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The MORNING BID brings Europe-Fed to the forefront for now
Rae Wee gives us a look at what the European and global markets will be like tomorrow. Investors are choosing to ignore the simmering U.S. China trade tensions for now and instead take comfort from Federal Reserve Chairman Jerome Powell’s remarks that hint at future rate cuts. The global stock market was once again optimistic on Wednesday. European futures pointed to a sharply increased opening, following a volatile session yesterday due largely to the trade whiplash. Powell may be to blame for the market's reprieve. His comments on Tuesday reaffirmed expectations of more easing in the coming year and a possible end to the Fed’s balance sheet reduction. The dollar fell and gold extended its record run, with futures indicating that rate cuts of approximately 48 basis points will be implemented by December. The recent bouts of volatility in the market are a reminder that investor sentiment is still fragile. In their ongoing trade spat, China and the U.S. continue to fire volleys. The latest is Trump's threat to cut off some trade relations with Beijing in relation to cooking oils. Investors assume that the two sides are going to continue to push each other, but not to fight. U.S. trade representative Jamieson Greer said on Tuesday that it was up to China whether or not the increased tariffs would kick in by November 1, but admitted it could be difficult for Beijing find a way out. Politics is also an important issue around the globe. Local media reported that the Japanese parliamentary schedule committee couldn't agree on holding the vote to choose the next premier on October 21. This prolongs the uncertainty surrounding Sanae Takaichi, who is seeking to become Japan's first woman prime minister. In France, the focus will be on the next steps for the government after French Prime Minister Sebastien lecornu announced that he would suspend a historic pension reform until the election in 2027. Earnings from Morgan Stanley and Bank of America are due in the afternoon on Wall Street. After their peers announced a set of solid results on Tuesday, expectations are high. The top U.S. banks predicted that business would continue to grow as equity markets surged in the last quarter, and the economy and consumers spending held steady despite the sweeping tariffs. The following are key developments that may influence the markets on Wednesday. French political developments Bank of America and Morgan Stanley Earnings Fed's Miran Bostic and Schmid talk Release of Fed's Beige Book
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Oil prices drop as the market focuses on excess supply and US-China trade tensions
The oil prices continued to fall on Wednesday as investors considered the International Energy Agency warnings of a surplus supply in 2026, and the U.S./China trade tensions which could reduce demand. Brent crude futures dropped 21 cents or 0.3% to $62.18 a bar by 0425 GMT. U.S. West Texas Intermediate Futures dropped 16 cents or 0.3% to $58.54 a bar. The previous trading session saw both contracts close at lows of five months. The International Energy Agency (IEA) said that the global oil market may face a surplus of up to 4 million barrels a day next year, a larger glut than its earlier predictions, as OPEC+ and its rivals increase production and demand remains sluggish. The market is focused on the excess supply amid mixed signals of demand. Emril Jamil is a senior oil analysts at LSEG. He said that ebbing geopolitical risk and escalating tensions in trade are adding to the pressure on prices. In the last week, the trade dispute between China and the United States, two of the largest oil consumers in the world, has re-emerged. Both countries have imposed additional port fees for ships transporting cargo between them. This will increase trading costs, disrupt freight flow and likely lower economic output. The focus will be on the recent escalation of trade tensions between China and the US, and the risks that this poses to the global economic system," said Tony Sycamore. Tensions have increased between the two world's largest economies after China announced last week a major expansion in rare earth export controls. U.S. president Donald Trump has threatened to increase tariffs on Chinese products to 100%, and tighten export restrictions of software from November 1. Yang An, an analyst at Haitong Futures, said that the current oil price is largely determined by the level of global oversupply as reflected in the changes in inventories. The weekly inventory report will give traders a good idea of the demand in the United States. A preliminary poll indicated that U.S. crude stockpiles were likely to have increased last week while gasoline and distillate stocks are likely to have decreased. Six analysts surveyed by estimated that on average crude inventories increased by around 200,000 barrels during the week ending October 10. The American Petroleum Institute's weekly industry report is due at 4:30 pm EDT (2030 GMT), and the U.S. Energy Information Administration will release its data at 10:30 am EDT (1430 GMT), on Thursday. The delay is due to Monday's Columbus Day/Indigenous Peoples' Day. Sam Li reported from Beijing, and Jeslyn Leh in Singapore. Sonali Paul and Christian Schmollinger edited the report.
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Gold reaches record highs on Fed rate-cut betting, US-China Trade woes
Gold reached a new high on Wednesday just below the $4,200 per ounce mark, boosted by expectations for further U.S. interest rate cuts. Meanwhile, renewed U.S. China trade concerns also increased demand for safe havens. As of 0252 GMT the spot gold price was up 0.8% to $4,173.56 an ounce after reaching a session high of 4,186.68. U.S. Gold Futures for December Delivery gained 0.7%, to $4192.90. The U.S. president Donald Trump announced on Tuesday that his administration would produce a list of "Democrat programs" on Friday, which will be closed due to the federal government shutdown. Matt Simpson, senior analyst at StoneX, said that the U.S. shutdown and Jerome Powell's dovish remarks have been two of the most recent reasons why gold prices are on an upward trend. Federal Reserve Chair Jerome Powell stated that the U.S. labor market was subdued. However, the economy may be "on a slightly firmer trajectory than anticipated." Powell said that interest rate decisions will be taken "meeting by meeting", balancing the labour market's weakness and persistent inflation above the target. Investors have priced in the near certainty of a Fed rate cut of 25 basis points in October and December. Bullion is more likely to perform well when interest rates are low and there is political and economic uncertainty. Gold has risen 59% in value year-to date, mainly due to geopolitical and financial uncertainties, central bank purchases, the de-dollarisation of currencies and strong exchange-traded funds. Simpson added that "this rally has become a momentum trading, where traders pile into the market to chase away prices." Trump stated that Washington would consider cutting off some trade relations with China, such as in the area of cooking oil. On Tuesday, both countries started imposing port fees tit for tat. The International Monetary Fund increased its global growth forecast for 2025, citing better than expected tariff and financial conditions. However, it warned that renewed U.S. China trade tensions may curb growth. Silver increased 0.3% to $51.60 after hitting a record of $53.60 Tuesday. This was due to the gold rally and tightening of supply on the spot market. Palladium and platinum both rose by 0.2%, to $1,528.50. (Reporting and editing by Sherry Phillips, Subhranshu Sahu and Ishaan Aroo in Bengaluru).
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Shanghai copper declines amid escalating US-China trade standoff
Shanghai copper fell on Tuesday, as tensions escalated between the two largest economies in the world, China and the United States, threatening to increase demand for the metal. As of 0315 GMT, the most active copper contract traded on Shanghai Futures Exchange fell 0.91%, trading at $8,933.60 per metric ton. Donald Trump, the U.S. president, threatened to cut off some trade relations with China on Tuesday in relation to cooking oils as a form of retaliation for China not "purposely" buying U.S. soy beans. Trump's threat was the latest escalation of trade tensions ahead of a high-stakes summit between Trump and his Chinese equivalent Xi Jinping in South Korea later this month. China imposed an export control on rare earths, to which the U.S. reacted with a threat of a 100% tariff, impacting the copper, used in construction and power, that is important for the macro-economy. Both sides sent conciliation signals. Beijing has stressed that the export control on rare earths does not represent a complete export ban. However, it is still open to talks. Scott Bessent of the U.S. Treasury Department said that talks between leaders in South Korea were still proceeding according to schedule. Shanghai coppe prices have dropped after the red metal reached a 16-month high on SHFE in early October, when mine disruptions such as the Grasberg closure triggered concerns about supply. Investors are profiting from the rally triggered when Grasberg was suspended for the time being, but risks are high as China and the U.S. trade barbs over export controls and tariffs," said a Shanghai copper trader, who requested anonymity because they were not authorized to speak to media. Benchmark three-month Copper, on the other hand rose 0.47%, to $10,628 per ton. London's future rose amid renewed U.S. interest rate cuts hopes, as Jerome Powell, the U.S. Federal Reserve chairperson spoke on Tuesday and signaled that economic conditions were unchanged from a few weeks ago when policymakers cut rates. They also projected two further reductions this year. Nickel and lead were little changed. Zinc also declined by 0.86%. The LME's other metals saw a gain of 0.27% in aluminium, 0.26% in nickel, 0.24% in lead, and 0.8% for tin. Zinc, however, posted a loss of 0.37%. Reporting by Dylan Duan, Lewis Jackson. $1 = 7.1261 Chinese Yuan Renminbi
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Eversource Expects $75m Charge Due to Offshore Wind Sale Settlement
Utility firm Eversource Energy said on Tuesday it expects a $75 million or 20 cents per share after-tax charge in the third quarter due to an increased liability for the two wind projects sold to Global Infrastructure Partners (GIP).In 2024, Eversource sold its stake in the South Fork and Revolution Wind projects to GIP, receiving adjusted gross proceeds of $745 million, down from $1.12 billion due to reduced capital spending and delayed commercial operations of Revolution Wind.The company added it increased its expected payments to GIP by about $285 million, following revised construction cost estimates including higher insurance expenses, tariff impacts, turbine vessel damage and costs tied to a temporary stop-work order issued by the Bureau of Ocean Energy Management in August.However, the company also said it expects to offset part of the impact with an estimated $210 million federal tax benefit linked to tax losses on its offshore wind investments.The company also said it is narrowing its full-year adjusted profit forecast to between $4.72 and $4.80 per share from a previous forecast of $4.67 to $4.82 per share.(Reuters)
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BHP's Slattery: Australia must reduce red tape and power costs to compete
Geraldine Slattery is the head of BHP Australia. She said that Australia must increase access to low-cost power and speed up environmental approvals if it wants to compete with other nations for mining investment capital. The comments of the world's largest listed miner highlight the rising competition for capital, with nations such as the United States who are ramping up their mining-friendly policies to spur the development of an alternate supply chain to the dominant producer China. Slattery explained what she believes Australia needs "to compete on the global market". Slattery, in remarks for a conference held in Western Australia, said: "This is no small matter. It's the linchpin that will make the resources sector and many other sectors, more productive." BHP CEO Mike Henry told the Financial Times this week that the company is considering reopening older mines in Arizona due to the U.S. Administration's "breathtaking shift" in building up the mining sector. Australia has reached the final stages of negotiations for reforming its environmental laws. Local media reported that new legislation will be introduced in the final two weeks of this year's parliament session. Slattery has been tipped as the top candidate for BHP's CEO position. He has worked at BHP for over 30 years and led its petroleum division. Henry was expected to leave BHP by the middle next year, after a six-year typical tenure. "Australia's growth in labour productivity is at its lowest level for sixty years." This isn't a random economic statistic. This trend poses challenges not only in attracting future investments, but also in maintaining the higher standard of living enabled by productivity," she said. BHP has allocated more than A$840 (555.16) million for its Olympic Dam Copper operations in South Australia. The miner is preparing to make a decision on investment by mid-2027, to double the output of the state. Slattery also listed Australia's need to reduce taxes in order to compete with other developed countries, improve workforce development, and embrace automation and AI, which, she said, was key to addressing productivity challenges.
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Iron ore prices rangebound due to Sino-US trade issues, but firm demand in the near term offsets this.
Iron ore futures ranged on Wednesday as worries about the worsening Sino US trade dispute and China's low inflation data, its largest consumer, offset optimism regarding remaining strong near-term demand. Donald Trump, the U.S. president, said that Washington is considering ending some trade relations with China. The U.S., China and other countries began to charge additional port fees for ocean shipping companies on Tuesday. This is another sign of the tensions that exist between the two world's largest economies. These tensions could impact the market sentiment and put pressure on commodity prices. As of 0303 GMT on Wednesday, the most-traded contract for January iron ore on China's Dalian Commodity Exchange dropped 0.32%, to 785.5 Yuan ($110.22), per metric ton. This was after Tuesday's record lows, which were more than a month old. As of 0253 GMT, the benchmark November iron ore traded on Singapore Exchange was $0.36% higher. Official data released on Wednesday showed that China's Consumer Price Index (CPI), which measures consumer prices, fell 0.3% on an annual basis in September, compared to a 0.2% drop in a survey. This was due to the fact that domestic weakness continued and trade tensions increased, while consumer confidence also suffered. Analysts at Everbright Futures said in a report that "the strong ore demand continued to support prices", halting any potential downside. The data released by the China Iron and Steel Association, a state-backed organization, showed that the daily crude steel production among members steelmakers increased by 7.5% compared to the same 10-day period in September. Coke and coking coal, which are used to make steel, both rose by 1.62% and 0.7 percent, respectively. The benchmarks for steel on the Shanghai Futures Exchange are mixed. The Shanghai Futures Exchange saw a mixed performance in steel benchmarks.
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Asia shares recover as dollar eases, Fed reduces bets and reclaims spotlight
The Asian stock market staged a modest rebound on Wednesday. This was helped by the dovish remarks of Federal Reserve chair Jerome Powell, and positive bank earnings in Wall Street. However, simmering U.S. - China trade tensions kept risk appetite at bay. Powell said that the possibility of further rate reductions was still open on Tuesday, and that the long-term effort of the central banks to reduce the size of their holdings could be nearing its end. Some viewed his comments as dovish. They lifted the markets slightly, and reinforced expectations for more easing in this year. By December, roughly 48 basis point worth of cuts will be priced into the market. Tom Kenny is a senior international economist with ANZ. He said that the Fed could announce its intention to end quantitative tightening at the upcoming FOMC meeting in October. We expect the Fed will cut 25bp in both October and December FOMC Meetings. The market was also supported by the strong earnings of U.S. banks and the upward revision to the IMF's global growth forecast for 2025. This came after the market had fallen on signs of renewed tension in U.S. China trade relations. The Nikkei gained 0.8%, after falling 2.6% the previous session. Nasdaq and S&P futures both rose by about 0.1%. Even so, the sentiment was fragile. On Tuesday, U.S. president Donald Trump said that Washington would consider terminating certain trade ties with China. This included in relation to cooking oils. Both the U.S.A. and China have begun charging extra port fees to ocean shipping companies that transport everything from holiday toys, to crude oil. The markets have been thrown into turmoil in recent sessions due to a rapid escalation of the U.S./China trade war. Trump announced an additional 100% duty on Chinese goods as retaliation against Beijing's dramatic expansion of export controls on rare Earths. It does indicate that a lasting ceasefire is unlikely to be achieved easily. It's a reminder to the market that they are shooting these arrows, and then walking them back," said Tony Sycamore. U.S. trade representative Jamieson Greer said separately on Tuesday that the timing of additional tariffs of 100% on China's exports to America depends on whether they kick in November 1, or earlier, but acknowledged that Beijing might find it difficult to find a way out. POLITICAL UNCERTAINTY Sebastien Lecornu, the French Prime Minister, promised to delay a historic pension reform until 2027, a measure that would provide some relief for investors. EUROSTOXX50 futures gained 0.8% in Asia. FTSE and DAX Futures also rose by roughly 0.3%. Juan Perez is the director of trading for Monex USA. He said: "I believe that anything that can bring relief to the squabbles within the French Parliament is an absolute victory." The euro last traded at $1.1611 despite being largely insulated from France's political turmoil. The Fed's cut bets weighed on the currency market as the dollar fell 0.25% to 151.42 yen and 0.06% to 0.8009 Swiss Franc. The fragile risk sentiment also supported the safe-haven yen as well as the Swissie. Spot gold, meanwhile, continued its record-breaking run, and last rose 0.9% to $4,179.80 per ounce. This was helped by the geopolitical, economic, and expectations of a U.S. interest rate cut. Brent crude futures fell 0.1% to $62.33 per barrel while U.S. crude dipped 0.07% to $58.66.
After a seven-week high, oil prices fall as investors profit from the dip
Oil prices fell as investors booked profit after an earlier jump to a seven week high on the back of a sudden drop in U.S. crude oil inventories. They were also concerned about Ukraine's attack on Russia's infrastructure for energy.
Brent futures LCOc1 fell 18 cents or 0.26% to $69.13 per barrel at 0013 GMT. U.S. West Texas Intermediate crude futures (WTI) CLc1 also dropped 20 cents or 0.31% to $64.79 per barrel.
Both benchmarks rose by 2.5% the previous session.
After testing and rebounding from the bottom of the recent range this week, crude has retreated back to the upper limit of the recent range. Tony Sycamore is a market analyst for IG. He said that we will likely see some profit-taking this morning.
The Energy Information Administration reported on Wednesday that U.S. crude oil inventories dropped by 607,000 barrels during the week ending September 19.
The American Petroleum Institute, according to market sources, reported a draw of 3.8 million barrels on Tuesday. This was less than analysts' expectations.
The Russian war in Ukraine also contributed to the rise of oil prices.
In recent weeks, Ukraine increased drone attacks against Russian energy infrastructure, focusing on refineries and export terminals in order to reduce Moscow's revenue. Russia also faces a shortage of certain fuel grades and could be forced to restrict fuel exports if necessary.
Haitong Securities reported in a recent report that despite concerns about Russia's supply disruptions the oil price has remained resilient due to the fact that fundamentals such as supply and demand have not been under significant downward pressure in recent weeks.
Haitong Securities stated in a recent report that prices have not yet reflected the expectations of a rising oversupply.
J.P. Morgan reported on Wednesday that global oil demand has grown by 800,000 barrels a day year-to date through September 23 compared to an estimate of 830,000. According to the report, global oil demand for September was 104.4 million barrels per day. This is in line with J.P. Morgan's estimate. Reporting by Sam Li, Trixie Yap and Jamie Freed
(source: Reuters)