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Shanghai locals try to beat the heat by indoor skiing
On Thursday, thousands of people in Shanghai flocked to the largest indoor ski resort in the world to escape the heat. The temperatures in the Chinese capital reached around 37 degrees Celsius. Shanghai L+SNOW Indoor Skiing Resort is a 98,000-square-metre (117207 square yard) indoor ski resort where temperatures are kept at or below 5degC all year. Tang Junqi spent a day with her mother. It was hot and felt like I was in a pot. The 10-year-old boy said, "But it feels like you're in a refrigerator inside." Shanghai experienced on Friday its 24th consecutive August day with temperatures above 35 degrees Celsius. This ties a record set in 1926. According to the Shanghai Meteorological Bureau, temperatures are expected to remain high for the remainder of the month. The city has declared an orange alert - the second highest level in its three-tiered heatwave warning system. Scientists claim that extreme weather is more likely to occur due to man-made climate changes, which are caused by carbon dioxide emissions. This is exacerbated by energy intensive activities such as maintaining indoor temperatures artificially low. Reporting by Xihao Jiang and Brenda Goh, editing by Barbara Lewis and Lincoln Feast.
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ASIA GOLD - Indian jewellers stockpile for the festive season; elsewhere, activity is muted
Jewellers in India stocked up on gold ahead of the holiday season. Activity elsewhere remained low. Indian dealers are charged a premium Up to $4 per ounce above official domestic prices. This includes 6% import duties and 3% sales taxes. Last week, the offers ranged from a discount of $2 to a premium of $3. A bullion dealer in Chennai said that "Jewelers had been sitting on the sidelines, but as prices refused to improve much, they have now started purchasing for the upcoming holiday season." This year, the Dussehra/Diwali festival, which is a time when buying gold is considered auspicious (and therefore a good sign), will be celebrated on October. On Friday, the domestic gold price was around 102,000 rupees for 10 grams, after reaching a record-high of 102,250 earlier in the month. Gold has been at 100,000 rupees now for three months, and the shoppers are slowly getting used to it. They're coming back to market," said a Mumbai bullion dealer from a private banking institution. Bullion was traded in China, the world's largest consumer of gold at a premium between $5 and $10 per ounce above the global benchmark spot rate . Last week, dealers were charging premiums between $3 to $8 per ounce. Bernard Sin, Regional Director of Greater China for MKS PAMP, said that the volume at Shanghai Gold Exchange was low, with little participation from retail investors and speculators. There has been little demand for gold in RMB. The price is still high, but there's no obvious catalyst to buy. "The absence of new import quotas further dampened the physical flows." Gold is available in Hong Kong and Singapore The price of the bullion was $2.50 higher or lower. In Japan, bullion According to a Tokyo-based dealer, the prices of swaps were equal to spot prices. We are seeing a greater number of clients come to sell. The buying has dropped significantly because the prices are so high.
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Wall St. lifts Asia shares as markets await US inflation figures
Asian stocks rose on Friday on the back of a tech-driven rally in Wall Street. Investors are now looking forward to the key U.S. Inflation reading that will be released later today for more clues about the Federal Reserve's interest rate outlook. The results from Nvidia, the artificial intelligence giant this week, fell short of expectations. However they confirmed that AI infrastructure expenditure remains strong. This helped to lift both Dow Jones Industrial Average and S&P 500 to record closes on Thursday. The Asian markets seized on the positive momentum of Friday, as MSCI’s broadest Asia-Pacific share index outside Japan rose by 0.26%. European and U.S. futures for stocks were mixed. Futures for the EUROSTOXX50 fell by 0.1%, while FTSE gained 0.06%. S&P futures fell 0.12%, while Nasdaq lost 0.21%. The headline revenue numbers for Nvidia don't suggest much of a decline in the AI story, despite the uncertainty surrounding China. "The expectations are already high," said Thomas Mathews of Capital Economics, who is the head of Asia-Pacific markets. The stock market in the U.S. will likely continue to do well if earnings don't change materially. The STAR 50 Index, which is a tech-focused index in China, fell 3% following a rise of over 7% the previous session. The shares of Chinese chip company Cambricon Technologies fell more than 7% on Thursday after the company issued a warning to investors via a stock market filing. It cited a steep rise in its stock price since late July. Frank Benzimra is the head of Asia equity strategies at Societe Generale. "For me, this is a normal way for the market to function, since we all know the market will undershoot to the downside, and overshoot to the upside." The CSI300 blue chip index rose 0.5%, while Hong Kong's Hang Seng Index grew 0.8%. Japan's Nikkei slipped 0.33%. WAITING ON PCE The focus of the market now shifts to the release of U.S. PCE Price Index data, the Fed's preferred inflation measure. Khoon Goh is the head of Asia Research at ANZ. There are three key pieces of information ahead of the FOMC meeting in September. The PCE is the first, followed by the payroll number the following week and the CPI. According to CME FedWatch, traders are now pricing in a 85% chance that rates will be cut in September. This is up from 63% one month ago. Fed Governor Christopher Waller said on Thursday that he plans to begin cutting interest rates in the next month. He "fully expects," more rate cuts to follow, to bring the Fed’s policy rate to a neutral level. On Friday, the expectation of an imminent Fed rate cut led to a dollar decline of 2% monthly against a basket currency. The euro last fell 0.16% to $1.1664, mainly due to political and fiscal concerns in France. Sterling, however, eased 0.09% at $1.3495 but was still set for a gain of over 2% in the month. Dollar also faced headwinds due to concerns about Fed independence, as President Donald Trump intensifies his campaign to exert greater influence over monetary policies. This includes his latest attempt at firing Fed Governor Lisa Cook. Cook filed a suit on Thursday, claiming that Trump does not have the power to remove Cook from her office. Brent crude futures fell 0.55% on Friday to $68.24 per barrel. U.S. crude dropped 0.6% to $64.21 a barrel. Spot gold fell 0.23%, to $3.408.78 per ounce.
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India increases its oil purchases from the US at competitive prices and narrows its trade deficit
Trade sources reported that Indian refiners increased their purchases of U.S. crude this month due to the competitive prices. This could help reduce the trade deficit between India and the United States, amid tensions. Indian Oil Corp., the country's largest refiner, purchased 5 million barrels U.S. West Texas Intermediate Crude for delivery between October and November through a tender. Other sources reported that Vitol had sold 2 million barrels to Reliance Industries, while Bharat Petroleum Corporation purchased 2 million from Vitol. Indian refiners and others in Asia increased their purchases following the arbitrage window The door for U.S. crude oil to Asia was opened. India has also been urged to purchase more U.S. crude oil following the United States Doubled its tariffs On Indian imports, New Delhi has increased its purchase of Russian oil. Sources said that Gunvor and Equinor, European traders, each sold 2,000,000 barrels, while Mercuria sold IOC 1,000,000 barrels. They added that BPCL also purchased its first Nigerian Utapate crude oil, as part of its expansion to include other grades in its crude diet. (Reporting and editing by Himani Sarkar, Stephen Coates and Siyi Liu in Singapore. Additional reporting by Florence Tan and Siyi Lu in New Delhi.
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NKT Installs Cables for TenneT’s BorWin5 Offshore Grid Connection
Danish power cable maker and services provider NKT has installed the HVDC power cable system for Tennet’s BorWin5 offshore grid connection in Germany.NKT said it completed the installation of the 320 kV HVDC system, completing the pull-in works to the offshore platform with its NKT Victoria cable laying vessel.In 2020, NKT secured a turnkey contract by TenneT to deliver and install a high-voltage DC XLPE power cable system for the BorWin5 project in Northern Germany.The order comprised the manufacturing of approximately 30 km of 320 kV high-voltage DC on-and offshore power cables and accessories as well as offshore installation.It will serve for the transmission of electrical energy between the 960 MW offshore wind farm He Dreiht operated by EnBW in the German North Sea and a grid connection point on land.BorWin5 is TenneT’s fourth offshore wind DC project off the coast of Borkum in northwestern Germany. It connects the offshore converter platform BorWin epsilon in the North Sea to the converter station in Garrel/Ost close to Cloppenburg in Lower Saxony.
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BlueScope Australia's appeal against civil cartel cases dismissed
The Australian Competition Regulator said that the appeals of steel producer BlueScope, and its former General Manager against an earlier ruling in a civil anti-cartel proceeding brought by BlueScope were dismissed by a court. The court confirmed its previous findings, that BlueScope's former general manager and BlueScope tried to convince distributors in Australia to enter into agreements containing price-fixing clauses between September 2013 and July 2014. In 2019, Australia's Competition regulator initiated civil cartel actions against the company, and its former employee. The alleged conduct was in the supply flat steel products. Australian Competition & Consumer Commission stated that the decision meant that a penalty for a breach of competition law of A$57.5m ($37.36m) against BlueScope and a fine of A$500,000 on the general manager would remain in effect. BlueScope said in a separate press release that it accepted the court's decision and brought the long-running matter to an end. By 0304 GMT, shares of the company had risen by 0.9%. The benchmark S&P/ASX 200 was mostly flat. $1 = 1.5389 Australian Dollars (Reporting and editing by Mrigank Dahniwala in Bengaluru)
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Gold to gain monthly on US rate cuts and soft dollar
The gold price was on course for a rise of more than a month on Friday, after reaching a peak of over a month in the previous session. This was supported by a softer dollar in general and expectations that the Federal Reserve will cut interest rates in September. As of 0223 GMT, spot gold was unchanged at $3,412.56 an ounce. Bullion is up 3.9% this month, and on Thursday it reached its highest level of $3.423.16 in the last 23 days. U.S. Gold Futures for December Delivery were flat at $3.473.70. Dollars fell 0.4% overnight and were set to drop by a month, making gold priced in greenbacks less expensive for those who hold other currencies. Tim Waterer, chief market analyst at KCM Trade, said that "the precious metal is still a favorite among investors" ahead of the expected loosening of monetary policy beginning next month in the United States. Fed Governor Christopher Waller stepped up on Thursday his call to reduce short-term borrowing costs in the United States. He said he would be supportive of a rate cut next month, and further reductions within the next three-six months. According to CME FedWatch Tool, traders believe there's an 86% likelihood of a rate cut of 25 basis points at the Fed policy meeting next week. Gold that does not yield is usually a good investment in an environment with low interest rates. Investors will now be waiting for the release of the Personal Consumption Expenditures Price Index (PCE), the Fed's preferred measure of inflation, which is due later today, to get more clues about the Fed's rate path. Waterer stated that if core PCE is stable at 0.3% per month, it will help keep the Fed's rate reductions on track. Fed Governor Lisa Cook has filed a lawsuit claiming that President Donald Trump does not have the power to remove her. Spot silver fell 0.3%, to $38.94 an ounce. Platinum dropped 0.6%, to $1,351.21, and palladium remained steady at $1102.21. (Reporting and editing by Sherry Jacobi-Phillips, Harikrishnan Nair and Brijesh Pate in Bengaluru)
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Iron ore prices rise on demand and lower inventories
Iron ore futures prices traded in a narrow band on Friday but were poised for a gain of about 5% this week, thanks to a steady demand from China, the world's largest consumer, and declining inventories. As of 0150 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange was up 0.51% to 785.5 Yuan ($109.82). The contract is up 2.1% this week. As of 0143 GMT the benchmark October iron ore price on the Singapore Exchange had fallen by 0.58% to $103.5 per ton. However, it has gained nearly 3% this week. The demand for this key ingredient in steelmaking remained strong despite the production restrictions in Tangshan - China's largest steelmaking hub - to improve air quality before the military parade to mark the end of World War Two on September 3. According to Mysteel, the average daily hot metal production, which is a key indicator for iron ore consumption, fell by 0.3% from week to week to 2.4 millions tons on August 28. However, it remained 8.7% above last year's same period. Two analysts warned that the output could fall even more next week, as the effects of the new round of production restrictions take hold. This could put downward pressure on the prices. Mysteel data shows that portside stock levels dropped by 0.4% compared to the previous week. This also helped support ore prices. Coking coal and coke, which are used in the production of steel, have declined by 0.09% and 0.544% respectively. The benchmark steel prices on the Shanghai Futures Exchange are mixed. Rebar dropped 0.22% and wire rod increased 0.18%, while hot-rolled steel coils and stainless steel were unchanged.
Waiting for PCE to give rate clues
Rae Wee gives us a look at what the European and global markets will be like tomorrow.
Investors end a volatile week that was dominated by Federal Reserve drama, Nvidia earnings and Nvidia's quarterly report with the release of an important inflation measure on Friday. This could have a significant impact on the Fed's policy meeting in September.
The core price index for personal consumption expenditures, the Fed's preferred inflation measure, is expected to remain unchanged at 0.3% per month. This would put the annual rate of inflation at 2.9%.
The data could reveal further evidence that President Donald Trump's tariffs are affecting consumer prices. This is in response to a recent surprise increase in producer inflation.
Markets have priced in the Fed's 25 basis-point rate cut in September. However, what will happen after this is still uncertain.
Fed Governor Christopher Waller announced on Thursday that he plans to begin cutting rates in the next month. He "fully expects," more rate reductions to follow, to bring the Fed’s policy rate to a neutral level. This is a step up to his call for lower short-term lending costs.
The dollar fell by a full percentage point on Friday as the dollar was tipped to fall for the month. Worries about the central banks independence were also contributing factors, especially with Trump's campaign to influence monetary policy.
Fed Governor Lisa Cook has filed a lawsuit claiming that Trump does not have the power to remove her after he announced on August 25, an unprecedented move, that he was going to fire her.
The French and German preliminary inflation figures are due to be released later that day, ahead of the PCE.
ECB accounts on Thursday showed that policymakers at the European Central Bank (ECB), who met in July, were divided over whether inflation would be higher or lower than they expected. This debate is likely to reach a boiling point in the next few months.
Sources have said that the ECB kept rates at their current level in July and will likely do so again in August before discussing further rate cuts. This is especially true if European economies are affected by U.S. Tariffs.
The following are key developments that may influence the markets on Friday.
- U.S. PCE Price Index (July).
German preliminary CPI for August
France preliminary CPI for August
(source: Reuters)