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Kyrgyzstan approves a plan to build a mini oil refinery amid Russian shortages
Kyrgyzstan agreed to build a mini-oil refinery worth $25 million in the south of the nation as part of its efforts to increase domestic fuel production and reduce dependence on imports due to tightening Russian supplies. Central Asian Energy LLC of Kyrgyzstan, who will finance the project, recently signed an agreement with the Kyrgyz company to build the refinery. The plant will produce bitumen, motor oil and gasoline that meets?K5 or K6 environmental standards. The first phase of the construction should be completed by autumn 2026. Kyrgyzstan imports a majority of its gasoline from Russia. Fuel shortages in Russia have been a problem since late May, due to production reductions following drone attacks on Russian refineries. The Association of Oil Traders of Kyrgyzstan (AOTK) reported a shortage of AI 95 and AI 98?grade gas in late June due to a lack of supplies from Russia, and a seasonal rise in demand. In recent weeks, authorities have taken a series of steps to stabilize the fuel market. These include temporary price controls and lifting state price regulation for AI-95 gasohol. They also imposed a ban on exports of petroleum products. Kyrgyzstan?also awaits fuel deliveries from China, and Belarus. Separately the energy ministry announced that it had 'agreed with Uzbekistan to refine a part of its petroleum products in Uzbek refineries, before shipping them back to Kyrgyzstan. Reporting by Aigerim Turgunbaeva; Writing by Felix Light; Editing by Louise Heavens
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Norsk Hydro's Q2 profits are the highest as higher prices and Qatar offset the lower price.
Norsk Hydro, the Norwegian aluminium manufacturer, reported a quarterly profit that was?above expectations? on Wednesday. Higher aluminium prices and higher?recycling? margins outweighed lower energy output and negative currency effects. Hydro enjoyed a windfall from the higher aluminium prices, regional premiums and disruptions in Middle East supplies during the second quarter. However, reduced production at its Qatalum Joint Venture limited this. The company's adjusted earnings, before interest, taxes, depreciation, and amortization, rose 15% year-over-year to 8.92 billion Norwegian Crowns ($927.0 million) during the April-June period, while the average estimate of analysts polled was 8.22 billion Norwegian Crowns. Hydro's Aluminium Metal division, which has an adjusted EBITDA of 6.42 billion crowns, led the improvement. It said that higher metal prices and lower costs for alumina more than compensated a?8% drop in sales volumes, as well as increased energy and carbon expenses and a stronger Norwegian Crown. Hydro's adjusted EBITDA dropped from 922 millions crowns a year earlier to 316million crowns at Qatalum due to the Middle East Crisis. Hydro ceased purchasing metals from Qatalum in the third quarter after the marketing and offtake contract with the venture expired. Hydro stated that it was in discussions with its partner about how Qatalum’s metal would be marketed and sold going forward. Aluminum prices rose to a record high of four years in June, as regional supply risk increased and physical premiums in Europe and North America strengthened. Hydro's recycling operation earned over 900 million crowns despite little improvement in underlying demand. Hydro reported that primary aluminum consumption outside China has declined from a year ago. It added that the Energy division's profits had also been cut in half due to a lower hydropower output and regional price differences.
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Asian stocks hold gains as US recoveries, oil prices rise
The stock market made a few gains on Wednesday, but the positive impact of a strong Wall Street session was offset by caution as investors waited for earnings reports from Big Tech. Meanwhile, the oil price rose due to threats from Houthi "rebels" to escalate the Middle East conflict. The broadest MSCI index of Asia-Pacific stocks outside Japan rose 0.2%, while the South Korean Kospi's gains were reduced to just 1.5% from an earlier gain of over 6%. The Nikkei225 in Japan fluctuated between gains and losses. Meanwhile, S&P 500 futures fell 0.2% along with a 1.2% drop for Hong Kong stocks. Brent crude rose by 1.3% to $92.22 a barrel on Tuesday after two oil tankers transporting Saudi crude for Asia changed course in the Red Sea following threats from Yemen's Iran aligned Houthis. Westpac analysts stated in a report that equity markets have shrugged off the geopolitical risk and are instead focusing on returns from the tech sector. After large losses in the past few days, semiconductor stocks have bounced back. The market will be focused on the earnings of Alphabet and Tesla. Alphabet is under increased scrutiny for its delayed launch of an important AI model. Tesla is expected to report their first quarterly cash loss in more than two years. Laura Cooper, head of macrocredit at Nuveen and global investment strategist, wrote that the earnings season would be a test to see if the group?carrying the market could keep up the pace now required. The second half will require that AI spending translate into earnings growth in the entire market, and that credit can absorb a new wave of supply with no spreads giving away. The pharmaceutical stocks in India fell 1.5% following the announcement by U.S. president Donald Trump that all generic drugs imported into the United States would be subject to a 0% tariff for two years starting August 1, and then a 100% tariff for one year, followed by a 200% rate thereafter. The U.S. Dollar Index, which measures the strength of the dollar against six currencies held at 101.14, near its one-week high. The U.S. Dollar was unchanged at 163.17 yen against the?yen after hitting a four-decades high on Tuesday. Satsuki Katayama, the Japanese Finance Minister, said that the government is ready to take 'decisive action' in currency markets when needed. However, he refused to comment on specific levels of foreign exchange. Japan's imports reached a new record in June due to the soaring price of oil and the battered yen. Exports also exceeded expectations thanks to strong demand from AI data centres and a weak yen. Oil prices rose to a five-week peak on Tuesday. This did little to disturb the bond and currency markets in advance of next week's central bank meetings. According to a survey, economists believe that the U.S. Federal Reserve will keep its key rate constant for the remainder of 2026. However, they also said there is a high chance of a rate increase. FedWatch, an online tool from CME Group, showed that Fed funds futures indicated that, while a rate hike is likely by December, one of 50 basis points or higher by the end is just a coin flip. The yield of the 10-year Treasury bond in the United States was up by 0.2 basis points to 4.628%. Gold rose 1.2% to $4,124.74. Bitcoin was down by 0.5% to $66,077.16 while ether remained flat at $1923.25. (Reporting and editing by Christopher Cushing, Sam Holmes and Gregor Stuart Hunter)
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Steelmaker SSAB misses profit forecasts for Q2 as war-related costs bite
?Swedish steelmaker SSAB reported a smaller-than-expected rise ?in its second-quarter operating ?profit on ?Wednesday, ?as higher steel prices and shipments were partly offset by increased costs, including higher logistics and energy prices linked to the Middle East crisis. Operating earnings increased to 2.70 billion Swedish Crowns ($278.3million) in the April-June period, up from 2.14 billion crowns one year earlier. A poll by SSAB revealed that analysts expected?2.85 million crowns in average. In a press release, CEO Johnny Sjostrom stated that despite the continued geopolitical uncertainty, they remain committed to executing their'strategic priorities', strengthening the premium product offerings, and progressing our transformation towards fossil free steel production. SSAB operates steel businesses both on the Atlantic and the European side. It said that it?anticipated a seasonal decline in demand during the third quarter. It will also carry out planned maintenance in all of its steel divisions. Steel producer 'Steel Producer' expects its third quarter shipments in the Americas, Europe, and Special Steel divisions to be significantly lower than the previous quarter. It added that a slight increase in realised prices is expected due to?pricing increases already implemented.
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Helen Jewell: ROI-AI is not a threat to equity diversification
Investors are searching for diversifiers as the AI market becomes more crowded. Several options are hidden in plain sight. The massive spending on AI in the last year has boosted earnings for corporations. Companies associated with this splurge, as represented by an iShares?ETF, have seen their?stocks double from?June of 2025 to this June before a recent drop. BlackRock reports that the "momentum factor" - which is where winning stocks continue to?win - has outperformed all other factors over the last five years. It gained nearly 200%. Diversification is not a strategy that has been rewarding. This could change. Goldman Sachs says that the AI market is the most crowded ever. This has led many investors to wonder which parts of the market could offer an alternative if this AI boom fails. Three options are available. First, healthcare. The current global equity index strategy is not as diverse as you would expect. According to our analysis of global stock returns over the last 12 months, the MSCI All Country World Index has a correlation with AI stocks of 0.79 and with the momentum factor of 0.76, which means that the?returns are closely related. Healthcare stocks had a negative correlation with AI of 0.06 and a momentum factor of 0.12. There was, in other words almost no correlation between the movement of AI stocks and that of healthcare stocks over the last year. It is clear that healthcare has been a good diversifier. We expect healthcare to continue to play a role in protecting portfolios from downturns, due to its long history of strong earnings growth. Long-term changes such as the demographic shift and innovation in medical technology, as well as pharmaceuticals, continue to boost profits. In the past 30 years, the strength of healthcare earnings has translated into higher valuations for healthcare compared to the market. AI's dominance over the last few years has led to healthcare trading at a discount of 15%. We believe that while healthcare offers attractive valuations and strong earnings, it is important to be selective. According to?FactSet & BlackRock, the healthcare sector had more stock-specific volatility than any other sector last year. We prefer companies that embrace technology change. Combining large?medical data with AI models could, for example speed up the detection and treatment. This will not change, even if AI as a whole fades. OLD ECONOMY, NEW CASE Latin America is the second. Investors have mostly overlooked equity markets in Latin America, which have had a low relationship with AI and momentum over the past few years. According to BlackRock, Latin America accounts for just 0.8% in the MSCI ACWI but 7% in global GDP. This gap could close in the next few years, according to BlackRock. Brazilian and Mexican shares are also trading below their historical values, while most major markets are at a premium. Interest rate cuts in the near future, which would benefit their domestic economies, as well as, on a longer-term basis, rising commodity demand due to?AI and electricification, could be catalysts for a rating reassessment. The UK, my home market, has a low correlation with AI of 0.26 and has proven resilient to market turmoil over the past few years, fueled by the COVID-19 Pandemic, geopolitical conflict, and inflationary spikes. Over the last five years, the FTSE 100 outperformed the global stock market on a total returns basis - without having much or any exposure to pure AI. The UK market is characterized by its exposure to sectors of the "old economy", which are less susceptible to disruption from AI, including financials, materials and energy. As with healthcare, there are many reasons to believe that these sectors will benefit from AI. This could be through cost-cutting in banks or increased demand for copper due to AI and electrification. After a decade of six different prime ministers, political stability could be a catalyst to help UK stocks close the gap in valuation with developed markets. Stability could lead to greater economic confidence, which would encourage domestic investors to buy UK stocks in addition to foreign investors. This diversification strategy carries a risk: AI could continue to grow while diversifiers, which are meant to protect portfolios, drag down performance. Although there are many reasons to be optimistic about the three above areas over the long-term, there are not many catalysts that will lead to AI outperforming them in the near term. The AI trade could stall, either due to fears of over-investment or an unforeseen event. We've seen a drop in the U.S. Semiconductor Index just this month. Holding stocks to help weather the storm seems sensible.
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Gold reaches two-week highs as Fed outlook and Mideast conflict remain in focus
Gold rose to a two-week high on Wednesday as technical buying boosted the price. Investors assessed the escalating conflict in the Middle East and were awaiting the U.S. Federal Reserve's meeting next week, which will provide clues about the interest rate outlook. Gold spot rose 1.3% by 0511 GMT to $4,129.43 an ounce, after hitting its highest level since July 7 earlier that day. U.S. Gold Futures for August Delivery jumped?1.4% at $4,134.50. As tensions escalate in the Middle East, oil prices and inflation fears rise. This has led to expectations of interest rate hikes which caused gold to drop at its steepest weekly rate since early June. Tim Waterer is the chief market analyst for KCM Trade. He said that buyers are stepping in to find a bargain after the recent pullback. The hope of diplomatic progress between Iran and the U.S. also helps price movements. Marco Rubio, the U.S. secretary of state, said that Washington was still willing to talk about ending the Iran crisis with Tehran but Tehran wasn't serious. After threats by the Iran-aligned Houthis of Yemen, three oil tankers transporting Saudi crude to Asia changed course in Tuesday's Red Sea. This raised concerns over energy supply. According to a recent poll, the Fed will maintain its key rate for the rest of 2026. However, a majority who responded to a question regarding the possibility of a hike in this year described it as "high". This is a change from last month, when the majority saw the likelihood of a hike as "low". The opportunity cost of holding?bullion that does not yield increases as interest rates rise over time. Spot silver, among other metals?was up 1.6 percent at $59.71 an ounce. It had earlier reached its highest level since July 10. Palladium grew 2.2%, to $1310.50, while platinum rose 1.9%, to $1659.97. (Reporting and editing by Rashmi aich and Subhranshu sahu in Bengaluru, and Pablo Sinha in Bengaluru.
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The new chip ad is MORNINGBID EUROPE. An AI model Breaking Bad
Gregor Stuart Hunter gives us a look at what the future holds for European and global markets. The AI trade is roaring back Wednesday, as export demand surges throughout?Asia. This has lifted chipmaker stocks to their highest level in a week and pushed the regional benchmark up. MSCI's broadest indice of?Asia-Pacific stocks outside Japan rose by 1.3%, extending gains into a second session. The KOSPI soared up to 6.2% while Japan's Nikkei increased by 1.9%. It's a curious coincidence that the rally of tech hardware names has taken place. The rally in tech hardware names comes at a curious time. But that's not the only reason for concern about Big Tech. S&P 500 futures fell 0.1% during Asian trading, ahead of Alphabet's and Tesla's results. Investors are watching Alphabet closely as questions about delays in a flagship AI product mount. Tesla, meanwhile, is expected to report its first quarter cash burn since more than two years. This could lead to a bumpy week as we approach the weekend. The Middle East conflict is still a major issue, driving oil prices up and causing policymakers to face more challenges. Brent crude is up 1.2% to $92.13 following the Tuesday reverse of two oil tankers that were carrying Saudi crude from Asia towards Asia after threats by Yemen's Iran aligned Houthis. The closure of the Bab el-Mandeb could cause more shipping disruptions in the Middle East. The U.S. Dollar was unchanged at 163.105 yen against the yen after Japanese Finance Minister Satsuki katayama stated on Wednesday that the government is ready to take "decisive actions" in the currency markets, if necessary, but refused to comment?on specific levels of foreign exchange. The Japanese currency fell to its lowest level since 1986 Tuesday. The combination of a battered Japanese yen and rising oil prices has made life difficult for Tokyo policymakers. Japan's imports reached a record-high in June. Exports were also above expectations, thanks to booming demand for AI-related data centers and a weaker currency which continues to boost overseas sales. Early European futures rose?0.1% while German DAX and FTSE futures grew 0.3%. Key developments which could affect markets on Wednesday include: U.S. earnings from Alphabet and Tesla; European earnings from Equinor, UniCredit, Deutsche Boerse and Experian; Economic events in the UK: CPI, PPI and RPI for June. (Reporting Gregor Stuart Hunter, Editing Shri Navaratnam).
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Oil gains from new Mideast supply risk
The oil prices rose on Wednesday, as concerns about a 'further disruption of supply' grew after U.S. troops struck Iranian military targets for the 11th consecutive night. Meanwhile, oil tankers reacted to warnings from the Houthi-backed militia by making U-turns at the Red Sea. Brent crude futures increased $1, or 1.1% to $92.01 per barrel at 0330 GMT. U.S. West Texas Intermediate Crude climbed 82 Cents, or 1.0 %, to $85.16. Gains were made after oil reached a five-week peak on Tuesday, following U.S. strikes against targets in western and southern Iran. Iran also attacked U.S. installations in Bahrain, Kuwait, and Jordan. The U.S. army said that it had begun its "latest strike on Iran" late Tuesday night in the United States or early Wednesday morning in Iran. The U.S. attack came just a few hours after the Kuwaiti military said that its air defences intercepted Iranian drones Wednesday. Constant trading of'strikes' has raised concerns about further disruptions in global energy supplies. Yemeni Houthis, who are Iran-aligned, opened a new front for the Iran War by?threatening vessels carrying Saudi Oil in the Bab el-Mandeb Strait. They also announced a naval blockade? of Saudi Arabia. Since the collapse of the ceasefire agreement between Iran and the United States earlier this month, the Bab el Mandeb 'waterway? at the southern entry to the Red Sea is becoming an increasingly important route for Saudi oil exports. Following a warning by Yemen's Iran aligned Houthi militia, three oil tankers carrying Saudi crude bound for China and India turned around in the Red Sea Tuesday. They headed towards the Suez Canal instead of braving the Yemeni coastline. ING commodity analysts?on Wednesday said that this would force tankers into and out of the Red Sea through the 'Suez Canal. This would add significant time and cost to voyages to Asia. They also noted that 'tensions in Black Sea added to the uncertainty regarding supply. Caspian Pipeline Consortium stopped receiving oil from Kazakhstan on Monday after suspending loadings due to attacks against oil tankers in its Black Sea terminal that were blamed on Ukrainian drones. Ukraine has not made any comments on the attacks. ING said that the longer the suspension continues, the more likely it is that Kazakhstan will have to reduce its upstream production. Market sources reported that data from the American Petroleum Institute revealed that U.S. crude and distillate stocks rose last week while gasoline inventories fell. The data on inventories comes before official figures released by the U.S. Energy Information Administration Wednesday. Reporting by Siddharth Cavale in New York, and Jeslyne Lerh in Singapore. Editing by Lincoln Feast.
The AI boom and Brittle bonds face off in the morning bid of AMERICAS
The ROI team's weekend reading, viewing and listening.
Mike Dolan is Editor-at-Large for Markets & Finance
Hello Morning Bid readers!
The week began with a new surge in sovereign bonds yields across the globe as the 'Iran energy shock' kept the pressure up on oil prices and inflation expectations, along with rate-hike betting. The risk-off trend took attention away from the AI frenzy and global equities were volatile. However, major indexes rose later in the week led by chipmakers.
Bonds were under renewed pressure as government borrowing costs reached several milestones. The 30-year U.S. Treasury Yields hit a new high this week. Japan's long term borrowing costs have also reached new records - and Britain's gilt rates are at their highest level since the 1990s, as investors worry about a potential change of Prime Minister. Bond?selling slowed down late in the week as gilts were given a reprieve from UK inflation that was below expectations and Andy Burnham's, the mayor of Manchester, who is the main contender to Keir?Starmer's premiership.
The energy crisis showed no signs of abating, but the Gulf situation remained the main aggravating factor for bond yields. Brent crude prices fluctuated throughout the week. Fresh attacks in the area over the weekend pushed Brent crude over $110 per bar on Monday. After reports that six million barrels of oil had been transported by supertankers through the Strait of Hormuz, prices dropped to $105/bbl.
Meanwhile, Trump has continued to pursue his hardball approach: he floated the idea of a new military strike while simultaneously urging Tehran towards a peaceful settlement, and he talked up the prospects for a breakthrough. The oil prices rose again on Thursday after Tehran seemed to be hardening its stance regarding its nuclear program, underlining the distance between the two sides in their negotiations.
Energy markets are in a race against time. Fatih Birol, the IEA's chief executive officer, warned that a crisis was looming as crude oil inventories in the world could reach critical levels if the Strait of Hormuz remains closed. This could indicate that the global oil market is only a few months away from a crisis.
The summer months may be the most difficult for fuel supply disruptions.
The recent ructions in the markets could be a sign of things to come, now that Kevin Warsh is in charge. Markets can no longer assume that the Federal Reserve would always buy bonds when they are in need.
Warsh takes over at a challenging time. Warsh, who is set to be sworn into office at the White House today, was expected to pursue rate reductions once he assumed his position, as per the president's stated wishes. This may not be possible, given the inflation backdrop.
Strangely, Trump appeared to back down from his demand for immediate rate reductions this week. In comments to the Washington Examiner he said he would "let Warsh do what he wants" to rates.
Does that mean that rates are unable to fall as long as the price pressures continue? Fed policymakers seem to be increasingly in agreement. Minutes of its April policy meeting were released on Wednesday and provided more context to the hawkish remarks in last month's statements.
The accelerating inflation in the U.S. has forced real interest rates to negative territory.
This week, the chip giant Nvidia announced its first-quarter earnings. It was one of the most anticipated events of this year's earnings season. The results were strong, but the reaction of the stock price was not as positive. This is a sign that the share price is already reflected in the optimism and the high bar set for the world's largest company to continue to impress markets.
A planned strike by Samsung employees dragged the tech giant down on Wednesday. However, the South Korean chipmaker, after an 11th hour deal, surged to a new record high on Friday, pulling the KOSPI index with it.
Elon Musk filed for SpaceX's long-awaited IPO on Wednesday. It could be the biggest in history. Sources claim that SpaceX could list its shares on the Nasdaq as soon as June 12. OpenAI is also reportedly planning to file an IPO soon, with a listing date of early September. AI rival Anthropic will also be hitting the Street.
Open Interest. For more data-driven insight on markets and commodities. Open Interest. Open Interest.
Why could AI increase the neutral interest rate? What could happen if the status quo changes in the Gulf region threatens the dominance of U.S. dollars? How is it that Australia's LNG industry is both uninvestable, and also the country's "greatest growth opportunity"? What is the story behind zinc's surprising strength? Which countries are the most susceptible to a diesel price squeeze? Why would China bulls be wise to tread lightly? Three key reasons for the continued equity rally
We're reading this weekend... RON BOUSSO. ROI Energy columnist. In his Substack Noahpinion economics columnist Noah Smith argues militaries that do not use drones in'modern warfare' are outdated. He warns that drones made in a day can destroy a whole year's production of tanks from Rheinmetall. It's scary stuff. GAVIN MAGUIRE is the ROI Global Energy Transformation Columnist. A report by the International Renewable Energy Agency shows that the decarbonization of heavy road transport, which was long viewed as a permanent reliance on diesel due to the cost and weight associated with batteries, has become increasingly viable. Things are changing fast. CLYDE RUSSELL: Columnist for ROI Asia Commodities and Energy, former columnist John Kemp, has created a slide deck that provides a clear and comprehensive look at the global impact of the closure of the Strait Of Hormuz on the oil markets. It includes graphical analysis of flows and prices.
We are listening to... Ron Bouso, a?ROI Energy columnist. This podcast from the Oxford Institute for Energy Studies analyzes how oil prices have responded to the?Hormuz Crisis in a volatile and sometimes unexpected manner.
We're keeping an eye on... JAMIE MCGEEVER. In March, Jeff Currie, Carlyle, and Amrita Sen, Energy Aspects, discussed the energy shock caused by the three-week-old Iran War. They reconvene two months later, and are still bearish, despite the Strait of Hormuz being closed. Currie asks: Why is oil at $100 and not $200 if markets are "la-la land"?
Want to receive Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed are the authors'. These opinions do not represent the views of News. News is bound by the Trust Principles to maintain integrity, independence and freedom from bias. (By Mike Dolan).
(source: Reuters)