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AI rally pauses while Middle East ceasefire is on 'life-support'
The dollar and oil rose as expectations faded of a deal that would allow ships to pass through the Strait of Hormuz. Meanwhile, a raging rally in?chip stock prices cooled down while traders waited for U.S.?inflation data. U.S. President Donald Trump said that the ceasefire agreement with Iran, which had been in place for a month, was "on life-support" following Tehran's reaction to the U.S. plan of ending the war. Brent crude futures rose 0.6%, to around $105 per barrel. S&P futures dropped 0.2%, FTSE Futures fell 0.5%, and European Futures dropped 0.6%. Even the KOSPI index, which was a near-unstoppable market leader in Seoul, began to falter as it reached 8,000 points. It dropped by about 3.5% and pulled down other regional markets. Huh Jaehwan, analyst at Eugene Investment Securities, said that while the number of 8,000 is not significant, it's up 60% from 5,000 late in March. This is "not common". This stunning rally has sparked such a surge in South Korean stock trading that it enabled?brokerage Mirae Asset Securities?to almost quadruple its first-quarter profits thanks to an unprecedented increase in commissions. Tokyo's Nikkei gained 0.6% despite a bumpy day. The markets are watching Trump's trip to China which starts on Wednesday. Expectations for progress on either the Iran issue or trade fronts is low. Investors should not expect to see sweeping deals. "A 'win' means no new export controls or tariffs, but perhaps small symbolic deals such as agricultural orders, aircraft purchases, or signals about rare earths," Daniel Casali said, chief investment strategy at Evelyn Partners. "These might seem minor, but margin stability is important." Wall Street is resilient in the face rising oil prices. The S&P 500, and Nasdaq have all reached new highs in recent days. APRIL INFLATION SPEEDS EXPECTED IN US?DATA U.S. data on inflation is expected later Tuesday. The headline consumer price index will likely show a rise of 3.7% on a year-on-year, following a previous 3.3% increase. Markets could be rattled by any suggestion that the Federal Reserve might need to raise interest rates this year, rather than reduce them as investors expected before the war. Global bond yields are rising, led by a selloff of gilts, after Prime Minister Keir starmer's speech on Monday failed to convince investors that he would survive his election defeat. Japan's 10-year bond yield rose to 2.54%, a 29-year record high. A hawkish reading of last month's Bank of Japan meetings left the door open for a rate hike in June. Benchmark 10-year Treasury rates remained at 4.42%. The dollar dominated the foreign exchange markets, putting Asia's emerging-market currencies under pressure. Both the rupiah of Indonesia and the rupee of India hit record lows. The dollar increased to 157.62 yen. Scott Bessent, U.S. Treasury secretary, said that after a meeting with Japanese Finance Minister Satsukikatayama in Tokyo he was "constantly and robustly" coordinating with Japan to combat undesirable, excessively volatile currencies movements. The euro fell 0.2% to $1.1762, and the Australian dollar dropped 0.25% to $0.7232. Australia's budget deficit is expected to be smaller than the one previously announced on Tuesday. (Reporting and editing by John Mair; Tom Westbrook)
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Thyssenkrupp reduces sales forecast after steel and auto weakness affects results
Thyssenkrupp, the German conglomerate, cut its'sales forecast for 2026 on?Tuesday. It cited lower demand in its steel and automobile divisions as a sign that economic activity was muted across Europe. Axel Hamann, finance chief, said: "We remain cautious in our sales forecasts... not least due to heightened geopolitical uncertainty and its impact on?international markets." The company now expects that sales will fall by up to 3%, and at worst remain flat. Previously they had expected a range between -2% and +1%. In an LSEG survey, analysts expected sales to drop by 1%. Thyssenkrupp - which is attempting to turn itself into a holding company - said that demand for steel was "persistently low". Thyssenkrupp’s steel unit has been in the spotlight after a failed attempt to sell it this month to Jindal Steel International in India. This is the latest 'failed' attempt to divest from 'the business', and highlights 'the structural challenges surrounding industrial activity in Europe. (Reporting and Editing by David Goodman, Friederike Heine, and Christoph Steitz)
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Indian shares continue to fall and the rupee is at a record low, as optimism about a Mideast deal fades
The rupee and Indian shares both fell to a new record low Tuesday as crude oil prices rose. This was due to fragile negotiations over the end of the Iran 'war, which fueled concerns about global supply and economic fallout. As of 10:15 a.m. IST the Nifty 50?was down 0.69% to 23,652.4 while the BSE Sensex fell 0.82%, to 75,386.61. The benchmarks fell by 1.5% each on Monday. The mood was also affected after Prime Minister Narendra modi, over the weekend, urged fuel conservancy and restraint in gold purchases to help preserve foreign currency reserves. Jewellers, oil companies and travel stocks were all down for a second session. The rupee fell to a new record low as concerns about India's import bill grew. Crude oil prices hovered around $105 per barrel, and the outflow of foreign currency continued. The Asian markets dropped 0.7% on Monday after U.S. president Donald Trump claimed that the ceasefire agreement with Iran is "on life support". He also called Tehran's response, to a U.S. proposed peace plan, "stupid", causing a fear of a long-term conflict. India is the third largest oil importer in the world. Higher crude prices can cause inflation, devalue the currency, and impact growth and corporate profits. Investors were waiting for India's retail inflation data due later that day to get a sense of how much higher fuel costs have affected domestic prices. In a poll, the Reserve Bank of India (RBI) estimated that annual inflation would likely be closer to its 4% target by April from March's 3.4%. 11 of 16 major sectors suffered losses. The broader small-caps fell by 1.1%, while the?midcaps declined by 0.7%. Bajaj Broking Research stated that "the lack of progress in the U.S.Iran peace negotiations, along with continued selling pressure from foreigners, has weighed heavily on the market sentiment. There is a broad-based sell-off across all sectors." Financials fell 1% while the IT sub-index dropped 3.3% in advance of U.S. Inflation data. TCS,?Infosys and HCLTech all saw declines between 2.5%?and 4%. ONGC, Oil?India and other companies rose 6% and 6.6% respectively after CLSA, a brokerage, referred to the government's cuts in royalty rates on crude oil and natural gas production as a positive development for both companies.
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Sources say that China's independent refining companies cut production in May due to mounting losses
Sources from the trade and refining industry said that some independent'refiners' in China’s eastern province Shandong have cut fuel production due to dwindling margins. The Iran -war has pushed up crude prices, as they battle weak domestic demand. China's biggest independent refinery hub has been forced to cut production despite Beijing's order to small refiners (also known as teapots) to continue fuel production in order to protect the domestic supply amid disruptions caused by the Iran War. One of four sources familiar with the current situation, who spoke under condition of anonymity, stated that the average operating rate had fallen to about 50% from 55% in April. The demand for Iranian and Russian crude oil in the top importer of the world would be lowered if such refineries reduced their output. Sources said that some?refiners began reducing their runs to the minimum levels of operation as soon as the May Day holiday started. REFINERS SUFFER LOSSES OF ABOUT?500 Yuan PER TON Source: Independents are expected to lose 500 to 600 yuan (74 to 88 dollars) for every metric ton crude that is processed during the last week of this month. This source and another claim that some smaller refiners shut down their plants to perform maintenance. A third source said that without cutting output, the losses were unbearable. Some refiners had lowered their run rates from April by between 5 and 10 percentage points. In a Friday note, the commodities data provider SCI reported that Chinese refiners suffered losses of 649 Yuan per ton of crude they processed in April. This compares with a profit 269 Yuan one year ago. Sources said that Teapots, which is the world's largest buyer of Russian and Iranian sanctions crude, ran out of cheap crude in April, and chose to wait rather than purchase more cargoes of high-priced crude. Traders said that prices for these barrels, which usually trade at a discount to the benchmark ICE Brent oil, have surged since the conflict in the Middle East disrupted Middle East?oil?supplies due to the closure of Strait of Hormuz. They added that China's fuel consumption remained weak, while Beijing's curbs on fuel exports resulted in a glut of domestic fuel, which impacted the prices of gasoline and diesel, which teapots produce mainly. Beijing DIRECTIVE China's powerful planner warned independent refiners in early April not to reduce run rates below averages from the previous two years. He threatened to reduce crude import quotas if they did not comply. Sources said that it was unclear how strictly Beijing's directive is being enforced. However, some refiners requested permission from the Shandong Provincial government on May 9, to?lower processing rates or suspend operation at?some units. Sources claim that Beijing has not yet approved the requests. The National Development and Reform Commission didn't immediately respond to an fax request for comment. It was not clear if run-cuts would continue even if requests were denied. $1 = 6.7931 Chinese Yuan (Reporting from Siyi Liu, Singapore; Additional reporting provided by Beijing Newsroom. Editing by Florence Tan and Clarence Fernandez).
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MORNING BID EUROPE-Peace talks stutter
Ankur Banerjee gives us a look at what the future holds for European and global markets The markets are stuck in a cycle of hope and disappointment as talks to end war in the Middle East continue to be deadlocked. Donald Trump, the U.S. president, said that a ceasefire agreement with Iran is "on life support", after Tehran rejected an American proposal to end this conflict. Investors bet that both sides would not escalate their attacks. The lack of progress between Washington and Tehran in the negotiations has begun to weigh on some corners of the stock market. Investors are bracing for higher interest rates in order to combat inflationary pressure due to high?energy costs. Markets in Europe have priced two 25-basis-point hikes by the ECB over the 'three meetings up to September' and see a 75% probability of a third at year-end. Meanwhile, traders have fully priced any rate cuts from the Federal Reserve this year. The U.S. Dollar is now the safe-haven currency of choice, but gains are limited as investors continue to hope for a resolution in the next few days. Investors will be analyzing the U.S. data to determine the impact of war on prices. After an initial report that showed a rise, the final German inflation data is due for April. The data could help to highlight just how vulnerable Europe is, given its dependence on energy. Futures indicate a lower opening as the dour sentiment moves to Europe. The pan-European STOXX600 is still trading at a level that's 4% below its pre-war peak and lags behind global peers who have recovered on artificial intelligence driven optimism. The following are the key developments that may influence Tuesday's markets: * Germany: April inflation data, May ZEW survey * U.S. Inflation Report
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Prices of oil rise amid supply concerns as fragile US-Iran negotiations continue
Prices of oil rose by nearly 1% on Tuesday as the talks to end U.S. - Israel's?war on Iran? appeared fragile. Tehran's response?to a Washington proposal highlighted stark differences which have kept supply concerns alive. Brent crude futures rose 86 cents or 0.8% to $105.07 per barrel. U.S. West Texas Intermediate was up 99 cents or 1% at $99.06 as of 0411 GMT. Both benchmarks rose by nearly 2.8% Monday. U.S. president Donald Trump said on Monday that the ceasefire agreement with Iran is "on life support." He cited disagreements on several demands such as the cessation?of?hostilities across all fronts, removal of the U.S. navy blockade and the resumption Iranian oil sales. Tehran has also stressed its sovereignty over the Strait of Hormuz through which a fifth of all oil and gas liquefied flows. Suvro Sarkar, DBS Bank's energy sector team leader, said that optimism about a?imminent (peace deal) seems to have faded again. If we do not see a deal before?the?end of May then there are upside risks for oil prices. A survey released on Monday showed that OPEC's oil production in April was at its lowest level for more than 20 years. Tim Waterer is the chief market analyst for KCM Trade. He said that a genuine breakthrough towards a peace agreement could cause a sharp correction of $8 to $12. Any escalation in tensions or new blockade threats will quickly push Brent prices back up toward $115 and beyond. Amin Nasser, CEO of Saudi Aramco, warned on Monday that disruptions in oil exports could delay the return of market stability until 2027. This would result in the loss of 100 million barrels per week. Analysts in a?poll predicted that U.S. crude stockpiles would be down around 1.7 millions barrels from the previous week. Walt Chancellor, a Macquarie Group energy strategist, said that the draw will take place against a background of "continued strong net waterborne product export flows in the coming weeks." Market participants also kept a close eye on Trump's meeting with Chinese president Xi Jinping scheduled for Wednesday after Washington imposed sanction on three individuals as well as nine companies who facilitated Iranian oil shipments into China.
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Scientists say global fire outbreaks are at a record high, as 'unprecedented heat extremes' loom.
Scientists warned that climate change is causing unprecedented fire outbreaks in Africa, Asia, and other parts of the world this year. Conditions are expected to worsen as summer in the northern hemisphere approaches and El Nino weather patterns take hold, they said. Scientists warned that fires in the northern hemisphere from January to April had already caused unprecedented damage. They burned more than 150,000,000 hectares of land (370.66,000,000 acres), 20% more than previous records. Researchers said that temperature records may be broken this year. This will cause widespread fires and drought, as well as the effects of climate change caused by humans. Theodore Keeping is a wildfire specialist at Imperial College London, and part of the WWA group. He said that while the global fire season in many places has not yet heated up, the rapid start in combination with the forecast El Nino means we are looking at a severe year. He said that 85 million hectares have been burned in Africa this year, which is 23% higher than the previous record of 69 millions hectares. He said that the unusually high fire activity is caused by rapid changes from extremely wet conditions to extremely dry ones. The previous growing season was characterized by high rainfall, which produced more grass. This created an abundance of fuel for the recent savannah blazes caused by heat and drought. This month, EL NINO conditions are due Keeping reported that Asian fires had burned up to 44 million hectares this year. This is nearly 40% more land than in 2014, the previous record-breaking year. India, Myanmar Thailand, Laos, and China were among the worst affected. El Nino is expected to increase the risk of drought and heat in Australia, Canada, the United States, and the Amazon rainforest. He said: "The risk of extreme fires could be higher than we have ever seen before if an El Nino is strong." World Meteorological Organization has said that El Nino weather conditions caused by warming sea surface temperatures of the Pacific Ocean are expected to begin in May. The U.N. warned that it could cause droughts and flooding in Australia, Indonesia, and other parts of southern Asia, as well as temperature increases in other areas. Friederike Otto is a climate scientist from Imperial College London, and the co-founder and director of World Weather Attribution. She said: "If there is a strong El Nino this year, it is possible that climate change combined with El Nino will lead to unprecedented weather extremes." (Reporting and editing by David Stanway)
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Indian shares drop, rupee falls to record lows as Mideast peace hopes fade
The rupee hit a new record low on Tuesday as crude prices rose. Talks to end the Iran War appeared to be fragile. This fueled concerns about supply and potential economic impacts. The Nifty?50 dropped 0.44% as of?9 :20 a.m. IST to 23,712.2, while the BSE Sensex fell 0.56%?to?75,590.56. Ten of the sixteen major sectors suffered losses. The broader small and mid-caps fell 0.5% and 0.30%, respectively. Other Asian?markets dropped 0.5% as oil prices rose from about $100 a barrel to $105 after U.S. president Donald Trump said that the ceasefire agreement with Iran is "on life support". He had dismissed Tehran's response following a U.S. proposed peace as "stupid". The world's third largest oil importing country is negatively affected by higher crude prices, as they increase inflationary pressures. They also affect growth and corporate earnings. Investors also await India's retail inflation data for April, due later that day. This could provide clues on how the war with Iran has affected the price pressures of the economy.
Gold prices steady as markets assess Mideast tensions in advance of US inflation data
The gold price remained largely unchanged on Tuesday as markets assessed the latest developments in 'the Middle East conflict' and interest rate expectations before key U.S. Inflation data.
Gold spot fell by 0.1% to $4,728.79 an ounce at 0418 GMT after reaching a session high of three weeks earlier.
U.S. Gold futures for delivery in June gained 0.2%, to $4.737.60. U.S. President Donald Trump stated that a ceasefire agreement with Iran is "on life support". Tehran refused to accept the U.S. proposal and remained firm on its demands, which he called "garbage".
Ilya Spivak is the head of global macro for Tastylive. He said, "We have already seen expectations shift for many central banks in a more hawkish direction. For the Federal Reserve this has meant that all 'rate cuts' for this year are off.
We're looking at the CPI numbers to see if they give a stronger indication of inflation than expected.
Investors could get clues about the Fed's future policy by watching the data that is due later today.
The dollar also extended its gains from the previous session.
Increased crude oil prices can fuel inflation and increase the likelihood of higher interest rates. Gold is often seen as a hedge against inflation but high interest rates tend to put a strain on this non-yielding investment. BofA Global Research & Goldman Sachs have scaled back their expectations for U.S. rate?cuts in this year citing high inflation due to energy prices and growing strength of the labour market. The markets are also closely watching Trump's two day visit to China, where he will meet Chinese Xi Jinping and discuss a wide range of topics including the Middle East.
Silver spot rose by 0.4%, to $86.39 an ounce. Platinum fell 1.4%, to $2,101.60. Palladium dropped 0.6%, at $1,500.20. (Reporting and editing by Subhranshu, Harikrishnan Nair, and Rashmi aich in Bengaluru)
(source: Reuters)