMENT RESEARCH. "The government needs to adopt a less protectionist, more trade-oriented strategy in order to increase the demand that is already low. "Another way to encourage FDI and support trade is by signing free trade agreements and regional agreements with several countries. Lowering tariffs and non-trade obstacles, as well as lowering tariffs, could also be a good idea." AASTHA GUDWANI IS THE INDIA CHIEF ECONOMIST AT BARCLAYS "We estimate that 70% ($55 billion), of India's imports into the U.S., are under threat. This is a serious concern for growth. It has changed a lot from a "good trading partner" to "a bad friend." Reporting by Tanvi, Kashish Tandon, and Nikunj Ahri. Editing by Muralikumar Aantharaman
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ExxonMobil Hires Shearwater for OBN Survey in Angola
Shearwater Geoservices has secured a deepwater Ocean Bottom Node (OBN) seismic survey work offshore Angola by ExxonMobil’s affiliate Esso Exploration Angola Block 15 Limited.The two-month project is scheduled to begin during the third quarter of 2025.The project will be delivered using Shearwater’s OBN platform, featuring the SW Tasman and Pearl node system, with SW Gallien deployed as source vessel.“Being selected by ExxonMobil to perform this OBN survey in Angola is a real testament to Shearwater’s OBN-platform.“This award reflects our strong track-record in delivering high-quality OBN surveys and the trust our clients place in us to support their strategic exploration goals,” said Irene Waage Basili, CEO of Shearwater.
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Odfjell Oceanwind Acquires Ørsted’s Share in Scottish Floating Wind Project
Odfjell Oceanwind (OOW) has completed the acquisition of Ørsted`s 80% share in the 100 MW Salamander floating wind farm, located on the east coast of Scotland.OOW will work together with the remaining shareholders of the Salamander offshore wind farm, consisting of Simply Blue Group and Subsea7, to continue the development of the project into a demonstration project for commercial-scale floating offshore wind.Salamander is a 100 MW floating offshore wind project in Scotland, located 35 kilometres off Peterhead. The project was awarded an Exclusivity Agreement for a seabed lease by Crown Estate Scotland in the INTOG leasing round and recently received section 36 consent from the Scottish Government.The project will feature Odfjell Oceanwind’s Deepsea Star semisubmersible steel foundations.“Innovation projects are essential to de-risk relevant floating offshore wind technologies and the supply chain prior to embarking on larger projects like those in ScotWind and many of the INTOG projects that are planned to be operational in the 2030s.“OOW has closely monitored the UK market for several years and see the country`s commitment to net zero and well-established framework conditions, including annual CfD rounds, as investor-friendly features,” said Per Lund, CEO of OOW.“We are delighted to welcome OOW to the Salamander offshore wind farm. This partnership brings new strength and momentum to one of the country’s most significant offshore wind developments and together, we are supporting Scotland’s ambition to become a global leader in offshore wind, delivering long-term benefits for communities, the economy and the environment,” added Hugh Kelly, Simply Blue Group CEO & Co Founder.
Investors wary of Fed independence; Asia stocks outpace Nvidia
The Asian stock market was steady on Wednesday, ahead of a report on earnings from AI leader Nvidia. This will influence the risk sentiment in the near term. Meanwhile, investors were still nervous over attacks on Federal Reserve independence.
The U.S. Treasury curve has steepened since President Donald Trump ordered the firing on Monday of Federal Reserve Governor Lisa Cook. This unprecedented move could lead to a tussle in court after Cook's lawyer said that she would file a suit to stop it.
The Fed has stated that it will abide any court decision made on Lisa Cook, but in reality the Fed is caught between a rock and a hard place," said Prashant Nnewnaha senior Asia-Pacific rates analyst at TD Securities.
If Cook continues to serve after Trump's dismissal and before the court's ruling, "if the court rules in favor of Trump" then Chair (Jerome) Powell could be fired because he allowed a non Fed employee to make Fed Board decisions.
The yield curve steepened as shorter-dated yields dropped more than those longer-dated. Early Asian hours saw the yield of the two-year bond, which is usually in line with expectations for interest rates, reach its lowest level since May, at 3.654%. The 30-year bond yield was only 1.5 basis points higher, at 4.923%.
Trump has repeatedly criticized Powell and policymakers who have not cut interest rates. Market watchers took Powell's comments from last week to mean that interest rates could be cut.
Investors are betting on a reduction next month. Traders have priced in an 84% probability of a Fed move in September, and expect more than 100 basis points of easing in June.
Newnaha said that the markets are anticipating a scenario in which Trump has a majority on the Board of Governors, setting the stage for the cuts to be made sooner and possibly faster.
The dollar dropped sharply after Trump's comments, but it stayed near its lows. The euro was last trading at $1.1636 while the yen remained steady at 147.6 per dollar.
Investors are more focused on the September rate movement and what it means. Ben Bennett, APAC Investment Strategist at Legal and General Investment Management, said that the hope was that a rate reduction would still be on the cards if the labour market did not deteriorate sharply.
This could maintain a very positive investor sentiment. The Nvidia results tonight will be also important for the direction of markets in the near term."
Options traders have priced in a swing of $260 billion in Nvidia’s market value following the company's earnings report, when its business in China is the focus after an unusual profit sharing deal with the Trump Administration.
The fate of Nvidia’s China business depends on the outcome of tariff negotiations and trade restrictions between the two world's largest economies.
This has made traders cautious about placing large bets. The MSCI index for Asia-Pacific stocks outside Japan was up only 0.2%. Japan's Nikkei remained unchanged and shares in Taiwan rose 0.6%.
Blue-chip stocks in China gained 0.3% and hovered near the three-year-high reached earlier this week. The tech sector has been a major factor in the recent rise of China's stocks.
Spot gold fell 0.23% in commodities after reaching a two-week peak the previous session.
The oil price was little changed from the previous session as traders awaited the imposition of massive new U.S. import tariffs against India, the third largest crude consumer in the world, in response to India purchasing Russian oil.
(source: Reuters)