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Stocks hit by rising inflation, geopolitical uncertainty and oil prices
Investors were on edge Monday as rising?oil costs, the conflict in the Middle East, and political unrest in Europe kept them on edge. Stocks drifted lower ahead of important U.S. data on inflation later this week. Tehran announced that it would declare a restricted area outside the Strait of Hormuz within days after U.S. forces struck three Iranian tankers, and Iran's Islamic Revolutionary Guard Corps fired ballistic missiles on two U.S. Navy vessels. Brent crude futures have risen 1.3%, to $97.5 per barrel, the highest in seven weeks. Oil prices rose almost 8% in the last week, and are now 35% higher than they were at the end of February before war began. Diesel prices, which power transport, shipping and farming, as well as manufacturing, reached record highs in the last week. They are now around 90% higher than before the war. Investors should pay close attention to this week's U.S. Consumer Price Index because central banks will likely raise interest rates as?food prices and fuel prices are rising across the globe. On Thursday, the European Central Bank is expected raise rates to 2.5%. Futures traders expect another rate hike in December to 2.75%. Markets are also pricing in 75% of the possibility that Bank of Japan will raise rates by a quarter-point at its September 18 meeting, with 60% of another increase occurring before December. Bruce Kasman, global head economist at JPMorgan, said that the patience of central banks during the energy crisis has helped asset prices and credit cycles. "However central banks are now moving." RATE INCREASES? The Federal Reserve's last-week's payroll report, which exceeded expectations with a 162,000 increase in August, left the markets pricing in a 58% probability of an increase when they meet on September 16. And 70% for a movement in October. The euro gained 0.14%, to $1.1629. Analysts said that the euro has been drifting lower since August's three-month highs and with increasing political tension on many fronts it may struggle to gain much upward momentum. The Alternative for Germany (AfD), a far right party in Germany, won the state elections in Saxony Anhalt on Sunday. This is the first time in history that a far right party has been able to win power at the state level. The AfD, while still far from having a majority or gaining power at the national level, has stated that one of their policies is to abandon the euro. Kathleen Brooks, XTB's research director, said: "This development is harmful for the long-term stability of our single currency." Recent polls in France show that far-right leader, Marine?Le pen, who has previously supported abandoning the Euro, is likely to win the first round at next year's Presidential elections. The next few years may see a wave of political change in Europe, and a shift towards the right for the two biggest economies. It may not be an issue for FX traders now, but tomorrow it will be. This could explain why the euro is among the weakest currencies in comparison to its peers by 2026, Brooks stated. The euro fell 1.1% this year, the worst performing major currency in relation to the dollar. This was compared to a modest 0.7% increase in the Japanese yen which had been partly boosted through official intervention and a 0.4% gain in the pound. Dollar?retreated? against yen, dropping 1.2% to 154.32 as a 'burst of purchasing propelled the Japanese to a 7-month high. Last week, the yen posted its best weekly performance in over a month, with rising expectations that the BOJ will hike rates and the threat of further official buying triggering a short-squeeze. While European stocks were struggling to reach positive territory, Wall Street was a little quieter due to a U.S. Holiday. S&P futures fell by 0.2%, and Nasdaq Futures rose 0.2%.
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US imports more Congo Copper as Consumer Acceptance Grows
U.S. consumers are increasingly buying copper from the Democratic Republic of Congo. This is helping to drive record-breaking?imports of the African producer as industrial consumers take advantage of discounts on?COMEX approved brands. According to U.S. Trade data, copper cathode deliveries by the second largest copper producing nation in the world reached a record 53.290 metric tons during July. Congo now has a share of 23.9% of all imports. This is the highest ever. These numbers illustrate the increase in demand for Congo's copper by the United States. The country imported less than 32, 000 tons of?copper in 2024. Congo has more copper to sell now due to?increased production. This increase is all the more remarkable when you consider that there are no copper brands available from the Congo on the U.S. COMEX exchange. COMEX lists only two African copper brands, both from Zambia. More than one-third (35%) of COMEX approved brands come from Chile and Peru. Albert Mackenzie is a copper analyst with Benchmark Mineral Intelligence. He said that this could indicate the Congo metal was going directly to the U.S. market. "And if that's the case, it'll be much cheaper than COMEX-deliverable brand," he said. Mackenzie reported that the premium for COMEX copper compared to the LME price fluctuated between $400 and $600 during the summer. It may have been cheaper to buy non-CME-registered material at the LME price. Two sources in the industry who deal with Congo copper confirm that it is priced based on a LME basis. The first source stated that his metal is usually sold at a discount of between $550 and $800 per ton in order to cover the freight costs. Second source: The standard of Congo Copper has significantly improved in recent years. This has led to greater acceptance by U.S. consumers. China's copper imports from Congo have fallen by 4.3% over the first seven months of 2026 as large amounts of copper have been shipped to the United States. Congo's share of the market has however increased by a?five-point percentage point to 44.7%. China imported 95,778 tonnes of Congovian products in July, a 39.4% market share, which is the lowest since last October, but Congo remains the largest supplier.
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Institute: Italy has its hottest summer in more than 75 years
The Institute for BioEconomy of the National Research Council (CNR-IBE), a part of the National Research Council, announced on Monday that this summer was Italy's hottest since 1950. According to the public authority, August was the hottest month in the year with a temperature average of 25.6 C. This is 5.2 C higher than the average 1951-1980 and 3.5 C higher than the norm 1991-2020. These figures are based upon readings taken from a height of two metres. Researchers at CNR-IBE Lorenzo Arcidiaco stated that "the average of 25.6 degrees Celsius recorded in August 2026 surpasses the previous records which were 24.6 C in August 2024 and 24?C in August 2017." Arcidiaco stated that the data indicated 2026 as being the hottest year in Italy since 1950 when the data was collected. Both July and August were the hottest on record. CNR is Italy’s largest public research institution. Europe, which is the fastest-warming continent in the world, has experienced sweltering hot summers. Wildfires and drought are also a major problem. Britain experienced its hottest summer in recorded history. Most of the affected areas in Italy are located along?the Apennines and the northwestern lowlands, where drought and high temperatures have affected farming. Separate analyses of weather data showed that major cities like Rome, Florence, and Turin all experienced repeated heatwaves during June, July, and August.
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Nigeria's Dangote Oil Refinery signss IPO documents ahead of landmark share sale
On Monday, Nigeria's Dangote Oil Refinery signed offering documents with its 'advisers' and other parties involved in the initial public offering. This is a major milestone on the way to Africa's largest-ever share sale. According to a presentation made at a ceremony held in Lagos, Nigeria's commercial capital, the offering will last from September 14 until October 13. If fully subscribed, the company could raise up to $2.15 trillion ($1.63 billion). The presentation stated that in the event of a high demand for shares, Dangote's refinery and petrochemicals plant could issue up to 30 percent more than the base offer, subject to approval by the regulatory authorities. Investors will be able to gauge the level of interest in one of Africa's largest industrial projects. The 700,000-barrel-per-day refinery, built at a cost of about $20 billion on the outskirts of Lagos, has reshaped Nigeria's fuel market ?and benefited from supply disruptions linked to the Iran war, exporting jet fuel across Africa and into Europe. The plant is part of Africa's richest man,?Aliko?Dangote, whose sprawling empire includes sugar, cement, and other businesses. The IPO aims to raise money for a 'planned doubling of refinery capacity to 1.4m barrels per day. The company?has already secured a $400-million?underwriting commitment. Dangote said at the signing ceremony that he hopes the refinery will become the largest single-train refinery in the world by 2028.
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The Netherlands opens Europe's largest Carbon Capture Facility
The largest carbon-capture facility in Europe, developed by Yara International of Norway, opened?in The Netherlands on Monday. The CCS facility in 'Sluiskil in southern Dutch province of Zeeland will reduce emissions at Europe's biggest fertiliser production site and transport captured CO2 to Norway, Yara stated. Yara Sluiskil is set to capture and liquefy?CO2 up to 800,000.0 metric tons per year by 2026. Northern Lights, a transport and storage operator in Norway, will store and transport the carbon 2.6 km (1.65 miles) below the Norwegian continental shelf. Yara hopes to remove 12 million tonnes of CO2 from the site over 15 years. Norwegian Prime Minister Jonas Gahr Stoere stated that the Sluiskil Project offers a solution which is both scientifically and commercially viable. Our climate challenge is in the industry, because there we have labor, capital and technology. Energy is everywhere. Stoere stated that the Netherlands should be a leader in the energy nations. The European Union is planning to use carbon capture technology in order to achieve its 2050 "net-zero emission" target, especially for industrial processes like chemical manufacturing where there are no low-carbon alternatives available. Despite the fact that this technology has been a stumbling block in Europe for many years, it is still gaining traction. Critics say CCS allows companies to continue producing oil and gas, while promising to capture future emissions.
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France's EDF is in talks to purchase So Energy in order to increase its British customers
A source familiar with the matter confirmed a Sunday media report that a French electric utility,?EDF, is in negotiations to 'acquire' electricity supplier So Energy. This company is majority-owned by an Irish company, ESB. EDF is expanding its footprint in Britain where it already supplies electricity to around 5,000,000 customers. Sky News reported that the purchase would bring EDF a further?300,000 customers,? A spokesperson for So Energy stated that the company is evaluating a number of options, but could not comment on the subject further as it is a commercially sensitive matter. EDF is trying to keep up with Octopus, British Gas, and E.ON in a competitive British Market. German utility E.ON is also aiming to expand its presence in the region and announced plans to purchase rival Ovo Energy for an undisclosed amount. The source who refused to be named because they were not authorised to speak publicly, did NOT provide an estimate for So Energy.
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Copper prices set to reach record highs, but focus is on limited supplies outside US
The dollar was weaker on Monday and the prospects of shortages outside the U.S. boosted the price of copper. The traders said that the U.S. holiday meant volumes would be muted and that they were focusing on copper and zinc. The benchmark copper price on the London Metal Exchange was 0.2% higher, at $14.443 per metric ton. It reached $14,467 earlier in trade, its highest level since January's all-time high of $14,527.50. Since President Donald Trump proposed import tariffs last February, traders and producers have shipped large amounts of copper to the U.S. Comex copper stock levels are at a record high of 766,795 metric tons or 695.624 short tons. Albert Mackenzie is an analyst at Benchmark Mineral Intelligence. He said: "It's difficult to predict what will happen with tariffs, but the longer the uncertainty persists the higher the prices will be as materials?flow into the U.S." Some copper has returned to the LME due to higher?premiums? or?backwardations? for contracts that are close by compared with longer-dated futures. The LME is expected to lose more than 121,000 tonnes of copper over the next couple weeks due to cancelled warrants and metal that has been earmarked for deliveries at 51%. . In mid-August, the premium for cash on a three-month forward was above $430 per ton. This is the highest level since 2021. It closed at around $74 last Friday. The Shanghai Futures Exchange monitors warehouses in China. They have 63,000 tons of stocks, which is 85% less than the middle of March. This is the lowest level since January 2024. Copper prices are also falling on SHFE, indicating that the top consumer China is worried about supply. Zinc prices were up?0.7%, to $3,973 per ton. This was mainly due tighter supplies. At the beginning of September, it had reached $3,990 per ton, its highest level since May 2022. Base metals prices were supported by a?softer U.S. dollar, which made dollar-priced'metals cheaper for holders other currencies. Lead rose 0.6% at $1,913.5. Tin gained 0.7% at $55,250. Nickel fell 0.6% at $16,750.
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Radiant World sued in Singapore by a fund linked to Jefferies
The website of Singapore's Supreme Court showed that LAM Trade Finance Group II - in which U.S. bank Jefferies holds a minor stake - applied for a freezing order against Radiant World and its founder on Monday. The filing is just one of many challenges that the iron ore traders are facing. Some banks have frozen their accounts, and other trading houses have severed their ties with them over concerns that invoices sent to its banks might not be valid. Radiant World denies any wrongdoing. Last week it was reported that the Jefferies fund had obtained a freezing order from a UK court over the trader. On Wednesday, a hearing will be held in the Singapore case at the?Supreme Court of the city-state. There were no further details available on the filing. The filing revealed that the case in Singapore also names Sapphire Minmetals, the iron ore trading firm, and its Chairman Rakesh Setti, along with entities of Radiant World, Pinkesh Nahar and his company. Radiant World and Sapphire Minmetals did not respond immediately to our requests for comment. Gary Nagle is the CEO of Glencore. He said that last month, the company considered Radiant World, Sapphire Minmetals, and other companies to be part of the same group. Sethi, however, has denied this. Bloomberg News reported that Incomlend, a trade-finance company, is also suing Radiant World in Singapore and Nahar? in Japan, while Mizuho Bank took legal steps to remove the management of Radiant?World Singapore. Radiant World is being investigated by the 'Singapore Police force,' which said last month that it received reports about the company and was looking into them.
Oil price drop and reopened Strait of Hormuz may change Fed's options on future rate cuts
The Federal Reserve's policymakers face a complex outlook as they prepare for their meeting on April 28-29. The reopening of Iran's Strait of Hormuz has caused oil prices to fall below $90 per barrel for the first?time in over five weeks. U.S. Central Bank officials are now assessing the damage that the seven-week conflict had done to price trends and whether the hostilities have ended for good.
Iran announced on Friday that it will reopen the Strait of Hormuz, which is responsible for about a fifth the world's supply of oil, to shipping during the current ceasefire between the U.S. and Israel. The global oil price, which had been hovering around $95 per barrel, plunged to $89 and traders of contracts linked to Fed interest rate changed their views from the central banks remaining inactive until 2027 to the Fed resuming rate cuts as early as this year.
Neil Dutta is the head of Renaissance Macro Research's economic research. He said that the Fed could now set aside the concerns about stagflationary fears of increased inflation and a slowing of growth due to the oil shock, and pursue rate reductions on the basis of a renewed decline in inflation.
In a note, he said that the consumer's purchasing power would improve and they would spend less money on basic items like gasoline. According to AAA, the average gasoline price has already dropped from its recent high of $4.15 per gallon to $4.07 per gallon on Friday. Mary Daly, the San Francisco Fed president, said in a recent interview that the Fed could be influenced by the outcome of the conflict and how oil prices might respond if hostilities eased.
Daly stated in an interview that "as long as the conflict is resolved quickly, it will take longer but it won't stop the progress". It just takes a little longer for everything to be resolved." The Fed will likely keep its overnight benchmark interest rate at 3.50% to 3.75% when it meets later this month. Inflation has not improved in recent months, and there are new risks surrounding its direction.
The Fed's language was becoming more hawkish, as the concern grew that the Middle East war, which lasted seven weeks, was not just a disruption they could "look past" but rather was causing broader price pressures. In remarks made this week, New York Fed President John Williams began to sketch out the conditions that had already begun to play themselves out in the form of increased fuel costs, larger supply chain problems, and higher airfares and groceries.
Williams, a vice-chair and permanent voter in the Federal Open Market Committee of the central banks, said "even based upon what we have seen so far, inflation will be above 3% within the next few month." This is a major miss by the Fed, and a move in the wrong direction based upon the Personal Consumption Expenditures Prices Index, which the central bank uses as metric to set its inflation targets.
In February, which is the last month where data are currently available, the headline PCE, excluding energy and food, was 2.8% year-over-year. The core measure was 3%. Analysts expect that the core PCE will have increased to 3.2% by March. This data will be released on April 30th, a day following the Fed's second meeting.
Consumers may be eligible for a possible relief
The Fed's view on the economy, inflation, and interest rates will be affected by the latest events if the apparent progress in resolving the conflict continues. This could drive oil prices lower. The President Donald Trump labeled this week as "fake", the inflation that occurred as a consequence of his decision launch air strikes against Iran. A sharp rise in the Consumer Price Index headline in March was the fastest since 2022, when former President Joe Biden led the surge in inflation during the pandemic era. Economists do not include energy or food prices in the "core" concept that captures inflation trends better. Fed officials and comments from the Fed’s “Beige Book” survey of economic reports around the country began to focus on higher core prices that policymakers saw as possibly developing due to the energy shock. As firms reset their charges to account for increased input costs and fuel and energy contract adjust to?account? for market pricing, they began to see this increase in core inflation.
If the relief in oil price is sustained, it will be felt by consumers who can now spend more on other goods and services. This could boost economic growth.
Stephen Miran, Fed Governor, said this week that every dollar consumers spend on higher energy costs is $1 less they can spend on other items. He was advocating for a rate reduction at the Fed meeting next week. "I don’t think this is the kind of thing that will drive us into a recession, but I do believe it's going to be a drag on the growth. And in a labor markets that were very slowly drifting away form full employment, that's something that could make you worried." Reporting by Howard Schneider, Ann Saphir and Chizu Nomiyama. Editing by Paul Simao and Chizu Simao.
(source: Reuters)