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Constellation signs agreement with US Department of Justice to acquire Calpine
Constellation Energy, a U.S.-based power company, announced on Friday that it had reached an agreement with the U.S. Department of Justice regarding the conditions necessary to complete the previously disclosed $16.4 billion purchase of Calpine Corporation. Calpine must also divest four of its generating assets located in the Mid-Atlantic Region. The Federal Energy Regulatory Commission has approved the deal. The deal announced in January is one of the largest acquisitions in the U.S. Power Industry. It comes at a period of increasing electricity demand driven by the proliferation and energy-hungry AI Data Centers and the electrification and transportation of buildings and vehicles. Constellation received regulatory approval in July from FERC, following approvals earlier by the Public Utility Commission of Texas and the New York Public Service Commission for the acquisition. Constellation has agreed to divest its three natural gas-fired plants, including the York 2 plant near Philadelphia, the Jack Fusco Energy Center in Houston, Texas and a minority interest in the Gregory Power Plant in Corpus Christi. In a statement, the DOJ stated that the divestitures were made to address concerns about the acquisition harming competition and increasing prices for consumers on the Electric Reliability of Texas grid and PJM interconnection grid. (Reporting and editing by Krishna Chandra Eluri in Bengaluru. Pranav Mathur is based in Bengaluru.
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Silver reaches record highs on Fed rate cuts optimism
The gold price rose on Friday, as expectations of a rate cut by the U.S. Federal Reserve next week boosted sentiment. Silver also reached a new record high. At 1:36 pm, spot gold was up by 1% at $4,212.16 an ounce. ET (1836 GMT), however, was on course for a weekly loss of 0.4%. U.S. Gold Futures for February Delivery settled unchanged at $4.243 per ounce. Bart Melek is the global head of commodity strategies at TD Securities. He said that "the market is increasingly confident the central bank will cut (rates)." In response, the U.S. currency has weakened a bit, which is a positive for gold. The U.S. Economic data revealed that the Personal Consumption Expenditures Price Index (PCEPI) rose by 0.3% in September. This is a slowdown from the 2.9% annual increase in August. Last month, private payroll data revealed the largest decline in more than two and a half years. The Fed's dovish comments have further fuelled expectations of monetary ease. CME's FedWatch indicates that there is an 87.2% chance of a rate cut of 25 basis points at the Fed meeting on December 9-10. Alex Ebkarian said that gold is expected to trade between $4200 and $4500 this year and between $4500 and $5,000 in the future, depending on Fed decisions. In India and China, the physical gold demand has slowed this week while buyers await a correction of spot prices. Silver increased 2.6%, to $58.59 per ounce. This is up 4% on the week after reaching a record high of $59.32. Melek stated that "silver is following the path of gold, and many investors believe that silver is still quite cheap relative to gold," citing structural deficits as well as a rising demand for electricty. The white metal is up 98% this year due to supply shortages and its inclusion on the U.S. Critical Minerals List. Palladium rose 0.3%, to $1,453.39. Platinum remained at $1,646.10. Anmol Choubey in Bengaluru and Anushree Mukerjee reporting. Leroy Leo and Mark Potter edited by Vijay Kishore.
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Six EU member states press EU to relax 2035 ban on cars with internal combustion engines
Six European Union nations have asked the European Commission on Friday to soften an effective ban on sales of internal combustion engines cars scheduled for 2035, ahead of the release next week of a new package of auto legislation. A joint letter, seen by on Friday, showed that the countries had asked the EU Commission for permission to sell hybrid cars and vehicles powered by existing or future technologies, "that could help to reduce emissions" after 2035. The letter was signed the Prime Ministers of Bulgaria (the Czech Republic), Hungary, Italy, Poland, and Slovakia. The plan should also include low-carbon and sustainable fuels in order to reduce carbon emissions from transport. The European Commission will present a package to support European automakers. This includes a relaxation of the ban on internal combustion engine use from 2035. The package was due to be released on December 10, but it could be postponed. EU countries have been working to adopt a rule that will require all new cars manufactured after 2035 to emit zero emissions by March 2023. Now having Second Thoughts . The outlook for battery-electric vehicles was initially positive. However, carmakers have since been confronted by a reality of lower than expected demand and fierce competition coming from China. In their letter, the Prime Ministers stated that "We must and can pursue our climate goals in a way that is effective while not destroying our competitiveness. There is nothing green about an industrial desert." (Reporting and writing by Inti Lauro; editing by Philip Blenkinsop, Louise Rasmussen)
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Constellium CEO: EU faces slow demise of aluminum industry if carbon taxes are not abolished
Constellium's CEO said that the European Union should abandon a carbon border tax, which could push its aluminium industry into a long-term decline. The tax would increase costs and favor more polluting foreign suppliers. Carbon Border Adjustment, a mechanism that will begin imposing a tax on imports for a few commodities in January, was designed to protect European producers from cheaper competitors in countries with laxer climate laws. Industry representatives, however, see the system as flawed and are hopeful that the final EU adjustments to the Mechanism, which will be announced this month, address their concerns. Jean-Marc Germain is the CEO of Constellium in Paris, one of the largest suppliers of aluminum products to the aviation, automotive and packaging industries. The competitiveness of Europe is at the core of this issue. "We are shooting ourselves in our own foot," he said. In November, the manufacturing sector in the Eurozone slipped into contraction. Constellium mainly buys European Aluminium, which is exempt from the CBAM tax, to process in its factories. The upcoming tax, coupled with worries about supply from Iceland and Mozambique, has nevertheless pushed European premiums on physical metals to a 10-month-high. Germain warned that cost inflation will be "death in a thousand cuts" to Constellium industrial customers across Europe. The scheme has loopholes that allow overseas suppliers to avoid CBAM through the shipment of scrap or by sending low-carbon aluminum to Europe while continuing production of high-carbon metal in other regions. "It does nothing for the environment," Germain said. He said that the impact of CBAM will not be immediately felt, but it could lead to companies investing elsewhere and closing European capacity. It's not something that you can turn off the lights all at once. It will be a slow decline.
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US plans to secure minerals in response to the peace agreement between Congo-Rwanda and the US
The United States Development lender announced on Friday plans to take a stake to market Congo minerals, which could give U.S. users of copper and cobalt the right to first refusal. The U.S. and China are in a heated competition to gain access to minerals that are crucial to the manufacture of everything from cars to iPhones. Congo has 72% of the world's cobalt reserves, and supplies 74% of that amount. Many of these mines are artisanal. The plans for investment were revealed a day after U.S. president Donald Trump hosted leaders of Rwanda and the Democratic Republic of Congo to sign an agreement to end the long-running conflict in Congo's mineral rich east and stabilize supply chains. Trump said it was a new era in harmony and cooperation, which would bring peace and prosper across the region. However, neither country had implemented the pledges that were at the heart of the agreement and fighting broke out again on Friday. The peace agreement ties security commitments with an economic framework that opens up Congo's reserves of copper, cobalt and lithium to Western investors looking for minerals critical to EVs and renewable energy. CONGO AND METALS: A REDEFINED LINK The U.S. International Development Finance Corporation has expressed an interest in acquiring equity in a joint venture between Congo’s state miner Gecamines, and Swiss commodities group Mercuria for the marketing of copper and cobalt. In a joint press release, Gecamines said that the partnership could include minerals such as germanium and gallium. These are vital to semiconductors and solar panel technology. Guy Robert Lukama said that this collaboration is a crucial step for Gecamines to enhance its position in the global market. The two companies have said that under a possible deal with the International Development Finance Corporation U.S. consumers would get a first right of refusal on supplies of copper and cobalt. The lender stated in a separate press release that the planned U.S. investments in the partnership will support the commercialization of cobalt, copper and other essential minerals. This will give U.S. buyers and their allies access to supplies vital for electric vehicles and renewable energy. The partnership announced that it is aiming to improve transparency and competition in the world’s largest cobalt producer. This country recently introduced export quotas and launched traceable artisanal artisanal cobalt. Mercuria, as part of the agreement, will offer expertise in logistics and finance and provide training on risk management and operations. The statement also said that the venture plans to invest in export infrastructure, which will help ease mineral bottlenecks. Kostas Bintas is the global head of Mercuria for metals and minerals. He called this partnership "a redefined way of how Congo interacts globally with metals markets". DFC has also indicated support for another project in Congo to renovate the Dilolo - Sakania railway line. This project could be funded up to $1 billion. The line would be connected to Angola’s Lobito Atlantic Railway creating a strategic route to move goods and minerals across Central and Southern Africa.
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Silver hits record high as dollar falls on expectations of rate cuts; gold gains 1%
The dollar was under pressure as the expectation of a rate cut by the U.S. Federal Reserve next week grew. Silver prices also reached a new record high. At 10:44 am, spot gold was up by 1.1% at $4,255.59 an ounce. ET (1544 GMT) and was on course for a weekly gain of 0.5%. U.S. Gold Futures for February Delivery were up 1% at $4,286.90 an ounce. Bart Melek is the global head of commodity strategies at TD Securities. He said that "the market is increasingly confident the central bank will cut (rates)." In response, the U.S. currency has weakened a bit, which is a positive for gold. Gold became more appealing to buyers who use other currencies after the U.S. Dollar Index fell by 0.1%. Gold tends to be more attractive when interest rates are lower, as it does not provide a yield. The U.S. Economic data revealed that the Personal Consumption Expenditures Price Index (PCEPI) rose by 0.3% in September. This is a slowdown from the 2.9% annual increase in August. Last month, private payroll data revealed the largest decline in more than two and a half years. The Fed's dovish comments have further fuelled expectations of monetary ease. CME's FedWatch indicates that there is an 87.2% chance of a rate cut of 25 basis points at the Fed meeting on December 9-10. Alex Ebkarian said that gold is expected to trade between $4200 and $4500 this year and between $4500 and $5,000 in the future, depending on Fed decisions. In India and China, the physical gold demand has slowed this week while buyers await a correction of spot prices. Silver increased 3.6%, to $59.19 per ounce. This is up 4.7% on the week after reaching a record high of $59.32 an ounce earlier. Melek stated that "silver is following the path of gold, and many investors believe that silver is still quite cheap relative to gold," citing structural deficits as well as a rising demand for electricty. The white metal is up 104% in this year due to supply shortages and its inclusion on the U.S. Critical Minerals List. Palladium rose by 0.8%, to $1460, and platinum was up 0.2%, to $1648.85. Anmol Choubey reports from Bengaluru. (Editing by Leroy Leo, Mark Potter and Mark Potter.)
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TSX reaches new record high after positive jobs data
Toronto's main stock index rose to a fresh peak on Friday, and was on track for weekly gains, after stronger-than-expected domestic jobs data fueled optimism about the economy. The S&P/TSX composite index increased by 0.2%, reaching a new high of 31533.40 points. The index was last seen at 31,531.84 point. Data showed that Canada's unemployment rate defied expectations in November and dropped to a 16 month low as part-time employment grew for the third consecutive time. Analysts polled predicted a loss of 5,000 positions. Angelo Kourkafas is an investment strategist with Edward Jones Investments. He said, "The jobs data confirms expectations that the Bank of Canada remains on hold next Monday and will likely be done with its easing cycles." Bank of Canada interest rates are widely expected to remain at 2.25% the following week. The swap market now prices in a 15 basis point rate increase next year, up from 5 basis points before the data. The main index is set to post its second consecutive week of gains, as strong results from major Canadian Banks and higher oil prices have helped offset some of the losses suffered in early weeks due to a decline in technology and mining stocks. The U.S. Personal Consumption Expenditures (PCE) Price Index - the Federal Reserve preferred measure of inflation – came in line with expectations as the U.S. Central Bank prepares to announce its policy next week. Laurentian Bank, a lender, reported a fourth-quarter loss that was below analysts' expectations; shares were almost flat. Orla Mining shares fell 6.8% after Fairfax Financial Holdings bought 25 million shares. (Reporting by Avinash P in Bengaluru; Editing by Sahal Muhammed)
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Congo fighting flares up within hours of Trump’s peace deal ceremony
Fighting broke out in the eastern Democratic Republic of Congo Friday, just a day after U.S. president Donald Trump met with Congolese leaders and Rwandans in Washington for the signing of new agreements aimed at ending decades of conflict in this mineral-rich region. On Thursday, Congo's Felix Tshisekedi reaffirmed his commitment to the U.S.-brokered agreement reached in June. The deal aims to stabilize the vast country by allowing more Western mining investments. "We are settling a long-running war," said Trump. His administration intervened in many conflicts around the globe to burnish Trump's credentials as a world peacemaker, and advance U.S. corporate interests. The warring parties blamed each other for the fierce fighting that continued on the ground. AFC/M23, a rebel group backed by Rwanda, which has seized two of the largest cities in eastern Congo this year, and is not bound to the Washington agreement, claimed that forces loyal to government are launching widespread attacks. In a press release, the group stated that 23 people had been killed and others injured in bombings that targeted towns located in South Kivu Province in eastern Democratic Republic of Congo. A Congolese Army spokesman stated that clashes are ongoing and Rwandan troops are bombing. FAMILY FLEE CLASHES Analysts claim that U.S. diplomatic efforts halted the escalation in fighting in eastern Congo, but did not resolve key issues. Neither Rwanda nor Congo fulfilled their commitments in the June agreement. Online videos showed dozens displaced families fleeing with their possessions and livestock in the direction of Luvungi, in South Kivu Province in eastern Congo. It was not possible to verify them immediately. Lawrence Kanyuka wrote, "Women and children alike have tragically died in this tragedy." He wrote that the Congolese forces "continued to attack densely populated North Kivu areas and South Kivu using heavy artillery, drones, and fighter jets." Un spokesperson for the Congo army confirmed that there were clashes along the Kaziba-Katogota-Rurambo axis of South Kivu Province. The bombardment by the Rwandan Defence Force has caused a population displacement in Luvungi. He said that they were bombing blindly. The Rwandan army and government spokespersons were not available to comment immediately. A senior AFC/M23 representative said that rebel forces had recaptured the town of Luberika, and destroyed a drone used by the Congolese Army. He asked to remain anonymous as he wasn't authorized to speak with media. He said: "The war is still going on and it has nothing to do with the signing agreement yesterday in Washington." Reporting by Congo Newsroom, Writing by Bate Felis; Editing and proofreading by Philippa Fletcher & Alex Richardson
Investors look to end US shutdown as they increase their investments in world stocks
The dollar was stable and government bond yields were rising. Global shares rose Monday on the back of optimism that a resolution to a historic U.S. shutdown is in sight.
On Sunday, the U.S. Senate advanced a measure that would reopen federal government offices and end a shutdown of 40 days. The shutdown has caused federal workers to be unable to work and food aid delays and snarled travel.
In a procedural motion, the Senate advanced a bill passed by the House. The amended version will fund government operations until January 30, and includes a package of 3 full-year appropriations.
The Nasdaq futures gained 1.5%, while S&P futures rose by 0.95%.
The STOXX pan-European 600 index rose by about 1.4%. Diageo's shares also soared following the appointment of a new CEO.
The Nikkei, Japan's benchmark index, rose 1.26% and MSCI's broadest Asia-Pacific share index outside Japan gained 1.3%.
Prashant Nnewnaha, senior Asia-Pacific rate strategist at TD Securities said: "A possible ending to the longest-running U.S. shut down is a positive development for the markets."
We expect that a vote in the House will take place on Wednesday and the government will reopen next Friday.
The Senate may pass the bill but it must be approved by both the House of Representatives, and then sent to the President Donald Trump, who will sign the package. This process could take a few days.
The shutdown has had a negative impact on the U.S. economic system. Federal workers, from airports to the military and law enforcement are not paid. Meanwhile, the central bank is blinded by the limited reporting of government data.
Kevin Hassett, White House economist, said in an article that the fourth quarter GDP could be negatively affected if shutdown continues.
The data released on Friday revealed that the U.S. consumer's sentiment fell to a near 3-1/2 year low in early Novembre as consumers worried about economic consequences.
Mark Haefele is the chief investment officer of UBS Global Wealth Management. He said that allocations in quality fixed income and gold as part of a well-diversified, risk-managing portfolio can help to manage risks.
Haefele wrote in a report that "overall, the combination between Fed easing, robust corporate earnings, and quality bonds offers an attractive risk-reward ratio."
Under-allocated Investors should increase exposure to transformational growth, including AI.
On Monday, gold rose by more than 2% to reach its highest level in the past two weeks, at $4,079 per ounce. This was due to a combination of weak U.S. data, Federal Reserve expectations for rate cuts, and a softer currency.
On Monday, the overall risk sentiment was still positive.
The CSI300 blue chip index in China closed with a gain of almost 0.4%. This reversed early losses. Hong Kong's Hang Seng Index also rose by 1.6%.
The data released on Sunday shows that China's producer prices deflation has eased and consumer prices have returned to a positive level. This is as the government intensifies its efforts to reduce overcapacity and fierce competition between firms.
The benchmark 10-year Treasury yield increased by about 4 basis points, to 4.13%. This was due to the risk-on sentiment that has taken hold on global markets.
The dollar has recovered some of the losses it suffered last week as investors weighed the prospects for the U.S. economic outlook against a Fed that is more hawkish.
The Fed's officials reiterated last week that they prefer to be cautious about further rate reductions, even though recent data has sparked concerns over a weakening U.S. labor market.
The markets are pricing in 63% of a rate cut by the Fed for December.
Dollar rose by 0.42% against the yen to 154.09. However, the dollar was not much different against the Euro and Sterling.
A summary of the opinions expressed at the Bank of Japan's October meeting revealed that policymakers were increasingly convinced of the need to increase interest rates soon. Some even argued for the necessity of ensuring wage increases will continue, according to the report.
Brent crude futures rose 53 cents per barrel to $64,16, while U.S. oil gained 53 cents, to $60.28. Reporting by Nell Mackenzie, Rae Wee and Kim Coghill; editing by Dhara Ranasinghe, Clarence Fernandez and Kim Coghill
(source: Reuters)