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Gold drops as US Dollar regains its footing. Heads for first monthly gain since five
The?U.S. dollar gained ground on Friday, but gold fell more than 1%. The?dollar recovered its footing but was still on course to post its 1st monthly increase since February, as investors reduced their rate hike bets following the Federal Reserve meeting last week. Spot gold fell 1%, to $4.062.05 an ounce at 0857 GMT. However, it was on track for a 0.5% weekly increase. Prices have also risen by about 1.7% this month. U.S. Gold Futures for August Delivery dropped 1.1% to $4.059.70. Independent analyst Ross Norman stated that "gold struggles to gain meaningful momentum and is still in the corrective stage of a larger structural bull market." The dollar index is now back to a modest level above the '100 mark following the sharp sell-off that occurred after the FOMC meeting. This has taken some of the shine off gold today." The dollar rose?0.3% on Friday after falling 2.4% in one day, its largest drop since January 2023. The dollar's strength makes gold more expensive for those who hold other currencies. Kevin Warsh, U.S. central Bank chief, vowed that he would bring down inflation at the Fed's policy meeting on Wednesday. This left markets "confused". According to the CME FedWatch Tool, traders now price in a 63% probability of a rate increase in September, as opposed to an 80% likelihood a week ago. Data released on Thursday shows that U.S. inflation rates slowed down in June, but this was likely a temporary easing as the oil price rose due to renewed hostilities across the Middle East. The rise in energy prices has heightened inflation fears?and reinforced expectations that U.S. rates will be higher, undermining?the appeal of non-yielding gold. Gold demand in India was muted as buyers waited to see if the price would change, while a stronger Yuan boosted purchases in China, the world's largest gold consumer. Silver spot fell by 1.4%, to $58.14 an ounce. Palladium fell 1.3%, to $1,287.75. Platinum dropped 1.7%, to $1632.63. Both metals are headed for monthly gains. (Reporting by Sukanya Mitra in Bengaluru; additional reporting by Swati Verma; Editing by Diti Pujara)
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China raises retail prices for gasoline and diesel amid renewed Middle East conflict
The National Development and Reform Commission announced a 'raised retail price cap on gasoline and diesel in China from Saturday. This is due to the sharp volatility of?international crude prices. According to NDRC 'price data, the retail ceiling prices of gasoline and diesel are set to increase by 685 yuan (US $101.54) and $655 yuan, respectively. This represents an increase of 14% to 15% over the previous adjustment made before the Iran War. This is the second adjustment following the renewed conflict between the United States, Iran and other countries this month and the blockade of Strait of Hormuz - a key energy supply route. China's retail diesel and gasoline price caps returned to pre-war level on July 3. Every 10 working days, the NDRC adjusts and reviews retail gasoline and diesel prices. Its pricing mechanism takes into account changes in crude oil prices, average processing costs and taxes, as well as distribution expenses and profit margins. The refining margin of state-owned refineries increased by 1,645 Yuan per metric tonne month over month in July. However, it remained a loss at?728 Yuan ($107.90). According to Chinese consultancy Oilchem, the average profit margin of Shandong independent refineries that process imported crude is 146.48 Yuan per ton. According to Oilchem, high oil prices have led to a decline in demand. In April, it fell by more than 15% compared with the previous year. The demand for gasoline and diesel in July improved from the previous months. Gasoline demand fell by 6.5% in the peak summer season when travel is higher due to the holidays. According to Oilchem, diesel demand was impacted by 'high temperatures and frequent rain, which were unfavourable for construction and industrial activity.
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Firms on macro-risk, soft dollar and copper set to gain monthly
The copper price?firmed up on Friday, and was set to post a'monthly gain' as the market digested an 'easier dollar and a greater improvement in risk appetite?in equity markets. Benchmark?copper? on the London Metal Exchange rose 0.27% to $13,840.5 per metric ton at 0740 GMT and was on course for a month-long gain of 3.5%. The most traded copper contract at the Shanghai Futures Exchange increased 0.66%, to 105460 yuan, or $15,632.04, a 3% increase since the beginning of the month. The dollar tumbled overnight, making copper and other greenback-denominated commodities ?cheaper for buyers using other currencies, offering support. Dr Copper, the red metal nicknamed for its 'use as an aggregate to measure global economic health', was also supported after a wider increase in risk appetite following the?U.S. Federal Reserve kept interest rates. Craig Lang, Principal Analyst at CRU said that the sharp recovery in stocks yesterday after a difficult month was a reflection of an improvement in risk appetite. Early in July, copper prices were supported by a good demand from China, declining stocks, and concerns about supply. However, this support waned later. The Yangshan Copper Premium is on the rise The LME warehouses that track physical demand for the main consumer China have paused their withdrawal requests and received new ones. This week, faded. Sandeep Daga is the head of research for Metal Intelligence Centre. He said that this softening along with Chinese leaders’ apparent lack of interest in economic stimulus, and?disappointing PMI results from this week "makes copper into a toy, in the hands of dollar and risk-sentiment on equity markets." The total amount of copper in the SHFE monitored warehouses The number of tons that were produced last week was also little changed, with only 276 tonnes being added to the total. Aluminium lost 0.58% on the LME, while zinc and lead both lost 0.45%. Nickel was barely affected, only dropping by 0.03%, and tin gained 0.04%. The price of aluminium increased by 0.19%. Zinc gained 0.69%. Lead fell 1.18%. Nickel rose 0.32%. Tin rose 1.86%. $1 = 6.7464 Chinese Yuan Renminbi (Reporting and editing by Varun H. K. and Janane Venkatraman).
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Seven & i signs strategic partnership agreement, invests $620 million with SoftBank and SMFG units
Japan's Seven & i Holdings?formed a partnership with SoftBank -Corp, PayPay, and?Sumitomo -Mitsui Card.?Each will invest 100 billion yen (620 million dollars) in the 7-11 operator, a Friday filing revealed. The filing revealed that each of the three would acquire a 2.27%'stake? in Seven & i. LY Corp., a 'SoftBank subsidiary which runs the Line messaging application along with a number of online businesses has also signed a strategic partnership. The filing stated that they aim to 'integrate customer 'information' and create a loyalty point ecosystem across Seven & i physical stores, as well as the online and financial customers of the other companies. Seven & i will also benefit from the deal, as it provides a welcome 'investment' for its struggling business. Last year, Alimentation Couche-Tard made a determined attempt to takeover Seven & i. Seven & i's profits have been impacted by stiff competition in Japan and lacklustre results in North America.
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Gold on the verge of ending a four-month losing streak
Investors weighed Middle East developments and their impact on U.S. interest rate outlook as they weighed the gold price on Friday. As of 0703 GMT spot gold dropped 0.7%, to $4,075.35 an ounce. However, it was on track for a 0.5% weekly increase. Prices rose by about 1.7% in the last month. U.S. Gold Futures for August delivery fell 0.6% to $4 074. "Gold has a slight negative bias today due to profit-taking, and a moderate bounce in the U.S. Dollar, after the metal's gains and the corresponding drop in the greenback yesterday," said Tim Waterer, chief analyst at KCM Trade. The dollar rose by 0.3% after a 2.4% drop on Thursday, its largest single-day decline since January 2023. The dollar is stronger, making dollar-denominated goods more expensive to overseas buyers. Gold has had a better month than usual. Waterer stated that the metal has found a sort of cushion around the $4,000 mark, which has drawn buyers during dips. Kevin Warsh, Fed Chair, gave no indication of the next move the central bank will make at its Wednesday policy meeting. According to CME Group’s FedWatch tool, the markets are pricing in a 66%?chance that rates will be raised in September. Gold is often considered a hedge against rising inflation. However, higher interest rates can reduce its appeal because they increase the opportunity costs of owning the non-yielding asset. A drone strike in the Middle East that ignited fires on two vessels of gas in Egypt's Mediterranean Port of Damietta, has created a new hazard for shipping through the Suez Canal. The canal is one of the few major export -routes left to Saudi Arabia amid the U.S. vs. Iran war. Analysts at BCA Research wrote in a report that "over the long term, the Hormuz Crisis will fade, but geopolitical... Spot silver dropped 1.5% to $58.12 an ounce. Palladium dropped 0.6% and platinum fell 1.5%, but both metals are still on track for a gain in the month. (Reporting and editing by Mrigank Dahniwala in Bengaluru)
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South Korea reaches its highest temperature ever of 41.4 C during a heatwave
South Korea's highest temperature was recorded on 'Friday, since modern weather observation began. A prolonged heatwave had pushed temperatures over 40 degrees Celsius (104 Fahrenheit) for a third day in a row. According to the Korea Meteorological Administration, the record was set at Yangsan in the southeast city. Temperatures reached 41.4 C by 1:40 pm (0440 GMT) according to KMA. The reading exceeded a previous national record set in August 2018 in Hongcheon, which was 41.0 C. Yangsan now has temperatures over 40 C on three consecutive days amid an intense heatwave that is affecting most of the country. Heatwave advisories and warnings are still in place across South Korea. KMA's data records began using the ASOS system in 1973. The 41.4 degree temperature measured in Yangsan was the highest temperature recorded in our records since that time, according to a KMA representative. The KMA stated that the extreme heat in the country was caused by the simultaneous influences of the North Pacific High and the Tibetan High Pressure systems. These pressure systems have covered the Korean Peninsula as a lid. They have trapped heat, allowed temperatures to rise across much of the nation, while limiting clouds. Forecasters are also keeping an eye on 'Typhoon Dolphin' in the western Pacific. Its eventual path could influence weather conditions for the Korean Peninsula the following week, but its impact remains uncertain. Reporting by Kyu Seok Shim, Editing by Ed Davies
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Fire in southwest France weakens, allowing people to return home
Authorities have allowed a number of people who were evacuated from southwestern France because of a wildfire to gradually return home. The fire has been burning for over a week. The French authorities ended the evacuation in 12 districts west and southwest from Bordeaux on Friday, allowing more than 220,000 people to return home. Gironde prefect Sophie Brocas announced the decision in a press release. She said that the situation was stable and that the fire had been contained within its perimeter. "Overnight, the weather conditions were favorable: low temperatures and high levels of humidity." The A63, which connects the city of Bordeaux to the Spanish border, has been reopened. Access to the Cap 'Ferret Peninsula, which is a tourist destination and where many valuable properties are situated, remains closed. The only road that connects it with mainland France runs through the burned areas. After a prolonged dry spell, the wildfire that raged in the Landes region west of Bordeaux destroyed 42,000 hectares of "highly flammable" pine trees. A few hundred homes were destroyed by the fire. Laurent Nunez, the Interior Minister, said that so far this year, 308 people have been detained in all of Canada on suspicion of arson, whether intentional or not. France is currently experiencing a wildfire season that has never been seen before. The?area?burned is already greater than the previous record-breaking year of 2022. Brignoles, a town in southeastern Provence where residents, including Hollywood actor George Clooney and his British wife Amal, as well as their children, had to be evacuated, was another area that burned during the past few weeks. Reporting by Yves Herman and Sarah Meyssonnier; Writing by Inti landauro, Editing by Michael Perry
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Kyrgyzstan accepts Russian fuel despite shortage
Local media reported that First Deputy Premier Daniyar Amangeldiev had agreed to a monthly fuel supply of 100,000 metric tons with Russia. Reports stated that fuel would be purchased at the current market exchange rate. Kyrgyzstan relies on Russian imports for over?90% its gasoline and diesel, but the supply has been in question due to Ukrainian drone attacks?on Russian refining facilities and a subsequent shortage. Kyrgyz officials have taken a number of measures in recent weeks to stabilize the fuel market. These include a temporary price control, a ban on exports of petroleum products, and the removal of state regulation of AI-95 gasoline. Retail fuel prices rose sharply in July, with AI95 gasoline reaching 105-110 soms ($1.20-$1.26) per litre and diesel?prices rising to around 98-100?soms. Bishkek residents have reported fuel shortages and growing queues at certain filling stations. Kyrgyzstan also requested additional supplies from other nations to help alleviate the shortages. Fuel deliveries to Uzbekistan are still in the works, but Belarus has already started delivering fuel. Supplies from China are also on their way. Reporting by Aigerim Turgunbaeva, Writing by Felix Light, Editing by Jamie Freed
Stocks to gain this week after tech earnings calm AI fears and yen retreats
The yen fell after the Bank of Japan kept interest rates at their current level on Friday.
South Korea's KOSPI, which had suffered heavy losses this week, has risen?17.91%. This is a record return. The tech-heavy stock exchange, which is still around 30% below its all-time peak, has become a symbol of investor sentiments towards artificial intelligence stocks.
Microsoft's earnings report on Wednesday reassured investors who were worried that the AI rally could soon lose steam. The company forecasted generating cash through fiscal 2027.
Amazon's cloud revenue grew the most in over four years a day after that, satisfying investors who were eager to see signs that billions of dollars being invested into AI buildout are paying off.
Saverio papagno, portfolio manager of North Square Growth Opportunities ETF, said: "Investors have a greater focus on long-term economics, capital efficiency and financing than they do on the near-term demand."
He said that while concerns about the competition from China, and AI hyperscalers relying on debt, are rife, selling could be an opportunity for long-term investment, as "the sector?resumes its leadership?" once there is more clarity.
Futures that track the Nasdaq 100, a tech-heavy index, rose 0.83%. S&P 500 futures and Dow futures also rose 0.35% adn 0.46% respectively.
The STOXX 600 index in Europe reached a new record high, and was on track to gain for a fourth consecutive month.
The MSCI All Country World Price Index gained 0.87%, and was on track to end a two-week loss streak. If current levels are maintained, it will still end the month with a loss of 0.33%.
YEN RETURNS RETREAT
Investors watch the yen. It has resumed its fall against the dollar, a day after Tokyo intervened to provide some respite.
A market source reported that the dollar rose 0.56% to 160.38 yen after falling by 2.42% on Thursday when Japan carried out a yen buying, dollar selling intervention.
"I do not think that intervention will have a significant impact on reversing this trend of yen weakness. The BOJ will need to promise more reinvestment into domestic assets, and a faster pace of hikes.
The BOJ held interest rates at the same level on Friday but indicated its intention to increase borrowing costs. Kazuo Ueda, the Governor of the BOJ, said that inflation risks are skewed upwards and the central banks is prepared to accelerate rate increases if monetary conditions are accommodative.
WAR KEEPS MARKETS ON THE EDGE
The Middle East conflict remains a major concern for global equity markets. Recent strikes in the Middle East have dashed any hopes for an imminent solution, and diplomatic efforts have been sporadic.
Brent crude oil prices rose dramatically in July. This is the first monthly increase since March.
Teddy Bunzel is the head of Lazard Geopolitical Advisory, Lazard Asset Management. He wrote: "The shock-absorbers in oil markets have dwindled fast. A failure to deescalate will be more costly than previous tensions."
The crucial Strait of Hormuz remains blocked. The Houthis-backed Iranians have also attacked the 'alternative route' through the Bab el-Mandeb Strait, making the situation worse.
The yield on the 30-year U.S. Treasury fell 2.32 basis points, but remained close to its highest level in 19 years. The curve steepened as short-end yields declined, easing the curve.
The Fed did not change rates this week but the comments from the chair of the board confused markets.
(source: Reuters)