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India's equity benchmarks tempered as Iran war concerns offset IT gains
India's equity benchmarks closed at the same level on Monday, as concerns about the Iran War offset a partial rebound in IT stocks. The general mood remained weak due to concerns?over the?weakening rupee, high energy prices, rising yields on bonds and escalating tensions related to the Iran conflict. Saudi Arabia reported intercepting three drones. A drone attack caused a fire to break out at a nuclear plant in the United Arab Emirates. U.S. president Donald Trump said Iran had to act "fast" to stop the U.S. and Israel war with Iran. The Nifty 50 closed 0.03 % higher at 23,649.95 and the BSE Senex?added 0.1 % to 75,315.04. The indexes dropped as much as 1.4% in the session. The rupee closed at 96.35 dollars per rupee, a record low. Small-caps and mid-caps both lost 0.2% and 1.3% respectively. IT index rose 2.4%, as expectations of better profits growth from companies with a high share of revenues in greenbacks grew. The index dropped by 5.7% in the previous week. The narrow recovery shows that sentiment is fragile in countries such as?India, which are heavily dependent on energy imports. As the Iran War has lasted for a third consecutive month, Brent Crude prices have risen to $110 per barrel, said Dharmesh KANT, head of equity analysis at Cholamandalam Securities. Consumer durables ?shed 1.8%. Amber Enterprises fell 15.6% due to weak results. Gland Pharma's March-quarter profits rose 97%, resulting in a 15.4% increase. Jana Small Finance Bank's shares fell 5.9% following the announcement that the TVS Group, led by Venu Srinivasan, would buy a stake of 5.64% in the lender via the issuance warrants worth 3.17 billion rupees at a 5.3% discount to the last closing price. Separately TVS Motor announced that it would buy 4,9% of Jana Holdings at a price of 1.93 billion rupees. TVS Motors dropped 5.1%.
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Copper falls to a one-week low due to weak China data
Copper prices dropped to a one-week low on Monday, as concerns about demand were exacerbated by the weak economic data coming out of China, the world's largest consumer. Benchmark copper on the London Metal Exchange was down?0.7% to $13,465 per metric ton, from an earlier low of $13,394.5. It has fallen 5% from a three-and-a half month high of $14196.50, last week. The traders said that the Chinese data had caused a further unwinding - a bet on higher prices held by funds and traders. China's industrial output data in April rose by 4.1% from the previous year, compared to a 5.7% increase in March. This is below a polled forecast of 5.9% growth, and represents the slowest growth in China since July 2023. Brent crude futures increased by more than 1%, to $110 per barrel. This was after an attack on a nuclear power plant in the United Arab Emirates and the apparent failure of U.S. - Israeli efforts to end their war against Iran. Britannia Global Markets wrote in a report that "that fuelled further speculation" about the need for central banks to continue tightening their monetary policies. This could harm metals, as it would slow global growth and reduce demand from manufacturers. Amid disruptions in Middle East production, aluminium is a major focus elsewhere. It accounts for about 9% of the global supply. "Aluminium has a very clear deficit." Analysts at Marex estimated that the market would be "short" by about 1.5 million tonnes before the Middle East's latest disruption risk. A Strait of Hormuz supply shock could cause a reduction of around 3 million tonnes of aluminium this year, pushing the shortfall in 2026 to approximately 3.3 million tonnes. The fear of a shortage led to large premiums or backwardations for contracts that were close by compared with those with a longer maturity. Prices of industrial metals were supported by a weaker dollar, which made metals more affordable for holders of other currencies. Aluminium for three months was up by 0.4% to $3,576 per ton. Zinc rose by 0.2% to 3,543, while lead climbed to $1,979. Tin gained 0.7% to 52,700, and nickel increased 0.5% to 18,590.
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The Indian cooking fuel shortage is driving California's gas price up
There is a cooking gas shortage in India. Californian motorists pay $6 per gallon for gasoline. Both are symptoms of the biggest ever disruption in energy supply. The two are directly related and show the impact of the U.S./Israeli war on Iran. The near-closure of 'Strait of Hormuz by Iran has caused global oil trade to be in chaos, and cut importers off from?around a fifth of global oil supplies that crossed the waterway prior to the war. Oil buyers have been forced to burn down their stockpiles to deal with the global fuel shortage. The pain is being spread by some attempts to alleviate the shortages. For example, the Indian government has been trying to increase the supply of liquefied petrol gas. India is the world's most populous nation and uses LPG for its primary cooking fuel. New Delhi, cut off from Middle Eastern LPG that accounted for over 90% of India’s total LPG imports before the Iran War, has ordered refiners in New Delhi to increase LPG production. Refiners have reduced production of motor fuel additives, which are made from LPG. The shrinking supply of alkylates in California is a concern for the state due to the potential shortage of gasoline. This could be caused by the decline in fuel production, and refiners from Asia struggling to get Middle Eastern crude oil. California is a big fan of alkylates because they are cleaner burning than other additives and it requires a special gasoline blend to reduce the smog. Californian motorists are facing a double blow from the war. A slump in Asian fuel imports has hit the motor fuel supply chain and the Indian government's policy of conserving cooking fuel is making it difficult to obtain the additives needed for California's unique gasoline mix. Mason Hamilton, chief economics for the American Petroleum Institute, said that India's LPG supplies are being restricted by the Strait of Hormuz. Refiners in India are also producing and exporting fewer alkylates, which adds pressure to the already tight California gasoline markets. INDIA Prioritises Cooking Fuel The decision by Indian refiners to reduce alkylate exports couldn't have come at a more inconvenient time for California. GasBuddy analyst Patrick De Haan says that Californian motorists are already paying higher gasoline prices than they have since 2022 due to the global fuel crisis brought on by the war. De Haan stated that the more severe the shortage of alkylates becomes, the higher the prices could rise in California. California Energy Commission spokesperson said that California was aware of India's changing priorities, but had a good supply of gasoline, and other blending components. A spokesperson for the CEC said that the CEC does anticipate a shortage but is closely monitoring the situation. GasBuddy's data shows that California's average retail price for motor fuel was $6.14 on Friday. It had been $6.16 per gallon over the past three years on May 7, as gasoline stocks in California hovered near records lows. De Haan stated that prices could cross $6.50 in the next few weeks. U.S. laws require cleaner gasoline blends in the summer peak season. This increases costs. California has the most stringent U.S. mandate which raises costs compared to the rest. GasBuddy data shows that the average national gasoline price in the United States was $4.52 per gallon on Friday. India has little to do to ensure that California continues to receive alkylates. There is a severe shortage of LPG in California. People have queued up for hours just to buy LPG cylinders. Restaurants and businesses have been warned that they may be forced to close. Reliance, the operator of Jamnagar's world-largest refinery, announced this month that it would reduce alkylate production and exports in order to maximize LPG output. Kpler data shows that India's alkylate exports in April fell to 33,000 barrels a day, which is about half the 61,000 bpd exported by March. This was the lowest level since October 2023. FEW ?GOOD OPTIONS California Governor Gavin Newsom, who is also battling LPG shortages in New Delhi, has limited options to stop pump prices from increasing further while the Iran War continues. De Haan stated that any temporary measures, such as tax exemptions, to lower fuel costs would increase demand. This, in turn, would exacerbate the alkylate scarcity and cause even more sticker shock for consumers. De Haan stated that "you can't add more pressure to a system already struggling under the weight it is carrying." GasBuddy's De Haan stated that Newsom's only option to lower California's gasoline prices could be to relax the state's fuel specs to reduce the use of alkylates. His hands are bound. De Haan stated that the only option he had was to make this decision. CEC spokesperson stated that the CEC did not believe a waiver on the blending requirements will help the state. Reporting by Shariq Khan in New York, Mohi Nrayan in New Delhi and Trixie Yap, Singapore; Editing done by Liz Hampton & Rod Nickel
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The Kremlin has "serious expectations" for Putin's visit to China
The Kremlin announced on Monday that Russia had high expectations for President Vladimir Putin's visit to China this week. Both sides will use the trip to develop their "privileged partnership". Putin will visit China on Wednesday and Tuesday, less than a fortnight after U.S. president Donald Trump visited the country to meet with President Xi Jinping. Dmitry Peskov, Kremlin spokesperson, said: "We have high expectations for this visit." Since the West imposed sanctions on Russia to punish it for its war in Ukraine, the 'no limits' partnership between China, the world’s largest producer of natural resources, and Russia has grown. Peskov stated that "we and our Chinese partners refer to it as an especially privileged and strategically important partnership." He said that the Russian delegation would include relevant?deputy premier ministers, ministers of government and company leaders. Peskov answered the question by saying that plans would be discussed regarding the proposed Power of 'Siberia 2' gas pipeline. This could deliver 50 bcm (billion cubic meters) more per year via Mongolia from Russia's Arctic Gas Fields to China. He replied: "All issues which are on the economic agenda of our bilateral relations will be dealt with." (Reporting and writing by Dmitry Antonov, Editing/reviewing by Mark Trevelyan/Guy Faulconbridge).
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Oil prices rise and global stocks fall as bonds falter
The global share market fell on Monday, as new drone attacks in the Gulf pushed oil prices and bonds yields higher. This stoked inflation concerns in a week where the tech bull will be tested with?earnings by Nvidia. The United Arab Emirates reported that a drone attack caused a fire at a nuclear plant. Saudi Arabia also reported intercepting three drones. The Strait of Hormuz, which is vital to the oil and gas industry in the world, remains closed for all but a small amount of shipping. This is because Tehran wants to formalise control of this waterway. George Lagarias is the chief economist of Forvis Mazars. He said, "Markets are currently panicking because they are pricing in the possibility of the Strait of Hormuz remaining closed." Brent crude was up about 1% to $110.50 per barrel. U.S. crude rose 1.2% to $106.72 per barrel. Importantly, September futures rose?above 100 and December reached a contract high. Markets were bracing for prolonged shortages. The G7 finance ministers will meet in Paris to discuss the Strait of Hormuz, and the critical raw materials supplies. Concerns that energy prices will continue to rise and drive inflation hit the global bond markets again on Monday. The yield on U.S. 10 year notes reached a 15-month high of 4.631% after soaring 23 basis points in the past week. The yield on 30-year bonds has reached 5.159%, after a jump of 18 basis points in the last week. The yield on Japan's 10-year bond reached a level not seen since 1996, as the government announced plans to issue new debt in order to "fund" a planned budget increase to help cushion the economic impact of the Iran War. Germany's 10-year yield has reached a level that it has not seen for 15 years. Lagarias of Forvis Mazars stated that "as long as it is not a credit-related event and we do not have any evidence to call it a credit-related event, I'd be surprised if this causes a large rout also in the equity market." It can be an opportunity for some investors who want to withdraw money from the market, but I would be surprised if there was a real correction as a result of the bond volatility. STOCKS SKID The major European markets, Frankfurt, Paris, and London, all fell between 0.5% and 1.1%. Nikkei, the Japanese stock market, fell 1% overnight, after falling 2% from its record highs last week. South Korean stocks increased 0.3% as Samsung Electronics gained nearly 4% following a partial court injunction against a strike. MSCI's broadest Asia-Pacific share index outside Japan fell 0.7%. Chinese blue-chips lost 0.6% as disappointing economic data weighed on the market. Retail sales in China rose 0.2%, when analysts expected growth of 2.0%. Industrial output also increased a slow 4.1%. S&P futures dropped 0.4%, while Nasdaq futures declined 0.2%. AI, RETAIL EARNINGS TO TEST FOR THE BULL RUSH The rising yields increase borrowing costs, and a discount is applied to future earnings of the company. This can affect stock valuations. Earnings from Nvidia, the world's largest company, are due to be released on Wednesday. Expectations for this company are sky-high. Nvidia's shares have risen 36% from a low in March, and the Philadelphia SE Semiconductor Index has soared over 60% amid a voracious demand for semiconductors as tech companies invest massively to create AI-related infrastructure. This week, Walmart and a number of other retailers will also release their results. These will give us an idea about how consumers are coping with the high cost of energy. The greenback has been the most liquid currency in forex markets due to risk aversion. The U.S. also exports energy, which gives it a relative advantage over Europe and most of Asia. The euro remained unchanged at $1.1630, after losing 1.4% the previous week. The pound remained at $1.3353 after a 2.3% drop last week due to political unrest in Britain. The dollar held steady against the yen, at 158.91. Only the threat of Japanese interference prevented another speculative attack on the 160.00 chart. Gold was almost flat on commodity markets at $4,544 per ounce, after attracting little support as a safe-haven or a hedge against inflation risk. (Reporting and editing by Gus Trompiz, Sonali Desai and Wayne Cole)
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Environmental concerns are a challenge for Equinix to Cape Town data centers
The plan of U.S. listed Equinix, to build two data centres in Cape Town, should not be approved unless its full water, power, and environmental impact is fully disclosed, according to an official objection filed with 'city planners. Housing Assembly (HA), a South African social movement that represents more than 20 communities, and UK non profit Foxglove claim the application can't be approved without key information for officials to evaluate the project. Technology firms are racing to increase computing power around the world, but they're facing local opposition as communities worry about rising electricity bills, water stress and pollution. Rosa Curling said that there was not enough information to make a decision about a project this size. There were no details on water usage, emissions, electricity demands, diesel generators or noise. According to the document, this project includes two large data centers in Cape Town that will use a total of up to 160 megawatts of power. However, there are still questions about how backup power generation for the site is going to be handled. Curling stated that the water requirements of the site were also important, given Cape Town's history with water scarcity. Cape Town experienced a severe water shortage in 2017-2018. This is known as 'Day Zero Crisis', where the city shut down most household taps due to dangerously low reservoirs. Saadiyah kwada, an lawyer at Legal Resources Centre, a non-profit organization in Cape Town, said: "There is a rush to build data centres, without properly considering the impacts." Equinix, which according to their website operates a 100% renewable energy site in Johannesburg, declined to comment about the objections lodged by HA 'and Foxglove. King David Golf Club and Equinix, owners of King Air Industrial (the development site on which the data centers are to be built), have 30 days in which to respond. After that, 'the City' has 180 days in which to decide. KAI refused to comment. The City of Cape Town has not responded to any requests for comments. South Africa's Government pledged on Wednesday to increase investment in digital infrastructure including data centers through tax incentives, policy reforms and regulatory barriers. (Editing by Simon Jessop and Kirsten Donovan).
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No one bids on the auction for Russia's stake in UGC, a gold miner.
The Russian state did not auction the seized stake in Uzhuralzoloto, a gold producer, that it had taken last year. A state auction website showed this on Monday. It said no one had bid. Last July, a Russian court decided that the majority of UGC owned by Konstantin Strukov should be confiscated and transferred to state. This was part of an 'overall pattern of nationalisations for Russian companies. The Russian federal property management agency Rosimushchestvo auctioned off Strukov’s assets earlier this month. They valued them at $2.22 billion (?162.02 bn roubles). His former 67.2% share in UGC, one of Russia's 10 largest gold miners, was valued at 140.4 billion roubles. The state auction website announced on Monday that the planned sale failed. The website stated that "the bid was declared invalid as no applications were received by the deadline to submit applications." It wasn't clear if there was a plan for a new auction. Last year, prosecutors moved to seize Strukov's stake after accusing him and "several other" of obtaining their properties "through corruption." Strukov is not in custody and hasn't been charged. The Russian Finance Ministry has put up for auction a number confiscated 'assets, in an attempt to replenish the 'federal treasury. In January, Russia sold one of its largest and modern airports, Moscow’s Domodedovo to a subsidiary of another Moscow Airport, Sheremetyevo for just 66 billion Rubbles. This is only half the price it was originally listed at, 132.3 billion Rubles. $1 = 72,9000 roubles (Reporting and writing by Anastasia Lyrchikova. Editing and proofreading by Mark Trevelyan).
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Estonian spy chief: Putin is faced with'very hard choices' in Ukraine, as sanctions bite
Estonia's chief of foreign intelligence said that Russian President Vladimir Putin is limited in his options for a victory in Ukraine, as his military forces are unable to make significant progress on the battlefield and Western sanctions are eroding his resources. Kaupo Rosin is a leading'spy' on NATO’s eastern flank. He told us that Russia was losing more men in its?fifth full-scale year of war than they were recruiting. A general mobilisation, he said, would be unpopular and could undermine stability. "All these factors are creating a scenario where some people, including those at the highest levels in Russia, understand that they have an enormous problem. In an interview with Tallinn, he stated that it is hard to know what Putin's thoughts are on the matter. However, I believe all of these factors have started to influence his decision making. In recent months, Russian forces have made some of the slowest advances in Ukraine since 2023 - one year after they invaded Ukraine. The economy of Russia, which is worth $3 trillion, contracted by 0.3% during the first quarter. Putin has said that government measures to boost Russia's economy are starting to yield positive results. He has also repeatedly stated that Russian forces will continue to fight until they achieve all of their goals. Rosin stated that the "real, real hurt" of sanctions against the financial sector was the primary reason for the "bad" financial situation in Russia. He also said that punitive measures taken on Russia's crude oil exports are also limiting the country's income. It's a very difficult choice for them right now. In this situation, it's difficult to predict what they will do. Estonia, which has a land border to Russia, is one of the most vocal supporters of Ukraine within NATO and in the European Union. It has also urged its allies repeatedly to increase pressure on Moscow. "My message is to push ahead with (sanctions). He said that now is not the right time to hesitate. No sign of a 'big breakthrough' towards peace Unidentified, another European intelligence chief said that there are clear signs of increasing pressure on Russia but that this has not yet changed Moscow's war calculus. The chief stated that it was difficult to imagine Russia abandoning its goal to take the entire Donbass area. Russia insisted that Ukraine withdraw from eastern Donbas as part of any agreement, but Kyiv rejected this proposal. The Donbas region includes the Russian-occupied Luhansk province and the Donetsk area, parts of which Ukraine was able to defend for years against the Russian offensive. The spy chief said that it did not appear as if Russia was attempting to change its war objectives or if there was going to be a "big breakthrough". The spy chief characterized Russian society as resilient. The official stated that it was "wishful thinking" to think that Russia's leadership is in some way diminishing or Putin has been challenged (domestically )..."). BIG MILITARY AMBITIONS The Estonian spy chief said that Russia would not abandon its goal of subjugating Ukraine as long as Putin was in power. They also predicted they would keep a large military force on the borders of Ukraine even after the war ended. He also said that once the fighting has ended, Moscow will expand its military along NATO's border and "achieve military dominance" from the Arctic to the Black Sea. He said that the Russians' military ambitions were "very, very large" and predicted they would continue to carry out a sabotage campaign in the West, regardless of the danger it poses to civilian lives. Russia has always denied involvement in any sabotage plans or attacks and dismisses these accusations as Western scaremongering. Rosin stated that "Russia views this (such attacks as) something which does not ignite a war." (Editing by Chizu Nomiyama).
Italy warns EU that it could pull out of SAFE Defence Scheme without budget flexibility on energy
Italy may not be able to access the SAFE financing scheme of the European Union for defence if budget rules on energy spending aren't more lenient, said?Prime Minster Giorgia Meloni in a letter sent to EU Commission president Ursula von der Leyen.
The Security Action for Europe instrument (SAFE), backed by EU budget, is a joint loan scheme that helps member states reach more ambitious NATO expenditure targets.
Meloni escalated her diplomatic efforts with the EU by urging the Commission to give member states the same amount of budget flexibility to reduce the soaring energy costs that is currently permitted for defence expenditures.
Meloni, in a letter sent late Sunday to the.
It would be very difficult for the Italian government to justify the SAFE program to the public without this political consistency.
The "escape clause" allows the European Union to allow countries to exceed their deficit limits, either to increase defence spending or to address advers economic conditions.
The budget flexibility for defence spending would last four years, starting in 2025. However, any increase in deficits through 2028 must not be more than 1.5% of the national output each year.
If the clause was extended to include energy expenditure, Italy could potentially fund aid measures worth over 30 billion euros (34.90 billion dollars) for firms and families.
Rome would have to 'drop its current plans' in order to reduce its budget deficit under the EU ceiling of 3% GDP this year.
According to the EU, energy crisis does not justify deviations from budget rules.
Last month, Italy warned that it might not be able honour its commitments for boosting defence spending because of the need to combat surging energy costs.
Meloni wrote von der Leyen: "We can't justify to our citizens the fact that the EU allows financial flexibility to secure and defend the country in the strictest of terms, but does not protect workers, families and businesses against a new energy crises that could deal a serious blow to the economy."
(source: Reuters)