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MORNING BID Europe-Bonfire the vanities
Rocky Swift gives us a look at what the future holds for European and global markets. Donald Trump knew what the markets needed. With a U.S. shutdown and the threat of tariffs, he was prepared. Tariffs. As is becoming a routine, Asian markets were first to digest the overnight announcements by the White House about new U.S. Import duties. This time, the duties applied to bathroom vanities and cabinets. Trump's announcement cited "national defense" as the reason for tariffs on furniture from abroad, which are due to begin on October 14. This follows duties on drugs and trucks that went into effect Wednesday. There has not been a breakthrough between Trump and the congressional Democrats in their talks to prevent a shutdown of government on October 14. Gold, a safe haven asset, reached a new record due to the fear of a government shutdown. China and Japan's data showed the impact of trade uncertainty on the two largest economies in the region. China's manufacturing output declined for the sixth consecutive month in September according to official data. A separate report revealed that Japan's factory production fell more than expected during August. The Australian dollar gained a little on Tuesday after the central bank of the country held rates at the same level as expected and stated that global economic uncertainty remains high. The Asian stock markets were unfazed by the news, as MSCI's broadest ex Japan gauge added to its September gains of more than 5%, which was the best for a year. If Washington goes dark, the Friday release of the important non-farm payrolls for September would be halted. This data is a crucial input to the Federal Reserve's timing for further easing. This puts other U.S. labor reports in the spotlight, including today's JOLTS report. Analysts expect that the data will show that job openings remained stable at 7.18 million in august. Equity contracts indicated a negative opening for European markets. Euro Stoxx futures for the entire region were down 0.07%. German DAX Futures fell 0.06%. FTSE futures dipped 0.08%. U.S. Futures, S&P 500 E-minis were flat. The following are the key developments that may influence Tuesday's markets: - JOLTS August job openings, U.S. consumer sentiment for September - Flash CPIs in Germany and France British Q2 GDP - Speeches from ECB president Christine Lagarde and Fed vice chair Philip Jefferson. Boston Fed President Susan Collins
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Shanghai tin reaches near six-month peak on Indonesian supply concerns
Shanghai tin reached a six-month high Tuesday as supply concerns grew following reports about a crackdown against illegal mining in Indonesia, a key producer. The Indonesian president Prabowo Subito ordered the closing of 1,000 illegal tin mining operations on the island Sumatra where tin-mined goods were being smuggled on small boats and ferryboats, according to state media Antara. Antara quoted Prabowo as saying that 80% of the tin produced in the main producing region of Bangkia Belitung, off the east shore of Sumatra, was being smuggled abroad. Fears of a lower supply in the second largest tin-producing country in the world fueled the rises in soldering metal. As of 0313 GMT, the most active tin contract at Shanghai Futures Exchange rose 1.15% to 275,250 Yuan ($38.630.49) a metric ton. The tin price has fallen 0.16% in the first month. It reached 283,000 yuan per ton earlier in the day. This was the highest level since April 3. The benchmark three-month tin at the London Metal Exchange is down 1.58% to $34,930 per ton. This was lower than the $35,100 it reached on Monday, its highest level since April 4. The London contract is expected to finish the month at a lower level by 0.25%. Copper was the highest-rising metal among the SHFE base materials, rising 1.29%, to 83240 yuan per ton. It is expected to finish the month at a 5.1% rise. Metal prices were supported by the disruptions in supply at Freeports Grasberg's cooper mine in Indonesia and China's plans to stabilize growth in the nonferrous industry. Zinc rose 0.58%. Lead was down 0.44%. Aluminium grew by 0.12%. Nickel fell 0.15%. Copper, among other LME metals fell by 0.32%. Aluminium was down 0.5%. Zinc dropped 0.61%. Nickel declined 0.8%. Lead also fell 0.2%. $1 = 7.1252 Chinese Yuan (Reporting and editing by Subhranshu Sahu; Lewis Jackson, Dylan Duan).
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Baltica 2 Offshore Wind Farm Sees First Monopiles Roll Out
The first batch of monopiles for Baltica 2, a 1.5 GW offshore wind farm being developed by Ørsted and PGE in the Baltic Sea, has rolled off the factory floor, marking a key milestone for what will be Poland’s largest offshore wind project.A total of 111 monopiles are planned for the project, including 107 for turbines and four for offshore substations.Diameters range from 7.5 to 10.5 meters, with wall thicknesses of 60 to 112 millimeters depending on foundation requirements. Production includes plate rolling, welding, non-destructive testing and the application of anti-corrosion coatings.EEW will supply 77 monopiles, with the first load-out of completed foundations onto a transport vessel planned for the end of 2025. Steelwind is also supplying foundations for the project.Vast majority of secondary steel structures will be produced in Poland by Baltic Industry Group (Grupa Przemysłowa Baltic) and Smulders.In parallel to the preparatory work at sea, construction work is underway on the onshore part of the project. In the Choczewo commune, the onshore connection infrastructure is being built - onshore substation and HDD drillings which will enable the connection of the offshore and onshore parts of the cables.The works are carried out in accordance with the highest QHSE standards, with an emphasis on solutions that reduce the carbon footprint (including waste reduction, efficient energy use, and long-lasting coating systems).Once commissioned in 2027, Baltica 2 will be supplying green energy to around 2.5 million households in Poland.“Monopiles are among the most demanding components of offshore projects. We are talking about structures up to 100 meters long and weighing around 1900 tonnes, with durability measured in decades.“During today’s visit to the EEW factory, we were able to see first-hand the scale of this vast undertaking and examine the advanced technological processes. We were very pleased to learn that production of these components is progressing on schedule. As Poland’s flagship offshore wind project, Baltica 2 also remains a key part of Ørsted’s global construction portfolio and our 8.1 GW offshore wind construction program for 2025 to 2027,” said Patrick Harnett, Chief Construction Officer and Executive Vice President at Ørsted.
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Gold reaches record highs, best month for 14 years in safe-haven rush
Tuesday, gold prices reached a new high and were on track for their best monthly performance in 14 years. Fears of a possible U.S. shutdown and expectations of more interest rate reductions by the U.S. boosted demand for this safe-haven. As of 0309 GMT, spot gold was up 0.4% to $3,848.65 an ounce. Bullion is up 11.6% in September and could be on course for its best month ever if the current momentum continues. U.S. Gold Futures for December Delivery gained 0.6% to $ 3,877. Tim Waterer, Chief Market Analyst at KCM Trade, said that the looming shutdown of the government has created a cloud of uncertainty in the market. This has accelerated gold's rise. The $4,000 level is now a realistic target for the end of the year, as market dynamics like lower interest rates and geopolitical hotspots continue to work in favor of gold. The White House meeting between Donald Trump and his Democratic rivals to prevent a shutdown of the government that could affect a range of services by Wednesday appeared to have made little progress. According to CME Group’s FedWatch tool, recent economic data have raised expectations for more Federal Reserve rate reductions this year. Traders are pricing in an 89% chance that the Fed will reduce rates by 25 basis points at its next meeting. Alberto Musalem, the St. Louis Federal Reserve president, said that he would be open to more rate cuts. However, he stressed that the Fed should remain cautious and maintain rates high enough so as to continue to fight inflation. In an environment of low interest rates, gold, which is often used to store value in times of political or financial uncertainty, flourishes. SPDR Gold Trust is the largest gold-backed ETF in the world. Its holdings increased 0.60% on Monday to 1,011.73 tons, their highest level since July 2022. Investors are now awaiting U.S. data about job openings and private payrolls as well as the ISM Manufacturing PMI report and the non-farm payrolls reports on Friday to get more clues about the economy's state. In the event of a partial shutdown, the U.S. Labor Department confirmed Monday that the statistics agency will suspend the release of economic data, including the closely watched monthly employment report for the month September. Spot silver, meanwhile, was stable at $46.93 an ounce. It has gained 18.2% this month. Palladium fell 0.7% and platinum 0.8%, respectively, to $1,258.60.
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Iron ore futures drop on weak China data but are set to gain quarterly
Iron ore futures fell on Tuesday due to weak China manufacturing data. However, they are on track for a solid quarter gain as export-driven rallies from July and August have outweighed recent declines. As of 0238 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange was down by 0.45% to 782 yuan (109.73 dollars) per metric ton. The contract is down 0.51% this month but up 9.82% for the quarter. On the Singapore Exchange, September benchmark iron ore was down 0.05% at $105.25 per ton. The contract is up 12.27% in the first quarter. According to an official survey conducted in September, China's manufacturing sector contracted six consecutive months, indicating that manufacturers are waiting for additional stimulus to boost domestic consumption. Exports have increased for the first since March. This has eased some of the concerns about the recent decline. Citi analysts noted earlier in the month that exports may not continue to perform better than expected as steel margins are under pressure. RatingDog's private sector survey showed that China’s factory activity expanded in September at the fastest pace since March. New orders drove faster production growth. Goldman Sachs analysts said that the improvement in profitability of raw materials such as steel is a sign of government anti-involution policy at work. Coking coal and coke, which are both steelmaking ingredients, have also lost ground. They fell by 1.45% and 0.78 %, respectively. The benchmark steel prices on the Shanghai Futures Exchange fell. Steel benchmarks on the Shanghai Futures Exchange declined. According to Mysteel, billet production rose in the Chinese steelmaking hub Tangshan during September 22-28 even as profits steelmakers could earn through billet sales decreased. ($1 = 7.1263 Chinese yuan) (Reporting by Lucas Liew; Editing by Subhranshu Sahu)
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Shares of China's Zijin Gold surge 66% on Hong Kong debut
The shares of China's Zijin Gold International soared as high as 66% on their Hong Kong debut after the company raised $3.2 Billion in its initial public offering (IPO), which was the largest in Hong Kong for four years. The company is a unit of China's Zijin Mining, which operates all the gold mines of the group outside China. It sold 349 millions shares at HK$71.59 per share. Early trading saw the Hang Seng Index rise 0.8% to $HK119. As of 0123 GMT, gold prices reached a new record of $3,842.76 an ounce. Bullion is up 11.4% in September so far, and on course to have its best month ever since August 2011. It has also risen by 42% over the past year due to global political uncertainty and lower interest rates. According to filings with the regulatory authorities, Zijin Gold’s retail tranche was 241-times oversubscribed and the institutional tranche was 20-4 times oversubscribed. Dealogic data shows that the IPO raised $3.6 billion and was the biggest in Hong Kong since JD Logistics flotation in May 2021. If the Zijin deal is subject to an overallotment, this would be the biggest since Kuaishou Technology raised $6.2 billion back in January 2021. According to the prospectus, Cornerstone Investors, led by Singapore's wealth fund GIC, and private equity firm Hillhouse purchased shares worth $1.6 billion. Schroders, BlackRock and other firms also took part in the transaction. (Reporting and editing by Christian Schmollinger, Neil Fullick and Scott Murdoch from Sydney and Hong Kong).
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Sources say that the Mali mining dispute was the last straw for Barrick’s ‘Mercurial Mark’ Bristow.
Four people who are familiar with this development claim that Mark Bristow’s handling of Barrick Mining’s flagship asset in Mali was the final straw for the board, which led to a change of leadership. Barrick Chairman John Thornton announced on Monday that Chief Executive Bristow will step down immediately. He appointed Chief Operating Office Mark Hill as interim CEO. Barrick did not give a reason for Bristow’s departure but said that it had begun an executive search. It will announce the permanent CEO at a later date. According to a person familiar with board thinking, the discussion about replacing Bristow began six months ago when the company's Mali situation deteriorated under his leadership. Barrick has lost control of its Loulo-Gounkoto complex of gold mines in Mali over the past nine months. The government seized 3 metric tonnes of gold. The company wrote off $1 billion and sold two mines in Canada and the U.S. Barrick's future is uncertain in Mali, as its mining license expires in February 2026. If an agreement cannot be reached by then, Barrick may lose the asset. Barrick or Bristow did not respond to requests for comments on this article. Bristow's Mali history and Barrick's are interconnected. Randgold Resources was founded by the South African Randgold, and its assets were mainly in Mali. It was acquired by Barrick in 2018. The military coup of 2021 led to a regime wanting more mining revenue. Barrick's refusal last year to adopt the new mining code of the country led to the arrests of four employees, the seizure by the government of gold worth $300 million, and the temporary taking over of the mines by Mali’s military government. Barrick's performance has lagged behind its peers in the past five years, which is another reason why the board decided to replace Bristow, according a source who had been briefed about the reasons for Bristow’s departure. Barrick shares have increased by 37% in the last year, while Agnico Eagle shares have grown 110%. The gold price has roughly doubled over the last five years, reaching record highs. According to an ex-Barrick executive who didn't want to be identified, the tension between Thornton and Bristow was also a factor in Bristow’s demise. Bristow’s sometimes abrasive manner led to some of his peers in the industry calling him Mercurial Mark. Bristow was known for taking key decisions by himself, and he did away with a weekly meeting of staff. Jefferies analysts stated in a report that some investors had expressed concerns about the company's risk profile. This included its exposure to Africa and the planned investment in Pakistan for the Reko Diq Project. Barrick shares closed down by 4% at the Toronto Stock Exchange Monday. (Divyarajagopal, Toronto; Clara Denina, London; Editing and Caroline Stauffer & Lincoln Feast)
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Alcoa will close Kwinana Refinery and take a $890 million loss
Alcoa Corp, an aluminium producer in Australia, announced on Monday that it would permanently close the Kwinana Alumina Refinery. The closure will cost $890 million to Alcoa in the third quarter. Alcoa stated that the refinery's workforce, which currently numbers about 220 people, will continue to shrink through 2026. Some employees will remain on site in order to prepare for a future redevelopment. The U.S. Aluminum Producer announced in January of last year that it would stop production at its loss-making refinery due to the challenging market conditions, and the age of the facility. Matt Reed, Alcoa's Executive Vice President and Chief Operating Officer, said: "Alcoa operated Kwinana Refinery in a challenging and difficult environment for many years and had to make the hard decision to permanently shut the facility. We explored multiple options but were unable to find a viable path for restarting the plant." Alcoa said that the closing of Kwinana will reduce its annual global consolidated refinery capacity to 11,7 million metric tonnes. The Australian metals industry is being squeezed by high energy and labor costs. Meanwhile, the oversupply of top Chinese producer continues to lower prices. Glencore requested support for its Mount Isa Copper Smelter, located in the Queensland state. Rio Tinto, on the other hand, has consistently warned of a difficult outlook for its Tomago Aluminium smelter, which is New South Wales's largest energy consumer, due to its high-cost power.
Asian shares and gold rise amid US shutdown fears; crude oil falls
On Tuesday, shares in Asia rose and gold's record rise continued as markets assessed the prospects of a U.S. shutdown that could delay closely-watched jobs data.
The Australian dollar gained before the Reserve Bank of Australia meeting, where they are expected to maintain their current policy. Oil prices fell due to the prospect of increased production by OPEC+. Meanwhile, China's manufacturing activity declined for a sixth consecutive month in September.
After little progress was made in budget negotiations between Donald Trump and Democratic opposition, U.S. vice president JD Vance stated that the government "seemed to be headed for a shutdown".
The government shutdown would prevent the publication of important employment figures later this week. Instead, the Labor Department will release its JOLTS report for August job openings on Tuesday.
Ray Attrill said in a podcast that it appears the markets are preparing for the possibility of a shutdown. If we don't get payroll numbers, we can focus on what we have.
MSCI's broadest Asia-Pacific share index outside Japan rose 0.5% at the start of trading. This would make it the best month in a decade, with a gain of 5.6%. Japan's Nikkei index fell 0.3% for the third consecutive day.
After a 0.6% drop on Monday, the dollar was unchanged at 148.62yen. The euro remained unchanged at $1.1723. The Australian dollar rose 0.2% against the greenback, to $0.6587.
SHUTDOWN COULD LEAVE FEED WITHOUT KEY DATA
The Federal Reserve uses the U.S. JOLTS Report as the first indicator to be considered before the Friday employment report. This report is crucial in determining the timing for rate cuts. If the Fed is left in the dark about the economy, it could be difficult for them to make decisions at their October 29 meeting.
Analysts expect JOLTS data to show that job openings remained stable at 7.18 million jobs in August.
Capital.com analyst Kyle Rodda said in a recent note that the shutdown could delay the release certain data. This includes the important non-farm payrolls reports.
The primary focus of market participants at the moment is the future path for U.S. Interest Rates. Asset prices are supported by the idea that there will be a reduction in interest rates and it could be relatively deep.
A U.S. shutdown without a deal would start on Wednesday, the day that new U.S. Tariffs were supposed to take effect for heavy trucks, patented medicines and other items. White House announced new tariffs for furniture and cabinets on Monday night. They are set to take effect on October 14.
China's purchasing manager's index (PMI), a measure of economic growth in Asia, rose to 49.8 from 49.4 in august, just below the 50-mark that separates growth and contraction. This suggests that producers are waiting on further stimulus measures to boost domestic demand as well as clarity regarding a U.S. Trade Deal.
Gold reached a record high of $3,843.49.
The oil price remained lower due to the anticipated increase in production by OPEC+, and the resumption from Iraq's Kurdistan Region of oil exports. U.S. crude oil fell 0.6%, to $63.07 per barrel. Brent crude dropped 0.6%, to $67.51 a barrel.
Early European trading saw the Euro Stoxx futures down 0.11% to 5,524, German DAX Futures down 0.07% to 23,890 and FTSE Futures down 0.06% to 9,355.
(source: Reuters)