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The most violent ceasefire in history.
Mike Dolan: What's important in U.S. markets and the global economy today? By Mike Dolan. Editor-at-Large for Finance & Markets. With the World Cup hoopla this weekend, many may have missed the fact that the Iran conflict has once again descended into full-blown warfare. As Tehran retaliated on U.S. bases and gulf shipping, Iranian attacks now have killed at least three U.S. troops. The traffic through the Strait of Hormuz is now a trickle. Brent crude has also risen above $90 a barrel for the first since early June. All that and more will be discussed below. Listen to the Morning Bid podcast for the latest update on the energy crisis, the major moves in the chip stocks, and the changes both at?10 Downing Street and?11 Downing Street. Subscribe to the Morning Bid daily podcast and hear journalists discussing the latest news in finance and markets seven days a weeks. The most violent ceasefire It's not surprising that the June inflation report was received so poorly last week, given the recent increase in violence in the Middle East. The futures markets believes that there is a 2/3 chance the Fed will raise interest rates in September. Another big cloud is forming on the horizon due to shaky stocks. The South Korean market was closed on Friday but chip sales resumed today with the KOSPI dropping another 3%. Tokyo was closed on Friday, so the stock markets were quieter in the morning. The U.S. Futures are slightly higher before the bell. This follows a tough few weeks for tech stocks. The high-flying U.S. chips stocks fell 10% last week, and 20% since their record highs of June. This suggests that the market is settling down from its AI frenzy. Now, it'll turn its attention to the hyperscalers that will report their earnings this week and in the coming weeks. Alphabet will report on Wednesday. Intel, Tesla, and other companies are also reporting this week. China's Moonshot AI programme, which is the latest AI innovation from the country, offers a glimpse into how the second-largest economy in the world keeps up with the rapid technological transformation. On Monday, Andy Burnham will become the new UK Prime Minister. The market is likely to be interested in the cabinet picks he makes and his choice of finance ministry, with Shabana Mahmood being a conservative candidate for Home Secretary. Chart of the Day Crude oil prices briefly surged back above $90 a barrel on Monday, for the first since early June. The Iran war was raging after the ninth day in a row that the U.S. attacked Iran. Prices dropped below this level after Iran's Foreign Ministry said that negotiations with the U.S. can be pursued on the basis of national interests. Gulf shipping through the Strait of Hormuz is now at a crawl. Fuel prices are rising across the board. Average retail U.S. gasoline prices are now above $4 per gallon. Watch today's events Canada's June Inflation Report and the U.S. Leading Economic Index Andy Burnham, leader of the Labour Party, officially takes over as Prime Minister in the UK * ?U.S. Earnings reports from Domino's Pizza Steel Dynamics, and WR Berkley Want to receive the Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed here are the author's. These opinions do not represent those of News. News is committed, as part of the Trust Principles to independence, integrity and the absence bias. (Written by Mike Dolan).
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Why oil prices aren't crazy after 5 months of US/Iran war
Analysts predicted that the price of crude could rise to $150 per barrel, or even $200. This would result in the fifth of the global oil supply, which transits through the Strait of Hormuz, being cut off from the world market. Brent crude futures reached a peak of around $126, comfortably below the 2008 all-time record of $147, and averaged only $101 per barrel between February 28th and June 11, when U.S. president Donald Trump called off the strikes against Iran. They then briefly retreated to $70 levels before the war in early July. Here are some reasons why oil prices haven't gone insane. Yet. 1. CHINESE SURPRISE China, as the world's biggest oil importer, surprised everyone by reducing crude imports to the lowest level in almost a decade. Fuel exports have been curtailed, the population has started to use electric taxis in place of private cars, and the petrochemical industry has also reduced its volumes. 2. U.S. US. The United States also released crude from its Strategic Petroleum Reserve in March as part of an unprecedented 400 million barrel release coordinated by the International?Agency, which helped cushion supply disruptions. 3. TRUMP BURNS BULLS Donald Trump, the U.S. president, has repeatedly misled oil bulls with his statements about peace deals and the resumption of oil flows through the Strait of Hormuz. The oil market has seen a drop in liquidity as traders are reluctant to place large bets on the upside due to the possibility of a sudden market turn. Ilia Bouchouev, of the Oxford Institute for Energy Studies, said: "Everyone is bullish right now but nobody is going to last." According to data released by the ICE on Friday, after reducing their bullish positions in Brent futures in early July to their lowest level this year, funds increased their purchases in the following week. At $14.8 billion, based on prices of Monday, the position is still more than 50% lower than late March's six year peak. Ole Hansen, head of commodity strategy at Saxo Bank, stated that headline fatigue is reducing the impact on prices from new announcements. 4. HORMUZ FLOWS REBOUND Saudi Arabia - the largest Gulf oil exporter - increased its shipments to the Red Sea Yanbu Port, which helped offset the loss of barrels through the Strait of Hormuz. Hormuz shipping briefly resumed in June to ease concerns over crude availability, but then dropped in July when the fighting resumed. 5. Amplified Supply of Prompt Physical Cargoes The traders say that there is enough oil to meet demand, and the price response will be limited by the latest escalation of the conflict. Crude oil differentials in Europe such as North Sea Forties The Brent benchmark for global dates has fallen from its record high in April to a discount. Adi Imsirovic, a veteran trader, said that there is currently a large amount of crude oil available. "It might not last!"
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EU charges of cartel against construction chemicals companies and trade associations
The EU's antitrust regulators charged on Monday a group of construction chemical companies and trade associations with participating in a cartel from 2021 to 2022. They could face heavy fines. The European Commission made the accusations via a "statement of oppositions" following dawn raids in several EU member countries against unnamed firms in?2023. The Commission, acting as the EU's competition enforcer, stated that the companies and associations had colluded to raise prices in the supply chain of chemicals for cement, mortar and concrete between 2021-2022, affecting construction costs. Cemex was charged along with Chryso and Mapei. Other companies included Master Builders Solutions (MC Bauchemie), Sika, TAM and SYNAD, a trade association. Allegations of anti-competitive behavior in Germany concern Cemex (Ha-be), Master Builders Solutions (MC Bauchemie), Liesen (Remei), Sika, and the 'trade association Deutsch Bauchemie. The cartel charges relating to the Spanish market involved Chryso Mapei Master?Builders Solutions MC Bauchemie?Sika trade association ANFAH If found guilty, companies and trade associations could face a?fine of up to 10% of their global annual turnover if they are found guilty of violating EU cartel laws. (Reporting and editing by Philip Blenkinsop; Foo Yunchee)
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Copper prices are boosted by China imports, which have reached a nine-month high.
Prices of copper?rose on Monday due to a surge in buying sparked by a decline in inventories, and signs of strong demand from China - the world's largest consumer. Benchmark copper on the London Metal Exchange was?up?0.5% to $13,593.5 per metric ton as of 0937 GMT. Import data showed that China's refined copper imports reached a nine-month peak in June, according to traders. The metal is used in construction and power industries. The decline in domestic supply caused by smelter repairs is one of the reasons for the higher imports. The Yangshan Copper Premium is a gauge of China’s appetite for metal imports. Data from the consultancy Shanghai Metals Market revealed that on July 17, reached a record high of $100 per ton. The premium has increased 133% in the past year. The Shanghai Futures Exchange monitors 79,909 tonnes of copper in warehouses. This is the lowest level since August of last year and down more than 80% from the middle of March. . Copper inventories at LME-approved storage facilities have fallen by 24% since the end of May 295,275 tonnes. At 56%, cancelled warrants or metal marked for delivery indicate that another 166.025 tons are due to leave the LME. The United States has received a large amount of copper that has left the LME since February 2016, when U.S. president Donald Trump first proposed import tariffs for the metal. Goldman Sachs analysts said that they expect the ex-U.S. Copper?market to remain tight in the near future, as the U.S. continued import pressure on tariff expectations will continue to pull units away from a?thin market. Low Chinese inventories, limited scrap substitution, and low Chinese inventory are cushioning the downside. Concerns about the availability of copper on the 'LME has created a?premium or backwardation for most contracts nearer to maturity compared with longer-dated forwards. Other metals saw aluminium rise 0.2% to $3.158 per ton, while zinc was up 0.5% at $3.542, lead fell 0.3% to $1.876, tin rose 0.3% to $53,375, and nickel advanced by 0.4% to $17.030. (Reporting and editing by Harikrishnan Nair; reporting by Pratima Dasai)
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Gold prices steady as investors assess US-Iran risk and Fed signals
The gold price was'steady' on Monday as traders weighed the implications of developments in the U.S. Iran conflict for oil prices and U.S. Federal Reserve officials hinted that interest rate increases may be necessary to curb inflationary pressure. As of 0911 GMT, spot gold was unchanged at $4,018.75 an ounce. U.S. gold futures for August delivered gained 0.1%, to $4023.20. UBS analyst Giovanni Staunovo stated that "gold remains negatively correlated with oil prices" and that market participants closely track developments in the Middle East. U.S. Forces hit?Iran on a ninth day in a row as concern grew about shipping through the Strait of Hormuz, after Iran claimed that two oil tankers exploded and were immobilised. After reaching a?over a month high earlier in session, oil prices retreated after the spokesperson for Iran's Foreign Ministry said that negotiations with U.S. can be pursued on the basis of national interests. Increased oil prices fuel inflation fears, and increase bets on higher interest rates for longer. Gold is often seen as a hedge against inflation, but high interest rates can make it less attractive. Beth Hammack, Cleveland Fed President, added her voice to the growing chorus of policymakers who argue that 'interest rates might need to be raised to beat back persistent inflation'. This will set up a heated debate at the Fed meeting next week and could lead to disagreements during Chairman Kevin Warsh’s second meeting. CME FedWatch shows that traders now expect an 80% increase in interest rates for December, up from 73% last time. Staunovo stated that a weaker US dollar would support gold prices over the next six to twelve months. The yellow metal is expected to rise above $5,000/oz. Palladium was up 1.3% at $1,264.62, while platinum rose 0.2% to $1,595.08. (Reporting and editing by Mrigank Dahniwala in Bengaluru)
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India's UltraTech Cement profits rise in the first quarter due to strong volumes
UltraTech 'Cement, India’s largest cement manufacturer?by capacity?, announced a nearly 17% increase in the first-quarter profit?on Monday and?announced plans to add capacity in fiscal 2028. UltraTech's strong results indicate that it used its size and position in the market to absorb higher fuel prices linked to the Middle East conflict more effectively than smaller competitors. Petcoke and coal prices, which are the main fuels used in cement kilns remained high during the quarter. Cement makers increased prices by about 2.5% to 3% but the increase was partly offset by rising costs. The net profit for the quarter ended 30 June rose from 22.26 billion rupees to 25.99 billion. Sales volumes increased?12.2%, or?41.31 millions metric tons. Revenues from operations grew by about 16%. The company expects to add a cement production capacity of?29.8 million tonnes annually (MTPA) during fiscal 2028 compared to its planned addition?15.9 MTPA for 2027. After the results, shares of the company rose as much as 2,3% to 12,001 Rupees. (Reporting by Urvi Dugar in Bengaluru; Editing by Subhranshu Sahu)
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China's Securities Regulator vows to maintain market stability after market turmoil
China's securities regulator chaired an investor meeting on Monday, and promised to "make all efforts" to maintain stable market operations. According to a readout, the China Securities Regulatory Commission (CSRC) will take steps to prevent risk on the capital markets, increase supervision, and resolutely protect an open, fair, and just market. Commission Chairman Wu Qing said this at the Beijing meeting. The meeting follows a stock market crash that has wiped out 10 trillion Yuan ($1.48 trillion), or?China's market capitalisation, in the last two weeks. The markets rebounded Monday. The Shanghai Composite Index and the large-cap CSI300 Index both gained 1.5% and 0.85%, respectively. However, the tech-focused STAR Composite Index fell 2.28%. The readout stated that Wu pledged to?improve the transparency of listed businesses and investor protection, so that investors could better share in the fruits of economic development and capital market growth. According to the report, investors at the meeting proposed stronger counter-cyclical measures and more effective ways of directing long-term capital towards the?market. They also suggested harsher penalties for crimes involving securities. CRRC, SDIC Power and other state-owned firms announced proposals on Monday, such as increasing shareholder stakes, repurchasing shares and paying dividends to investors, in an effort to boost investor confidence. Bosera Fund Manager said that on Monday it would invest 50,000,000 yuan into?its own equity fund, citing its confidence in the long-term health and stability of the Chinese market. Two of China's state-backed investment firms said on Sunday that they have invested?some 60 billion Yuan in stocks and promised to increase their purchases.
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China's refined oil product exports in June are up from May despite export restrictions
China's refined oil product exports in June improved over May but fell from the same period in last year, amid export restrictions that began in mid-March in order to protect domestic supply after the Iran War. China is Asia's biggest fuel exporter, and the increased export allowance will ease tight supplies because regional refiners have curtailed production due to war-related oil shortages. China's refined product exports to Hong Kong and Macau, including gasoline and diesel, totaled 643,712 tons. This is a slight increase of 4% from last June. Exports of refined oil products from China to other regions than Hong Kong and Macau were 804,968 tonnes in June. This is down 64% from the same period last year but up 11% compared to May. Exports of gasoline to Asia totaled 76.753 tons. This excludes volume for Hong Kong, Macau and other Asian countries. Cambodia and Sri Lanka were the biggest recipients, each receiving 30,267 tons. The exports to Myanmar were 9,512 tonnes. China exported a total of 245,904 tonnes of diesel, mainly to Asian countries. Bangladesh was the largest export destination, accounting for 118,408 tonnes. In June, China exported 55.846 tons (mostly to Belgium and The Netherlands) of biodiesel. Biodiesel is primarily made from used cooking oils. It's unclear whether Beijing's export restrictions cover it. The total jet fuel exports, including Hong Kong and Macau, were 426,465 tons, down by 15% compared to May, and 64% compared to a year earlier. Vietnam was the largest export destination with 110,340 tonnes.
Mike Dolan: ROI-BIS is not afraid to speak out against the AI bubble.
The world's central bank forum and watchdog have?warned investors against being swept up in this frenzy.
The Basel-based Bank for International Settlements, in its annual report on the?state of world finance? on Sunday did not doubt the AI buildout's scale -- but was concerned about the "hangover" when spending peaks.
As the U.S. and Israel war against?Iran continued to rumble in the background U.S. chipset stocks rallied by 75% in the second quarter of 2026, driven by another wave in capital expenditure forecasts coming from hyperscalers who are racing to build AI infrastructure. This has caused supply bottlenecks, chip shortages, and stoked supply bottlenecks.
This pushed the earnings growth estimate for 2026 in the United States to almost 25%. Forecast AI capital expenditure by the five largest hyperscalers will be approaching $1 trillion this year. Goldman Sachs estimates that the total cumulative amount could reach $7.6 trillion in 2031.
Anyone? For the umpteenth and final time, can anyone confirm that this is a bubble? One of the biggest investors in tech and cheerleaders of that sector says it's not true. SoftBank's Masayoshi son said only last week that thinking such thoughts would offend the gods.
Son: "It is blasphemy to call AI a bubble. "This is just the beginning." "The potential of AI will be unlocked."
He's probably going to say it, given that hundreds of billions are at stake.
Other investors are starting to realize, perhaps a little weary, that the explosion of?spending' and stock prices is not the bubble they feared.
Deutsche Bank's latest quarterly client survey revealed that the perceived bubble risk for the Magnificent Seven Megacap stocks has been the lowest since 2021.
However, for the U.S. technology sector as a whole, these risk perceptions remain as high as they were in the previous two years.
This divergence could explain why June, despite the fact that chipmakers had their best quarter ever, was the worst monthly performance for the Mag 7, since the group was formed three years ago.
As we approach the halfway mark, it is clear that a bearish capitulation has both positive and negative effects.
Share prices may reflect the reality of revenue for many chipmakers.
Micron Technology's stock has more than tripled since March. The revenue estimates are also up, but the 12-month price/earnings has remained virtually unchanged. It is now at eight times its previous level.
Even though a near tripling of the share price for Intel, which is still losing money, stands out as an anomaly, valuations at chipmakers like Broadcom and Qualcomm are historically limited.
AI EATS ITSELF
It is up to the BIS, a financial stability watchdog, to explain what can go wrong in the economy and markets. Maybe they will do the same as SoftBank's son.
The BIS report focused primarily on the risks of sustaining the pace of investments, which was compounded by the race between a small number of firms based on the belief that only those with superior technology would ultimately dominate the market.
The watchdog warned fierce competition may lead companies to invest too much in AI projects with uncertain returns, leaving the entire sector vulnerable if they fail to deliver.
It said that as competition drives capex higher, the sector's total payoff could shrink, or even turn into a negative scenario in adverse scenarios.
"Disappointment with returns could trigger a quick pullback in funding and turn the capex boom in a long-term investment bust. This could have knock-on effects to financial conditions."
The BIS also highlighted supply bottlenecks for power generation, grids of electricity and memory chips. They could also force companies to commit to longer-term contracts in order to secure limited supplies. This would expose them to excessive investment and make them more vulnerable to demand disappointments.
The report's most stern warning is reserved for the possibility that AI will eventually eat itself.
If AI is able to replace human intelligence and work, as its most ardent acolytes claim, then the risk is that income will be diverted away from workers into AI investments. If taken to an extreme, the workers' share of the national income may fall below zero and leave fewer people with purchasing power.
The BIS says that firms who are proactive will eventually stop investing if they anticipate a demand problem.
The demand for further capacity expansion is missing. "The demand bottleneck becomes a binding constraint."
Even if it's blasphemy, a lot of the money spent in this AI arms race still relies on faith.
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(source: Reuters)