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Prices of oil drop as a result of the ceasefire in Ukraine, which will allow Russian supplies to be released
Oil prices dropped on Thursday, as traders remained thin because of the U.S. holiday Thanksgiving. Brent crude futures fell 21 cents or 0.3% to $62.92 a barrel as of 0108 GMT. U.S. West Texas Intermediate Crude futures also dropped 21 cents or 0.4% to $58.44 a barrel. Investors weighed the oversupply risks and the prospects of a Russia/Ukraine peace agreement as they assessed Wednesday's settlement prices. Steve Witkoff, U.S. ambassador to Russia and other senior U.S. officials will travel to Moscow with Russian leaders next week for discussions on a potential plan to end the nearly 4-year-old conflict in Ukraine. This war is the deadliest to have occurred in Europe since World War Two. A senior Russian diplomat stated on Wednesday that Russia would not make any big concessions in regards to a peace plan. This was after a recording of Witkoff's call with Moscow revealed that he advised Moscow how to approach U.S. president Donald Trump. In a client letter, Commonwealth Bank of Australia analyst Vivek dhar stated that a ceasefire would reduce the perceived supply risk associated with U.S. sanction on Russian oil producers Rosneft, and Lukoil. He added that sanctions which went into effect on November 21 had already affected Russia's oil, and refined products exports. Dhar noted that "a Ukraine-Russia agreement should see Brent drop to $60 per barrel relatively quickly", noting also that a ceasefire will allow Russian refinery activities to return to normal as Ukraine's drone strikes would stop. The market was also affected by a larger-than expected increase in U.S. crude oil inventories. The Energy Information Administration reported on Wednesday that U.S. crude oil inventories rose 2.8 million barrels, to 426.9 millions barrels. Imports also reached a record high of 11 weeks. Analysts expected a rise of 55,000 barrels. Baker Hughes, an energy services company, said that U.S. firms have reduced the number of oil drilling rigs to 407, the lowest level since September 2021. This is a sign the market has plenty of supply. Three OPEC+ source told Reuters on Tuesday that the Organization of the Petroleum Exporting Countries (OPEC) and its allies will likely leave the output levels unchanged during a Sunday meeting. Several members of the group that pumps half the oil in the world have increased production since April, to gain market shares. The rising expectation of a rate cut by the U.S. Federal Reserve in December helped to support crude oil prices. Lower rates are known to stimulate economic growth, which in turn boosts oil demand. (Reporting and editing by Christopher Cushing; Yuka Obayashi)
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Australia to revamp environment laws following Greens' support
The Australian government is set to reform its environmental laws, a long-awaited change. Prime Minister Anthony Albanese announced that the Greens Party had agreed to support the legislation of the Labor centre-left government on the final day of the parliament. In a press release, the Greens stated that this deal eliminates Labor's plan for coal and gas projects to be approved faster based on their "national interest". According to a government statement, the agreement also calls for "high-risk clearing of land and regional forest agreements", in order to comply with environmental regulations. In July of next year, the reforms will create an independent national Environment Protection Agency for a stronger oversight and enforcement. The government will increase penalties for serious breaches and set up a forestry growth fund of A$300million ($195.5million). This is a historic day for the environment of this country. Albanese, who spoke to reporters, said that it was also a great day for the business community in this country because of increased certainty and reduced delays. Sussan Lees, the leader of the conservative Liberal Party, criticised the Greens' reforms. She said they were at "war with gas". Labor, without a majority in the Senate, has been separately negotiating with the conservative Liberal/National coalition and Greens for support of the legislation. The Greens claimed that the bill falls "woefully" short of what's needed to combat climate change, but they argued that their negotiations had improved the legislation. Greens Senator Larissa Wassers stated that "Greens' pressure made this bill much better than our weak laws, and far better than if government had struck a deal with climate deniers within the Coalition." She claimed that the party had strengthened protections for native forest, closed loopholes in land clearing, and prevented Labor to fast-track coal and gas projects. The Minerals Council of Australia (which represents mining companies) expressed disappointment that the bill would result in increased red tape. This is despite the fact that the council had won some improvements, including a simplified testing procedure for projects which will be rejected or undergo further scrutiny and a limit of 28 days for environment protection orders. The National Farmer's Federation has criticised reforms that it says will make it more difficult for farmers to clear their land, even for cattle ranching.
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Australia to revamp environment laws following Greens' support
The Greens have agreed to support the legislation of the Labor centre-left government, which will allow the bill to be passed by the Senate on Friday, according to Prime Minister Anthony Albanese. Albanese said that the changes will help accelerate decision-making in critical mineral, renewable energy, and housing projects while strengthening environmental protection. This is a historic day for the environment of this country. Albanese, who spoke to reporters, said that it was also a great day for the business community in this country because of increased certainty and reduced delays. Reforms will create an independent national Environment Protection Agency, which will strengthen enforcement and oversight. The government will increase penalties for serious violations and set up a forestry growth fund of A$300million ($195.5million). Labor, which does not have a majority in the Senate, has been separately negotiating with the conservative Liberal National coalition and the Greens for support of the legislation. Albanese praised Greens' "very constructive" approach during talks with government, and for compromising some of their demands. The Greens claimed that the bill falls "woefully" short of what's needed to combat the climate crisis, but they argued that their negotiations improved legislation. Greens Senator Larissa Wassers stated that "Greens' pressure made this bill much better than our weak laws, and far better than if government had struck a deal with climate deniers within the Coalition." She claimed that the party had strengthened protections for native forest, closed loopholes in land clearing, and prevented Labor to fast-track coal and gas projects.
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Apple sued by US group over Congo conflict minerals
Apple has denied the allegations, but a U.S. advocacy group filed a suit in Washington claiming that the iPhone maker uses minerals from the Democratic Republic of Congo or Rwanda. International Rights Advocates, a group based in the United States, filed a lawsuit last year against Apple, Tesla and other tech companies for cobalt sourcing. However, U.S. court dismissed it. In December, French prosecutors dropped Congo's conflict mineral case against Apple subsidiaries citing a lack of evidence. An investigation is ongoing in Belgium into a criminal complaint related to this issue. Apple has denied any wrongdoing as a response to Congo's suits, stating that it had ordered its suppliers to stop sourcing material from Congo and Rwanda. Apple said that it "strongly disagrees" with the latest allegations about the company's benefiting from the forced labor and unsafe mine practices in Africa. The claims were "baseless," Apple stated. Apple's spokesman stated that 99 percent of cobalt used in Apple batteries is recycled, highlighting the company’s efforts to reduce its reliance on mining material. He said that, as the conflict in eastern Congo escalates in 2024 and the company instructs suppliers to stop sourcing materials from Congo and Rwanda. Apple's Supplier Code of Conduct enforces the "industry's strongest sourcing standard" and promises continued transparency in public reporting. In a complaint filed Tuesday at the Superior Court of the District of Columbia, IRAdvocates - a Washington nonprofit that uses litigation to curb rights abuses - said that Apple's supplier chain still contains cobalt and tantalum, which are linked to forced and child labour, as well as to armed groups from Congo and Rwanda. CONGO IS a major source of COBALT and TIN The lawsuit does not ask for monetary damages, nor class certification. It only wants a court to determine that Apple's conduct is in violation of consumer protection laws, as well as an injunction stopping alleged deceptive advertising, and reimbursement of legal expenses. The lawsuit claims that three Chinese smelters – Ningxia Orient JiuJiang JiXin, Jiujiang Tanbre – processed columbite tantalite metallic ore (coltan), which investigators from the U.N., Global Witness, and U.S. Department of Justice allege had been smuggled via Rwanda after armed group seized mines east Congo. The lawsuit ties the material back to Apple's supply chains. The lawsuit alleged that a University of Nottingham report published in this year revealed forced and child labor at Congolese sites connected to Apple suppliers. Requests for comment from Ningxia Orient JiuJiang JinXin, and Jiujiang Tanbre were not immediately responded to. The Congo, which provides about 70% of world cobalt, as well as significant quantities of tin tantalum, and tungsten, used in computers, phones, and batteries, did not respond immediately to a comment request. Rwanda did not respond immediately to a comment request. 'NO REASONABLE BASE FOR LINKS WITH ARMED GROUPS.' Apple has denied using minerals from conflict zones and forced labour repeatedly, citing audits as well as its code of conduct for suppliers. In December, Apple said that "no reasonable base" could be found to conclude that any refiners or smelters in its supply chain funded armed groups in Congo and neighbouring countries. Congolese authorities claim that armed groups operating in the eastern Congo are using mineral profits to finance the conflict, which has resulted in thousands of deaths and hundreds of thousands being displaced. They tightened controls over minerals to choke funding and squeeze global supplies. Apple claims that 76% of the cobalt used in its devices will be recycled by 2024. However, the IRAdvocates suit alleges that its accounting method includes ore from conflict areas.
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Sterling choppy after UK budget shock, but stocks buoyed by expectations of rate cuts
The global stock market rallied on Wednesday for the fourth consecutive day as expectations of a U.S. Federal Reserve interest rate cut were high. Sterling was also whipped around by Britain's Fiscal Watchdog accidentally publishing new forecasts prior to a UK Budget release. U.S. stock prices closed higher on Wall Street. The tech sector led the way, with a gain of about 1.5%. This was partly due to Dell Technologies' nearly 7% jump after its quarterly results. Since Friday, expectations of a Federal Reserve rate cut in December have risen. This was after New York Fed president John Williams stated that interest rates could fall in the short term while other policymakers said borrowing costs should stay the same for the time being. These expectations were reinforced by comments made this week by San Francisco Federal Reserve Bank president Mary Daly and Fed governor Christopher Waller, who both supported a December rate cut. Matthew Keator, a managing partner at the Keator Group in Lenox Massachusetts, said: "We've heard some dovish remarks from the Fed. I believe they are signaling that there could be a cut in interest rates next month." The economic data released on Wednesday revealed that weekly initial claims for unemployment fell by 6,000, to 216,000 seasonally adjusted claims in the week ending November 22. This is the lowest level of jobless claims since April. It also falls below the 225,000 estimates made by economists. The Dow Jones Industrial Average gained 314.67 points or 0.67% to 47,427.12, while the S&P 500 rose 46.73 points or 0.69% to 6,812.61, and the Nasdaq Composite increased 189.10 or 0.82% to 23,214.69. CME's FedWatch Tool shows that expectations for a Fed cut of 25 basis points are at more than 80 percent, which is higher than the 30.1% seen a week earlier. The U.S. market will be closed Thursday, November 22, for Thanksgiving. On Friday there will be a reduced session. MSCI's global stock index jumped 9.31 or 0.94% to 1,000.37 and was on track for its fourth consecutive session of gains. This is its longest streak of gains in a month. The MSCI index gained 3.3% in the last four days, which is its largest four-day percentage increase since mid-May. The pan-European STOXX 600 closed up 1.09%, its largest daily percentage gain since two weeks. The dollar index (which measures the greenback in relation to a basket currency) fell 0.26%, while the euro rose 0.22%, reaching $1.1594. The pound strengthened by 0.52%, reaching $1.3234. Currency fluctuated between a gain and a loss of 0.34% in response to the UK budget confusion, as the Office for Budget Responsibility released its Economic and Fiscal Outlook early. The British Finance Minister Rachel Reeves announced that she would be raising taxes on workers, pensioners and investors in order to achieve her deficit reduction targets. The yields on ten-year gilts fell 7 basis points to 4.426%. The Japanese yen fell 0.25% to 156.45 dollars per dollar, even though sources said the Bank of Japan was preparing the markets for an interest rate hike that could happen as early as next month. It may be necessary to take a more gradual rate hike path in order to change the trajectory of this currency. The yield on benchmark U.S. 10-year notes shed 1 basis point to 3.992% as the rally in UK government bonds helped limit the downside for longer-dated U.S. debt after stronger-than-expected economic data fueled selling. The yield on the 2-year note rose by 2 basis points, to 3.479%.
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Peru sentences former President Vizcarra for corruption to 14 years imprisonment
A Peruvian Court sentenced the former president Martin Vizcarra on Wednesday to 14 years of prison for taking bribes before he was elected. This is another former leader to be jailed because of corruption. Vizcarra, who served as the governor of southern Moquegua region from 2011 to 2014, accepted bribes worth $676,000 in exchange for contracts to build public works. Vizcarra has denied all charges since the trial began in October last year. He claims he is a victim political persecution. He was elected in 2018, after his predecessor resigned, and was removed by Congress two years later amid corruption investigations. Vizcarra wrote in a blog post after his sentencing: "This isn't justice, this is revenge." "But they won't break me." His legal team confirmed it had appealed Vizcarra's verdict, which also prohibited him from holding public office in the state for nine years. Mario Vizcarra is his older brother and plans to run for the presidential elections in April 2026. The former president, who has been a key advisor, will be running on behalf of the "Peru First", party. The answer is in the ballot box. "My brother Mario Vizcarra will continue this battle," said the former leader. Vizcarra won the most votes in the 2021 elections, but Congress banned him from holding any public office for a period of 10 years because he disdissolved the legislature in 2019. This is another high profile victory for the prosecution investigating the "Lava-Jato" scandal. The scandal involves a massive kickback scam involving Brazilian construction company Odebrecht (now known as Novonor), which has implicated political leaders in Latin America. Erwin Siccha was Vizcarra’s lawyer. He claimed that the state’s witnesses were executives of companies that Vizcarra had himself previously accused of corruption. Since 2018, six presidents have been elected in Peru due to resignations and impeachments, often sparked by corruption scandals. Vizcarra will be sent to the same Lima jail where three former presidents also remain. Alejandro Toledo, Ollanta Humala and Pedro Castillo are all serving prison sentences for corruption convictions. Pedro Castillo faces charges of rebellion. (Reporting and writing by Marco Aquino, editing by Brendan O'Boyle & Alistair Bell).
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After the army takeover, stability promised by President Embalo is undermined.
Umaro Sissoco Embalo, the President of Guinea-Bissau, struck a confident tone when he launched his reelection campaign in early November. He claimed that "stability" had been achieved since he assumed office in 2020. Embalo told journalists that he was deposed ahead of the results to be announced Thursday. Army officers announced on Wednesday that they had been deposed on state television. seized power In the country prone to coups. The unrest is consistent with Embalo’s turbulent tenure, during which his government attempted three coups. Critics claim that, as long as the political instability continued, Embalo failed to control the notorious cocaine trade in the country or improve the health and education of the impoverished West African nation of around 2 million people. The largest investments during this period were concentrated in the security and defence sectors. Meanwhile, the social areas of health and education were abandoned," said political analyst Rui Jose Semedo. The rise of a turbulent political force Embalo is a former army general who was 53 years old. He served in the administrations of previous presidents as a presidential advisor and minister before being named prime minister by President Jose Mario Vaz in 2016. One of Vaz's seven appointed prime ministers, he lasted just a little over a year. Embalo has been declared the winner of the presidential elections in 2019 after facing former Prime Minister Domingos Simos Pereira. Opposition parties accused him of election fraud and questioned his legitimacy in office. Embalo denied these allegations. Embalo claimed that the clashes which took place in the capital in 2022 were another attempt by the government to remove him. In response, he dissolved the parliament and since then, the country has been without a lawmaking body. The army has announced another new initiative for October. Attempt to coup This led to the arrest of a number of senior officers of the army. Embalo, however, was considered to be in a good position to win a new term. This is because Pereira, his main rival in the race for the presidency was banned from running. Also, legislative candidates of Pereira's African Party for the Independence of Guinea & Cape Verde (PAIGC), the party that led the struggle for independence against Portugal during the 1960s and 70s. COCAINE TRADE BOOMS Embalo, which has struck a deal to explore two offshore blocks with U.S. oil giant Chevron, optimistically promised a real change for villagers who are largely dependent upon cashew production. He also praised the mineral wealth of the country, which includes bauxite. The cocaine trade thrived under Embalo, as the country consolidated its position as an important transit point for drug smugglers shipping from South America into Europe. In an operation supported by the U.S. Drug Enforcement Administration (DEA) and Portuguese Judicial Police, the police in the United States seized 2,63 metric tonnes of cocaine from South America last year at the main airport. In a report published in August, the Global Initiative Against Transnational Organized Crime stated that "Bissau’s cocaine market has boomed once again and is arguably more profitable than any other time in the history of the country." Fernando Dias (47), Embalo's main rival in the election this month, criticised Embalo for illicit trade. He said that the responsibility ultimately rested with the president. "He is the leader of government." Dias stated that "nothing is done without his approval". According to the electoral commission, more than 65% voters participated in Sunday's election. Analysts predicted that Embalo would win by a narrow margin. Embalo Dias Both claims An outright win earlier this week. They claimed to have received more than half of the votes and therefore would avoid a runoff. However, the army officers who claimed to have seized power announced that they suspended the electoral process and closed borders, as well as enforcing curfews, leaving Embalo’s vision of stabilization in tatters.
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Stocks rise on expectations of Fed cuts, but sterling falls after UK budget shock
The global stock market advanced for the fourth consecutive day on Wednesday, as expectations of a U.S. Federal Reserve interest rate cut were unchanged. Sterling was whipped around by Britain's Fiscal Watchdog accidentally publishing new forecasts prior to a UK Budget release. U.S. stock prices were up on Wall Street. The tech sector led the way, with gains of almost 1.5%, partly due to Dell Technologies' nearly 7% jump after its quarterly results. Since Friday, expectations of a Federal Reserve rate cut in December have risen. This was after New York Fed president John Williams stated that interest rates could fall in the short term while other policymakers said borrowing costs should stay the same for the time being. These expectations were bolstered this week by comments from San Francisco Federal Reserve Bank president Mary Daly and Fed governor Christopher Waller who supported a December rate cut. The economic data released on Wednesday revealed that weekly initial claims for unemployment fell by 6,000, to 216,000 seasonally adjusted claims in the week ending November 22. This is the lowest level of jobless claims since April. It also falls below the 225,000 estimates made by economists. The economy isn't in recession but it is weak enough for the Fed to make another cut. The Fed has the headroom to make more cuts because there are still many people on unemployment. The Dow Jones Industrial Average rose by 423.32 points or 0.90% to 47,535.77. The S&P 500 gained 62.31 or 0.92% to 6,828.06. And the Nasdaq Composite gained 237.69 or 1.03% to 23,262.34. According to CME's FedWatch Tool the expectation of a 25 basis-point cut by the Fed is at 84.9%. This is down from 85.2% the previous session, but still above the 30.1% in a week. The U.S. market will be closed for Thanksgiving on Thursday and have a reduced session on Friday. MSCI's global stock index jumped 10.93, or 1.10, points to 1,001.99. This was the fourth consecutive session that MSCI had gained, which is its longest streak since a month. The MSCI index gained 3.4% in the last four days, which is its largest four-day percentage increase since mid-May. The pan-European STOXX 600 closed up 1.09%, its largest daily percentage gain since two weeks. The dollar index (which measures the greenback in relation to a basket currency) fell by 0.26%, reaching 99.60. Meanwhile, the euro rose 0.21%, at $1.1593. The pound strengthened by 0.51%, reaching $1.3232. Currency fluctuated between a gain and a loss of 0.34% in response to the UK budget confusion, as the Office for Budget Responsibility released its Economic and Fiscal Outlook early. The British Finance Minister Rachel Reeves announced that she would be raising taxes on workers, pensioners and investors in order to achieve her deficit reduction targets. The yield on ten-year gilts was last down by 7 basis points, at 4.426%. The Japanese yen fell 0.25% to 156.47 dollars per dollar, even though sources said the Bank of Japan was preparing the markets for an interest rate hike that could happen as early as next month. The yield on the benchmark U.S. 10 year notes fell 0.4 basis points to 3.998%.
Stocks surge on hopes of US rate cuts, but yen remains in the intervention zone
The dollar fell on Thursday as traders began to expect a Federal Reserve rate cut next month. Meanwhile, the yen was in the spotlight with traders considering the possibility of a rate increase before the end the year. The holiday-shortened week has resulted in limited movements across the markets, with stocks maintaining a generally positive tone and currencies more sedate. The U.S. market is closed on Thanksgiving Day and will resume trading on Friday.
MSCI's broadest Asia-Pacific share index outside Japan rose 0.27%, following Wall Street gains and on track to end a three-week loss streak. Japan's Nikkei, and South Korea's Kospi both surged by over 1%.
Investors will also focus on the Chinese real estate sector, as China Vanke is seeking bondholder approval for a delay in the repayment of an onshore bond worth 2 billion yuan (282.6 million dollars).
The first public bond extension for the state-backed developer would be a first. This property developer is a household name in China with numerous projects. It could cause a new wave in the financial and real estate markets.
WAGE WAGERS FOR SURGING RATE CUTTING
The U.S. government shutdown, which lasted 43 days and ended in mid-November was a record. However, the majority of economic reports released so far are dated. They offer little insight on the state of the economy.
Investors are now focusing on the comments of Fed officials in order to determine U.S. monetary policies. Comments this week by San Francisco Federal Reserve Bank president Mary Daly, and Fed Governor Christopher Waller have boosted expectations for a rate reduction.
CME FedWatch shows that traders now price in an 85% probability of a rate reduction next month, compared to just 30% one week ago.
George Boubouras of K2 Asset Management said that the weakening labour market is sufficient to offset inflation. A rate cut in December looks reasonable.
While core inflation is higher than target, the U.S. breakeven inflation rate of around 2.25 percent over a 10-year period suggests that inflation expectations are still reasonable. The short-term USD strength will continue, but it is expected to reverse in the March quarter of 2026.
In early trading, the euro reached its highest level in over a week. It was 1.16045. The dollar index (which measures the U.S. currencies against six rivals) was unchanged at 99.523, after falling 0.28% the previous day.
According to data released on Wednesday, the number of Americans who applied for unemployment benefits last week fell to its lowest level in seven months. This suggests that layoffs are still low.
The sterling rose to $1.3247 in a month's time, after the UK Finance Minister Rachel Reeves budget eased some concerns about Britain's finances on a long-term basis.
Watches YEN
The Japanese yen gained a little to 156.16 dollars as investors waited for Tokyo to intervene after weeks of verbal scolding by authorities to stop the currency's steady decline.
Sanae Takaichi, Prime Minister of Japan, ruled out Wednesday that Japan might face a "Truss Moment" or a loss of confidence in the market due to her fiscal expansion.
Since the beginning of October, the Japanese yen has fallen by almost 10 yen. This is because Takaichi assumed the presidency amid concerns that the government's spending plan will require heavy borrowing and doubts about the timing of next rate hikes from the Bank of Japan.
Sources have told us that the BOJ has been preparing the markets for an upcoming rate hike. It may even be as early as next month. The BOJ could also adopt a more consistent path of rate hikes to change the currency's trajectory.
Bitcoin was above $90,000. It is on course to end a four-week loss streak, with a gain of nearly 3%. Gold remained flat at $4164.81 an ounce after rising by 0.8% the previous session. (Reporting and editing by Shri Navaratnam in Singapore)
(source: Reuters)