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GLOBAL-MARKETS-European defence stocks hit record high, dollar gains amid geopolitical events
On?Thursday the euro defence stocks reached a new record and both oil and dollar prices gained ground as traders remained uncertain about geopolitical developments in Venezuela and Greenland. Two oil tankers linked to Venezuela were seized in the Atlantic. Meanwhile, U.S. Secretary of State Marco Rubio is scheduled to meet with Denmark's leaders next week in order discuss Greenland. The?highest?STOXX index of aerospace and defense stocks in Europe was up 1% on its fifth consecutive day. The index is up 13% so far this year, and has risen more than 260% in the time since Russia invaded Ukraine in 2022. Wall Street to start with a subdued start Wall Street is expected to start with a subdued tone after the increase in unemployment claims. However, arms manufacturers are also pointing upwards after President Donald Trump called for an increase of two-thirds in the U.S. Military budget on Wednesday. The dollar was held back by mixed U.S. economic data, which kept the bulls at bay ahead of the closely-watched nonfarm payrolls report on Friday. Peter McLean is the head of Stonehage Fleming Investment Management's multi-asset portfolio solution. While it is unlikely that we will see military action in Greenland, there is a clear impetus for increased defence spending in Europe. OIL CLAWS ABOVE 60 $ Brent crude prices fell this week due to the possibility of increased Venezuelan crude production, but Brent climbed back up above $60 per barrel on Thursday. The price of crude oil rose by 0.5%, to $56.30 per barrel. Top U.S. Officials said Wednesday that the country must control Venezuela's oil revenue and sales indefinitely in order to stabilize the economy of the latter, rebuild its oil industry and ensure it is acting in America's interest. Daniel Hynes is ANZ's senior commodities strategist. He said that the market's reaction to Trump's comments about Venezuelan oil control was a bit misplaced. The U.S.'s control over oil sales could mean that sanctions or restrictions remain in place for the foreseeable future, which would be bullish on oil prices. "I suspect that's why prices are recovering." Global Markets Benefit from a Robust Start to the Year Stocks in other markets have mostly fallen after a positive start to the new year that has seen global markets rise. S&P 500 futures, Dow and Nasdaq were all down more than 0.2% by early afternoon. The pan-European STOXX 600 fell 0.4% despite a surprising rise in German industrial order and a drop in the unemployment rate in the Euro Zone. Nikkei, the Japanese stock market index, fell 1.6% over night amid increasing tensions between Japan and China. China announced that it would launch an anti-dumping investigation into Japanese dichlorosilane (a chemical used to make chips). It seems that the Asian markets have taken a break after a very strong start in 2026." Charu Chanana is the chief investment strategist at Saxo. He also pointed to China's export ban for dual-use to Japan and talked about potential risks associated with rare-earth elements. PAYROLLS DUE FRIDAY Investors digested also the increase in U.S. initial unemployment claims, ahead of Friday's highly anticipated non-farm payrolls report. Goldman Sachs analysts said that they expected a rise of?70,000 above the consensus in December's non-farm payrolls, and also predicted a slight decline in unemployment to 4.5%. The data released on Wednesday painted a mixed image. JOLTS figures for the labour market bolstered "no fire, no hire"? views, while ISM's services index hit a 14-month high. The market's expectations for two additional Fed rate cuts in 2019 were not altered by the readings. The yields on the 10-year Treasury were slightly lower at 4.16%, while Germany's bunds yields were just above 2.83%. The pound sterling has fallen to $1.344, as UK retailers warn of a difficult year ahead. Meanwhile, the yen, which is Japan's currency, rose to 156.67 dollars per yen, and gold, a safe haven, fell 0.5% to $4420 an ounce. McLean, of Stonehage and Fleming, said that the direction of bond rates is one of the biggest risk factors for this year. "If the 10-year Treasury rate falls below 4 and continues to fall, that would be very positive," McLean said. VENEZUELA'S DEBT RESTRUCTURING IS 'CLOSER - TO THE BEGINNING? Venezuela's defaulted bonds finally cooled down after their near 40% increase following the weekend's U.S. Capture of President Nicolas Maduro, which fuelled investor hope for a massively complicated debt restructuring. Richard Cooper, a former bondholder and restructuring partner at Cleary Gottlieb Steen & Hamilton, said that a restructuring was "closer to beginning than six months ago," but it is still far from the start. He said it will be hard to get started "until we know what the cost of reviving the oil sector is and who is in power."
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China restricts rare earth exports after dual-use ban to Japanese companies, WSJ reports
The Wall Street Journal reported Thursday that China had begun to restrict exports to Japanese firms of rare earths, and powerful magnets that contain them, after Beijing banned the exports of dual-use items to Japanese military. Journal reported that China's restrictions are not only limited to defence industries, but apply to a wide range of Japanese industries. China's Commerce Ministry said Thursday that the export ban for dual-use products to Japan would only affect military companies. "Civilian users won't be affected," said He?Yadong to reporters. China announced on Tuesday a ban?on exporting to Japan so-called dual use goods that could have military applications. The Wall Street Journal reported on Tuesday that China has begun restricting the exports of "heavy rare earths" to Japanese companies, as well as powerful magnets that contain them. Two exporters from?China were cited. The Journal quoted another unnamed source familiar with Chinese government decision-making as saying that the review of export license applications across Japanese industry had been halted, and didn't just target Japanese defence firms. Dual-use products are software, goods or technologies with both civilian and military uses. Some rare earth magnets are used to power motors found in car parts like side mirrors and speakers. The report could not be confirmed immediately. The Chinese commerce ministry and the foreign ministry didn't immediately respond to requests from the Journal for comments. Beijing and Tokyo's relations have deteriorated since Japanese Prime Minister Sanae Takayichi stated in November that a Chinese attack against Taiwan could lead to a military response. Beijing called this remark "provocative". China has a list of about 1,100 dual-use products and technologies for which manufacturers need a license to export overseas, regardless of the final user. (Reporting and editing by Susan Fenton in Bengaluru, Mihika Sharma from Bengaluru)
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Why do French farmers drive their tractors to Paris?
French farmers brought tractors into central Paris and closed roads throughout the country in order to call for government action on a number of grievances. Here are a few of the issues which have sparked the protest movement, and the initial responses from the government and European Union. Why are farmers protesting? Farmers in France, EU's largest agricultural producer, struggle to make a profitable due to high costs, excessive red tape, and unfair competition by countries inside and outside of the EU who do not have the same strict standards for production. MERCOSUR Farmers in France and Europe are dissatisfied with a proposed trade agreement between the EU, and Mercosur, the South American bloc. The farmers claim that the proposed deal would result in cheap imports from South America, including beef, sugar and ethanol, which do not meet EU standards. The agreement could be signed as soon as next week. It includes a section that is devoted to agriculture, with import quotas being established for certain farm products coming from Mercosur nations - Argentina Brazil Paraguay and Uruguay. These imports will either be duty-free or have reduced levies. The deal also gives EU farmers greater access to South American market, which could boost exports such as wine and olive oil. Although Paris won last-minute concessions including safeguards on sensitive farm products like beef and sugar, the government and farmers are still opposed to the deal. They claim that imports should meet the same standards as EU produced. French Agriculture Minister 'Annie Genevard' said France will continue to fight against the deal at the European Parliament where it must also be approved. CATTLE DISEASE Some French farmers in the south blame the government as well for the way it has handled the lumpy skin disease that affects cattle. This includes the culling of herds after the virus was detected. The disease is characterized by painful lumps of skin, fever, and weakened animals. The government has started a vaccination campaign for all cattle in the affected areas. It said the disease would wipe out 10% of the national herd without intervention. ENVIRONMENT, RED TAPE In the area of environment, farmers are unhappy with both EU subsidy regulations and France's alleged "overcomplicated" implementation of EU policies. France is said to have stricter regulations than other EU members, such as a ban on pesticides for sugar beets. They also claim that France has a more bureaucratic approach towards water usage and fertilizer pollution. In light of the Russian invasion of Ukraine, and trade tensions between the United States and China, green policies are seen to be in conflict with goals of becoming more self-sufficient. The farmers blame excessive regulation for the decline in French agricultural exports, income and output. France could post its first trade deficit in food and farm products in over 50 years by 2025. The grain growers in France, who were once the richest producers, have seen their profits fall in the last three years due to the global glut of grains and the rising costs for energy, fertilisers, and fertilizers. The EU agreed on Wednesday to reduce duties on imported fertilizers and exempt them of a carbon tax to avoid further cost increases. (Reporting and editing by Gareth Jones, Gus Trompiz and Sybille De La Hamaide)
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Reliance Industries, India's largest oil company, will be considering buying Venezuelan crude
Reliance Industries, the operator of the largest refinery in the world, said on Thursday that it would 'consider' buying Venezuelan oil, if allowed to sell to non-US customers. In response to an email seeking comments, a spokesperson for Reliance Industries said: "We are waiting for clarity on the access of Venezuelan oil by non US buyers and we will consider buying the oil in compliance." email seeking comments. Caracas has reached an agreement with Washington to export 30-50 million barrels of Venezuelan crude oil to the United States, worth up to $2 billion. Reliance stopped purchasing Venezuelan crude oil in March 2026, after the United States announced 25% tariffs on countries that bought crude from this South American nation. The conglomerate got its last parcel of Venezuelan crude oil in May. Reliance’s two refineries located in the western Gujarat state are able to process?about 1 million barrels of crude oil per day. The complexity of these plants allows them to process heavier and cheaper crudes, such as Merey oil from Venezuela. (Reporting and editing by Nidhh Verma)
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India sugar exports gain momentum on the back of lower prices and weak currency
Trade and industry officials reported that Indian mills have signed export contracts worth around 180,000 metric tonnes of sugar this season, with the weaker rupee and domestic price corrections driving sales overseas in recent weeks. In November, the federal government approved the export of 1.5 million tonnes of sugar for this season which began on October 1. High prices on the local market are a major factor in the sluggishness of export activity. The slower than expected pace of India's sugar shipments, the world's?second-largest producer, may support global prices which are near their lowest levels for five years. Five dealers said that mills had so far contracted shipments into Afghanistan, Sri Lanka and East African nations. The?sources refused to be identified because they weren't authorised to speak publicly on the subject. "Mills used to get better prices on the export market than they did from the domestic one. "This time, there is no real incentive to sell," said a Mumbai based dealer at a global trading house. "Yet, some mills step forward because they have to pay cane farmers." BUMPER PRODUCTION DRIVES DOWN LOCAL PRICE Local Prices Above global benchmarks. The price of a ton has only fallen 6% in the last three months to 36,125 rupies ($401.35), as the arrival of new supplies for the season began. The output reached 11.9 millions tons between October and December, which is a 25% rise on the previous year. Dealers said that Indian sugar was now offered at $450 a ton, free-onboard (FOB), or about $20 per ton above the benchmark London futures. "Supply-pressure has brought local prices down." Exports at the current prices are not profitable, but are no longer a loss. Thombare is the president of West Indian Sugar Mills Association. One New Delhi-based trader with a trading house said that India only has a small export window from January to March, because shipments from Brazil, the top producer, are expected in April to lower prices. (Editing by Joe Bavier).
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Profit-taking causes the price of copper and nickel to fall
Prices of copper and nickel fell on Thursday as investors retreated from the recent sharp rise. Benchmark three-month Copper on the London Metal Exchange fell 0.3% at $12,853 a metric ton as of 1106 GMT. Concerns over a tight mine supply, and bets about future demand growth led to a record-high copper price of $13,387.50. The analysts at Sucden Financial stated that the continued mirroring of precious metals suggests this is "primarily profit-taking, position cleaning and not a major change in underlying trend." S&P Global said that the growth of artificial intelligence and defence sectors would boost global demand for copper by 50% by 2040. However, supplies will fall by more than 10 million tons per year without increased recycling and mining. Nickel fell 3.8%, to $17.205 per ton, as the Indonesian Government refused to disclose its 2026 mining production quota. This ended a rapid rally that saw the metal reach its highest level since mid-2024, on Wednesday. An official confirmed that Indonesia will adjust nickel quotas in order to support prices and meet the demand of local smelters. Analysts said that the policy could be reversed and added that a similar attempt a year earlier had only a limited effect. Nickel stocks In LME-registered storage warehouses, the number of tons is now 276,300, which is their highest level since mid-2018. This follows the inflows into Asia-listed warehouses that began earlier this week. Discount of cash LME Nickel contract against?three-month ahead The price of a ton increased to $224 on Wednesday, the highest level since March. It was $144 on Friday. Lead fell 0.6%, to $2,047. Tin remained at $44,310. (Reporting and editing by Kirby Donovan; Polina Devitt)
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The US Senate votes on Trump's Venezuela policy
On Thursday, the U.S. Senate will consider a measure that would prevent President Donald Trump from taking any further military action against Venezuela without congressional approval. Supporters of the resolution said it could pass with a close vote. After the U.S. military captured Venezuelan president Nicolas Maduro during a dramatic raid on Caracas in Caracas on September 29, senators will vote to approve the latest of a series war power measures that have been introduced by the Obama administration since it increased military pressure against the country through attacks on boats near its coast. Republicans blocked all the measures but the final vote was only 49-51. Two senators from Trump’s party voted with Democrats to support a resolution back in November. At the time, administration officials told lawmakers that they did not intend to strike Venezuelan territory or bring about a regime change. Several lawmakers, including Democrats publicly and Republicans behind-the-scenes, have accused the Maduro administration of misleading Congress after his capture. "I spoke with at least two Republicans who didn't vote for this resolution before, who are now thinking about it," said Senator Rand Paul of Kentucky, who is cosponsoring the measure, in a press conference held ahead of the vote. Paul spoke alongside Democratic Senator Tim Kaine, a leader of the resolution. He didn't identify the Republicans. Trump's party has a majority of 53 seats in the Senate. HURDS AHEAD Senate passage would be an important victory for lawmakers who have been pressing the war power issue. To become law, the resolution must pass both the Republican-led House of Representatives, and also survive an anticipated Trump veto. This would require a two-thirds majority in each chamber. The lawmakers admitted the obstacles, but stated that some Republicans might?be hesitant of a long and costly campaign to change Venezuela's regime. Trump said Wednesday on his Truth Social website that he wants the U.S. Military budget to go up to $1.5 trillion, from $1 trillion. Kaine pointed out that U.S. troops have been attacking Venezuelan boats since months. He also mentioned Trump's claim that the U.S. will "run" Venezuela, as well as the seizure of Venezuelan oil. Kaine said: "This is not a?surgical arrest operation by any means." According to the U.S. Constitution, any president must obtain Congress' consent before launching a long-term military operation. Senators opposing the "war powers" resolution claim that the arrest of Maduro was a law-enforcement operation and not a military one. Maduro is facing trial before a U.S. Court on charges of drug trafficking and gun possession. He has pleaded innocent. Trump, they say, is also within his rights to take limited military action if he feels it's necessary for national safety.
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Euro defence stocks reach record highs, dollar gains due to geopolitics
The European defence stocks rose to a "record high" on Thursday as oil prices and dollar gained ground. Geopolitical tensions rumbled from Venezuela to Greenland, keeping traders guessing. seizure Two Venezuelan-linked oil tanks in the Atlantic were reported alongside the news that U.S. Secretary Marco Rubio will?attend Meet?Denmark leaders Next week we will be discussing Greenland, and there are also some mixed economic statistics. STOXX, Europe's aerospace and defence stock index, has risen nearly 2% in the first hour of a fifth consecutive day of gains. They have already risen 13% so far this year and over 260% since Russia invaded Ukraine in 2022. Euro-dollar exchange rates are on course for their eighth consecutive drop, but mixed U.S. data from Wednesday kept dollar bulls at bay ahead of the closely watched nonfarm payrolls report on Friday. Peter McLean is the Head of Multi-Asset Portfolio Solutions, Stonehage Fleming Investment Management. While it is unlikely that we will see military action in Greenland, there is a clear impetus for increased defence spending in Europe. Brent futures recovered above $60 per barrel on Thursday and U.S. Crude rose 0.5% to $56.30 per barrel. Top U.S. officials stated on Wednesday that the country must control Venezuela's oil revenue and sales indefinitely in order to stabilize the economy of the latter, rebuild its oil industry and ensure it acted in America's interest. Daniel Hynes is ANZ's senior commodities strategist. He said that the market's reaction to Trump's comments about Venezuelan oil control was a bit'misplaced'. Oil prices would rise if the U.S. controlled oil sales continued in the short-term. I think that's why oil prices are rising. Stocks in other markets were mostly lower after a positive start to the new year that lifted global markets. The STOXX 600, a pan-European index, was down by 0.2%. Japan's Nikkei fell 1.6% over night amid increasing tensions with China, and Wall Street futures slipped 0.2%. Charu Chanana is the chief investment strategist for Saxo. Chanana said that "geopolitical headlines" were in charge, pointing out China's export ban for dual-use to Japan and the potential risk of rare earths. Tokyo shares of Japanese chemical producers fell, while those of their Chinese competitors jumped. This was after China's Commerce Ministry announced that it would launch an anti-dumping investigation into the imports of "chemicals used for chipmaking". PAYROLLS NEXT Investors were also watching the U.S. initial weekly jobless claims, due later, and the closely watched non-farm payrolls employment report, due Friday. Both could give further clarity to the Federal Reserve on its rate outlook. Goldman Sachs analysts predict a rise of 70,000 above the consensus in non-farm payrolls for December. They also expect unemployment to drop to 4.5%. The data released on Wednesday painted a mixed image. JOLTS figures for the labour market bolstered the view that "no hiring, no firing" is the best way to look at the job market. However, the ISM services index in December reached a 14-month-high, which was reassuring. The market's expectations for two further Fed rate cuts in 2019 were not altered by the readings. The 10-year Treasury yields were muted, at?4.15%. Germany's bund yields for the 10 year period were 2.8%. This is still down 7 basis points this week. On the currency market, the yen of Japan rose to 156.67 yen per dollar, while sterling bought $1.3458 last time. Silver and platinum fell 2.6% and 3.2% after recent gains. McLean, of Stonehage and Fleming, said that the direction of bond rates is one of the biggest risk factors for this year. "I think it would be positive if the 10-year Treasury yield falls below 4 and continues to fall.
Norway's Equinor CEO: We do not intend to return to Venezuela
Equinor's CEO said on Wednesday that the company does not have any plans to return to Venezuela after leaving the country at the beginning of this decade.
Anders Opedal said on the sidelines a business meeting that "at the moment, it's not an option." "We pulled out of Venezuela to reallocate our capital." The?U.S. is aiming to increase?crude oil output from Venezuela which has the largest oil reserves in the world. Donald Trump became president after U.S. troops seized Venezuela's Nicolas Maduro, the country leader. Equinor invested billions in Venezuela's oil industry during the mid-1990s. They viewed the country as an important part of their operation and identified it as such. However, they subsequently?pulled back after about 25 years. Donald Trump is planning to meet with executives of oil companies late this week in order to discuss ways to revive Venezuela's battered?oil industry, according to three sources with knowledge of the matter.
Equinor's Opedal stated that rebuilding Venezuela's industry in order to extract more heavy oil from the country will require huge investments. Nora Buli is reporting, Terje Solsvik and Kirby Donovan are editing.
(source: Reuters)