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Construction sector in Germany expects Infrastructure Fund to drive turnaround
The construction industry in Germany, which has been mired in crisis for many years, is about to 'a'revive, according to the main trade association of the sector. This comes as the German government pours hundreds of billions into a massive plan of infrastructure renewal. The Central Association of the German Construction Industry ZDB forecasts that the sector will see a real increase of 0.6% in turnover this year. This would reverse three years of decline and be followed by an explosive 2.5% growth in 2026. The forecast is for revenues to reach 168 billion euros ($196.61billion) in 2025. This represents a nominal increase of 3% from the year before, and 178?euros by 2026. The INFRASTRUCTURE FUNDS will boost the construction sector ZDB President Wolfgang Schubert Raab stated that "the construction industry has reached its lowest point," pointing out special funds from the 500 billion-euro package for modernising infrastructure as the main driver. After years of falling?figures the confidence in the construction industry is finally returning. The association stated that state investment would primarily drive growth in civil engineering. However, conditions are improving in residential construction. A ZDB survey of 1 500 construction companies found that 56% rated their current business as satisfactory or good. Nearly 70% of respondents expect the situation to be stable or improve in the next few months, compared to just over a half-year earlier. RESIDENTIAL SECTOR TO EXPECT GROWTH FROM 2026 ZDB projects a turnover in'residential construction' of just over 54 billion euros by 2025. This represents a real decline of 4%, after inflation, from the previous year. In 2026 however, revenue is expected to increase to?56.3bn euros, which represents a 1.6% real growth. The association anticipates that between 225,000 and 235,000 housing units will be completed by 2025. This is down from 252,000 units in 2024. Next year, the number of units should drop to between 215,000 and 222,000. The number of new building permits fell by 27% in the year 2023, and another 17% in the following year. ZDB stated that "due to long lead times we don't expect positive numbers until 2027."
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After a report on major U.S. plans, the Kremlin said that Russia was interested in foreign investments
The Kremlin announced on Thursday that Russia is interested in attracting more foreign investment. This comes after the Wall Street Journal reported that the U.S. peace plan in Ukraine included proposals to invest in Russian rare Earths and energy. The Journal reported that the plans, which were detailed in the appendices of peace proposals drafted by U.S. president Donald Trump's administration and given to European counterparts during recent weeks, included proposals to restore Russian supplies to Europe. The Journal reported that U.S. firms would also invest in Russian strategic areas such as rare earth extraction and oil drilling in the Arctic. U.S. businesses and financial firms would then tap into $200 billion in frozen Russian sovereign assets to fund projects in Ukraine. When asked about the Journal article, Kremlin spokesperson Dmitry?Peskov stated that Russia is and has always been open to foreign investments but that Moscow will not engage in megaphone?diplomacy. Peskov said to reporters that he was interested in foreign investment. "As to 'the plans,' we are not engaged in a loud discussion about any plans or projects." He declined to make any comments when asked about the plans for a $200 billion Russian asset. The Journal reported that an unidentified European official compared proposed U.S. and Russian energy deals with the economic version of 1945's Yalta Conference. The Soviet Union, United States, and Britain divided their interests in Europe at that meeting. After the Russian invasion of Ukraine in 2022 many Western investors either left Russia or mothballed investments. Some major stakes have been taken over by Russian investors, or confiscated and given to Russian businessmen. Western European powers, including the U.S. administration of Joe Biden, sought to cripple Russia's economy with the harshest sanctions ever imposed against a major economy. Europe also tried to wean themselves off Russian gas. Ukrainian President Volodymyr?Zelenskiy stated on Wednesday that Ukraine had reached an agreement on the key points of post-war peace. Reconstruction plan In talks with Trump's daughter-in-law Jared Kushner and other top officials, as part of efforts to settle the war that has lasted for nearly four years. (Reporting and writing by Dmitry Antonov, editing by Guy Faulconbridge).
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Silver reaches new highs; gold falls after Fed split vote on rate cuts
Gold edged lower on Thursday, as traders ?weighed the U.S. Federal Reserve's divided vote on a quarter-percentage-point ?interest ?rate cut, while silver climbed to yet another record high. As of 0947 GMT, spot gold was down 0.2% at $4,220.09 an ounce. U.S. Gold futures for delivery in February rose 0.5% to $4247.50 an ounce. It's an overpositioning in gold, in anticipation of the rate reduction, which actually happened, and you're experiencing some selling pressure," said Ross Norman, independent analyst, adding that gold fundamentals remain intact. In a rare split vote, the Fed cut interest rates a quarter percentage point on Wednesday. However, it signaled a pause in further easing while officials assess the direction of inflation and job market. Gold is a good example of an asset that benefits from lower interest rates. After the two-day gathering, most policymakers projected that there would only be one rate reduction in 2026. Jerome Powell, Fed chair, did not give any indication as to when a second cut could occur. Donald Trump, the U.S. president, said that on Wednesday the Fed could have cut rates even more. Trump will announce the next Fed chair in early 2019. White House economist Kevin Hassett is considered a frontrunner. Investors will be awaiting the November non-farm payrolls data and the unemployment rate, which are due on December 16th. This information could provide further insight into what next moves may be made by Fed. Spot silver increased 0.5% to $62.09 an ounce after hitting a new record high of $62.99 earlier in the session. This brings its year-to date gain to 115%. Silver's fundamentals are still incredibly positive. The critical minerals list is a huge tailwind, and there's a possibility we could see some stockbuilding. This would increase the market's tightness. Norman concluded. Palladium increased 0.3%, to $1480.03, and platinum rose 0.8%, to $1669.73. (Reporting and editing by Kate Mayberry in Bengaluru, with Pablo Sinha reporting from Bengaluru)
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EUROPE GAS prices edge higher due to low wind output
The Dutch and British wholesale prices of gas rose slightly on Thursday morning, as lower wind power production forecasts increased demand for gas by?gas-fired?power plants. However, prices were still close to their?20-month lows. LSEG data shows that the benchmark Dutch front-month contract was up 0.23 euros at 26.98 Euro per megawatt hour or $9.25/mmBtu at 0845 GMT. The contract reached an intra-day minimum of?26.55 euro/MWh, on Wednesday. This is a level that has not been seen since April 20,24. The Dutch February rate was 26.98 Euros/MWh on Wednesday, up 0.18 euros. The British February 'contract' was up 0.61 cents at 69.96 pence/therm. In a daily note, LSEG analyst Saku Jussila said that the demand for non-local distribution zones in Northwest Europe (which includes 'power plant demand) is expected to increase by 242 gigawatt -hours/day in the days ahead,?at 3.138GWh/d. This will be due to a drop in wind energy output on Friday. After prices reached new 19-month lows, technical buying also provided some support. According to LSEG, the relative strength indices (RSI) for the Dutch front-month contracts have been below 30 in this week. This is a technical threshold that indicates a stock, commodity, or other asset may be due an upward correction. The market is still weak in terms of fundamentals. Mind Energy analysts said that temperatures in Germany are expected to be above average or at least not below normal until Christmas. The benchmark contract on the European carbon markets was 1.02 euro higher, at 83.43 Euros per metric ton. (Reporting and Editing by Louise Heavens, Susanna Twiddale)
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Ford Motor and South Korea's SK On to terminate joint US battery venture
South Korean battery manufacturer SK On announced on Thursday that it has ended its joint venture agreement with Ford Motors for their joint batteries factories in the U.S., as part of a major business revamp to focus on areas such as energy storage systems. This split is a new beginning for one of the largest U.S. battery partnerships. It comes at a time when EV demand has slowed and there are fewer?U.S. South Korean battery manufacturers are pushed to change their U.S. strategy and expand into energy storage systems. SK On is a subsidiary company of SK Innovation that supplies automakers such as Hyundai Motor, Kia Corp and Kia. A Ford subsidiary has announced it will?take ownership of the Kentucky battery plants, while SK On assumes full ownership and operates the Tennessee plant. The Tennessee plant's production schedule is flexible for the time being, due to the ownership change. Ford and SK On invested $11.4 billion in 2022 to build joint battery plants. SK On stated that the move reflected a strategy overhaul of assets and capacities aimed at enabling them to respond faster to market changes, to accelerate their North American energy-storage system business, as well as to strengthen productivity and competitiveness within its battery operations. The company stated that the restructuring will?improve their financial structure and profit by reducing debts and cutting fixed costs. SK On reported an operating loss of $124.8 billion ($84.72 millions) for the period July-September, almost double the $66.4 billion loss from the previous quarter. This was due to the slowing EV batteries shipments. Ford CEO Jim Farley forecast that sales of electric cars could drop by 50% after the expiration on September 30th of a $7.500 tax credit. SK On is?expanding its energy storage business to offset the weaker EV market. In September, the company announced a contract with U.S.-based Flatiron Energy Development for lithium iron phosphate batteries (LFP). Due to the phase-out of U.S. subsidy, other South Korean battery'makers such as LG Energy Solution, Samsung SDI and others have repurposed EV battery production to produce energy storage system. The chemistry of energy storage batteries is similar to that found in automotive batteries. They are used for powering data centres and other facilities.
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Australia announces first new oil and gas acres in many years
The Australian government released on Thursday its first offshore oil and natural gas acreage available for auction since 2022. The five areas are located in the Otway Basin, offshore of?Victoria in Commonwealth waters. They were announced a day after?the Victorian Government offered state waters for companies to bid on. In 2020, over 40 areas - most of them in the north - were put up for bids. By 2022, there were only 10. Canberra hopes that the offer will prevent a future shortage of gas on Australia's east coast. Madeleine King, Resources Minister, said: "Exploration will be key to meeting our commitments of net-zero energy and supporting Australian industry and households." The Otway Basin is considered an old oil and gas basin, not a new one. It has infrastructure such as pipelines and onshore processing plants where any new gas finds can be connected. Australia is about finish its gas market review. It aims to correct shortfalls on the domestic east coast while continuing to export liquefied gas from the east coast. ConocoPhillips, along with its junior partner 3D Energi, announced a discovery of gas in the Otway last week. They have since begun drilling the second 'well' as part of their exploration campaign. The U.S. firm has a stake in one of three LNG export consortiums in Queensland that are being reviewed by the Australian government. Samantha McCulloch CEO of Australian Energy Producers, a lobby group for oil and gas producers, said: "This week we have seen a welcome recognition by the Victorian and Federal governments that continued exploration is crucial to maintaining a pipeline of gas supply project to meet our long term energy needs." The companies can now bid for the land with applications closing in June of next year. Helen Clark, Thomas Derpinghaus and Helen Clark contributed to this report.
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Thyssenkrupp will close electrical steel plants as Asian imports threaten additional 1,200 jobs
Thyssenkrupp’s steel unit announced that it would temporarily stop production of electrical steel, a material key to wind turbines and electricity grids. It blamed 'cheap imports' from Asia, which it warned were putting an additional '1,200 jobs in danger. According to industry sources, the move was previously unknown and highlights the struggles Europe's steel industry faces in the face global trade frictions which have forced Chinese competitors to sell surplus capacity on the continent at a lower price, even by a quarter. Thyssenkrupp Steel Europe, Europe's second largest steelmaker, has already cut or outsourced 11,000 jobs as a response to the crisis. Talks about a possible sale to India's Jindal Steel International have reached a critical'stage'. The total number of job losses would increase to 45% from 40%, bringing the TKSE workforce down to a little over 45%. The company announced that TKSE will close its electrical steel factories in Germany and France between mid-December and the end of the year. It also said its Isbergues plant in France will operate at half capacity starting in January, for a minimum of four months. Marie Jaroni, CEO of TKSE, said that "grain-oriented electric steel is essential for Europe's infrastructure and energy transition" "We are committed to maintaining production of this important product in Europe. We're currently working on effective market protection to ensure fair competition." Eurostat data shows that imports of grain-oriented electric steel (GOES), which is not currently covered by EU plans for a reduction in tariff-free steel quotas to?almost a half, and to impose a 50 percent duty on excess shipments, has tripled over the last three years. The data indicates that imports of GOES are up?by about 50% so far in 2025. This is a direct result of the stiffer U.S. Steel Tariffs, which have shifted supplies to Europe, a trend seen also in other industries. TKSE, along with Poland's Stalprodukt SA is one of the few remaining European producers, while China's Baowu and South Korea's POSCO, as well as Nippon Steel, are among the largest exporters into Europe. (Reporting and editing by Elaine Hardcastle; Tom Kaeckenhoff, Christoph Steitz)
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BlackRock sells Naturgy 7% stake for $2 billion
BlackRock sold a 7.1% stake in Spanish gas utility Naturgy through an accelerated placement managed by JPMorgan for around 1.7 billion euro ($1.9?billion). After completing the accelerated placing of 68.825,911 share at a cost of 24.75 euro per share, BlackRock now holds around 11.42% of Naturgy. This represents a?discount of around 5.4% on Wednesday's closing share price of 26.16 euro. At 09:21 am (0821 GMT), Naturgy's shares were down by 5% to 24.86 euro, making it the worst performers in Spain's Ibex 35 blue-chip index. BlackRock acquired Global Infrastructure Partners in 2024, which had invested previously in Naturgy. BlackRock, the fourth largest shareholder in the company, will become the company after selling its stake. The company is currently owned by Spanish holding company Criteria which has a stake of almost 24 %. CVC, a private equity firm, holds 18.6% of the company and IFM, an Australian fund, 15.2%. Sabadell wrote in a client note that "the transaction will close the door on a possible new shareholder entering the company, and pave the way for CVC to exit the future." The transaction is expected to increase Naturgy’s free float towards its target of 25%. It follows a period in which the company has performed well, reporting record earnings of approximately?2 billion euro annually for the last two years. Since the April 28 grid failure, the company has seen increased output from its combined-cycle plant, which has operated for more hours. This has improved supply security and helped to avoid widespread disconnection.
ORACLE - Morning bid Europe - Reality check for Fed-inspired rally
Ankur Banerjee gives us a look at what the future holds for European and global markets
While 'AI spending is not showing signs of slowing down, the sector faces a challenge in converting spending into profit.
The relief that the Federal Reserve didn't sound more hawkish during its December meeting lasted only a short time, as stocks fell and futures pointed to a lower opening in Europe and America.
Oracle, a U.S. cloud computing company, provided a profit and revenue forecast that fell short of expectations. It also said spending would increase by $15 billion over earlier estimates.
Oracle's results can be used to determine if an AI bubble is present, as well as how much money it will need to raise in order for the infrastructure to be built.
Oracle shares dropped?more? than 11% after-hours trading, weighing down on U.S.?futures and Asian?markets. Investor attention is now?shifting?to Broadcom which will report earnings on Thursday after the market close.
The focus will be on European tech stocks, which could also see their gains for the year to date disappear after a paltry 4% increase so far. Bitcoin, a risk appetite barometer, fell more than 2% as a result of broader risk off moves.
The markets got more than they expected with the Fed's 25-basis point rate cut and the fact that Fed Chair Jerome Powell sounded less hawkish.
Powell stated that a rate increase is not the base case for anyone. This was enough to spark a short-lived rally in risky stocks before Oracle's earnings.
The Fed's ?signals reinforced market expectations for two more rate cuts next ?year, against the Fed's median expectation for a single quarter-percentage-point cut next year.
This put pressure on the dollar, causing some relief to the yen and lifting it near two-month highs. The dollar was able to provide some relief to the yen, and the euro rose to two-month highs.
The following are key developments that may influence the markets on Thursday.
Swiss National Bank Policy Meeting
Weekly U.S. jobless claims
Earnings of Costco, Broadcom, and Lululemon
(source: Reuters)