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Copper firms worry about dwindling LME inventory
The copper price rose to its highest level in six months on Wednesday, boosted by supply concerns over dwindling LME inventories and a positive economic outlook. By 0300 GMT, the benchmark three-month price of copper at?the London Metal Exchange had risen by 0.49% to $14,419.5 per metric tonne. The price of a ton reached $14,437 earlier in the day, its highest level since January 29. The Shanghai Futures Exchange's most traded copper contract rose by 1.11%, to 109 360 yuan (16,272.36) per ton. Non-traditional copper players, such as hedge funds and speculative traders trading on volatile LME inventory figures, have supported the price gains. David Wilson, BNP Paribas' head of metals strategies, said that there are many non-traditional sources of copper trading and a large amount of "fast money" is being moved on the release of data. The uncertainty surrounding?potential U.S. import tariffs on refined copper has led to large?outflows? of the metal from LME warehouses. Exchange data shows that the amount of copper available in LME registered warehouses dropped by 11,925 tons, to 106.950 tons, on Tuesday. showed. The outflows of this week have revived inventory concerns, which had been somewhat alleviated by large warehouse deposits made last week. Wilson stated that the ongoing uncertainty over tariffs "has kept the arb (arrangement) window between the CME?and LME open enough to encourage more metal to be moved into the U.S.," he said. Dr Copper, a metal that is used as a 'barometer for economic health', has been a standout performer in a market of largely flat industrial metals, ahead of Wednesday's release of important U.S. inflation figures. As tensions between the U.S. and Iran shifted to economic pressure rather than military conflict, lower oil prices helped boost economic sentiment, which in turn supported metals that are growth-dependent. Aluminium was up by 0.02% on the LME, while zinc remained stable, lead increased by 0.03%, and nickel was down 0.01%. Tin was also up by 0.22%. Aluminium gained 0.4% on the SHFE. Zinc gained 1.15, lead added 0.4% and nickel increased by 0.1%.
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Australian Indigenous group appeals compensation ruling over Fortescue's mining impact
The Australian Yindjibarndi Indigenous Group said that it had filed an appeal to the Federal Court on Wednesday regarding the amount of compensation given by Fortescue since 2012 for mining their land without a contract. The Yindjibarndi group filed a native title claim for A$1billion ($718m) in cultural losses and A$800m in economic losses against Fortescue and the Western Australian state government. In May, an Australian court ordered Fortescue to pay A$150m in compensation for cultural losses caused by mining. The court also awarded A$136.757 in economic losses and A$217.152 compound interest on that amount. The decision was one of the biggest ever payments in Australia's past under native title laws that recognise Indigenous rights and interest in certain parcels of land. Australia is the largest producer of iron ore in the world. The majority of it comes from Western Australia’s Pilbara Region, which is home to dozens of Indigenous tribes. Since Rio Tinto destroyed two culturally significant rock refuges at Juukan Gorge, in 2020, the mining industry has been updating its agreements with Indigenous groups. Michael Woodley, CEO of YindjibarndiNgurra Aboriginal Corporation YNAC, said that YNAC was appealing the amount awarded by the Court to compensate for economic and cultural losses. The group claims that the court should've tied compensation to royalty payments typical under native title agreements in Pilbara. It assessed the economic loss instead based on land value, and?disregarded the value of iron ore deposits. The mine also claims that the community is entitled to compensation due to social divisions caused by it. The Federal Court, in its judgment, found that there had been significant damage to Yindjibarndi songs and other cultural sites, including 240 FMG heritage places of which 124 were completely destroyed. Song lines are cultural routes that span the country. The court found that the damage done was legal, and had been approved by government authorities, but not by YNAC which has exclusive native title rights to the land. The YNAC group said that Fortescue continued to mine native title land on Yindjibarndi since '2012 without any agreement with YNAC or Indigenous Land Use Agreement. Fortescue did not immediately comment, but previously stated that it had sought to settle with YNAC over a 15-year period and paid the award sum.
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Investors focus on US inflation data as gold prices remain stable
Investors awaited the release of a crucial U.S. inflation data to determine the Federal Reserve's future interest rate path. As of 0150 GMT, spot gold was unchanged at $4,652.39 an ounce. Tuesday, prices rose to their highest level since mid-May after last week's sharp gains following the U.S. Treasury bond buyback announcement. U.S. Gold Futures rose 0.3% to $4,709.20. The U.S. The Personal Consumption Expenditures price index (PCE) for July is due at 1230 GMT. The Fed chairman Kevin Warsh will also be speaking at the Jackson Hole symposium on Friday. "For gold, a soft-than-expected inflation combined with a balanced or dovish message from Warsh would be the most favorable outcome, reinforcing the expectations of lower real yields, and reducing opportunity costs associated with holding a nonyielding investment," said Wael Makarem, Financial Markets Strategists Lead at Exness. A renewed decline in confidence about U.S. fiscal stability could be significant (for gold), especially given recent Treasury buyback plans and their impact. Data released earlier this month showed a surprising decline in nonfarm payrolls in the United States and consumer inflation that was in line with expectations. This dampened expectations of a September rate hike. According to the CME FedWatch tool, traders are pricing in an?63.6% probability that?the Fed?will leave rates unchanged next week. Iran announced that it had re-started talks with Oman about managing the Strait of Hormuz. This lowered oil prices. Kristalina Georgeeva, Managing Director of the International Monetary Fund, said that the global economy had weathered energy shock from Iran's war better than expected. She did, however, raise concerns over the deteriorating fiscal situation in some countries. Other metals saw spot silver rise 0.7% to $69.09, platinum up 0.6% to $1869.22, and palladium firmer 1.4% at $1,345.30.
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Oil prices drop 2% after Iran-Oman talks on reopening Strait of Hormuz
The oil prices fell 2% Wednesday, adding to the previous session's losses. This was due to renewed hopes that?the Strait of Hormuz? could be reopened after Iran announced it had resumed discussions with Oman about managing this strategic waterway. Brent crude futures dropped $1.78 or 2.0% to $86.80 a barge by 0027 GMT. U.S. West Texas intermediate crude futures were also down $1.49 or 1.8% at $80.87. Both benchmarks fell more than 3% Tuesday. Mitsuru Muraishi is an analyst at Fujitomi Securities. He said that the market has continued to react to developments regarding navigation through the Strait of Hormuz and hopes of progress in negotiations between Iran and Oman. He added that "uncertainty over the outlook" has led to bargain-hunting, which is limiting future losses. Prices are expected to remain range-bound in the near term. Iran has said that it has restarted discussions with Oman about managing the Strait, as it is facing increased economic pressure from U.S. president Donald Trump. Iran and Oman are in sporadic talks about the control of?traffic along the waterway. This was the route that handled one-fifth the global oil and LNG shipments prior to the start of the war in February. The two countries announced on Tuesday they had discussed "a temporary joint navigational corridor" and agreed to clean it of mines. Two people familiar with the situation said that despite the tensions the U.S. has begun to send back personnel to diplomatic missions in the Middle East which were evacuated or reduced due to tensions with Iran. Washington's move indicates that it sees less risk in the short term of a conflict escalating with Iran, even though some embassies initially will operate below full capacity. Washington increased sanctions on Monday to cut off Iran's economic lifeline. It threatened?to punish those countries that continued?to do biz with Tehran. The United Kingdom Maritime Trade Operations reported that an unidentified 'projectile' struck and disabled an oil tanker on Tuesday, about 9 nautical mile (17 km) northeast from Oman’s Ash Shishah which?lies near the entrance of the strait. The American Petroleum Institute said crude oil inventories in the U.S. rose by?about 4.2 million barrels during the week ended August 21. The analysts polled by?by predicted that crude oil stocks would increase on average by 600,000 barrels. The EIA (the statistical arm of the U.S. Department of Energy) will release official data at 10:30 am. ET (1430 GMT), on Wednesday. Reporting by Yuka Obaashi; Editing and Sonali Paul by Chris Reese
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Australia's Lynas reports sharp increase in annual profits, but misses the market estimates
Lynas rare earths, based in Australia, reported a'sharp rise' in its annual profit on Wednesday. This was aided by a record-high average price for a?rare-earths oxychloride and a strong demand. However, it missed the'market expectations, which sent its shares down in early trading. The largest rare-earths manufacturer outside China, said that the price increases were due to firm pricing and agreements on floor prices with Japanese and U.S. clients. This helped reduce volatility. Its average selling price rose 59% to $80.7 per kilogram, helped by ?improved pricing of neodymium-praseodymium, a key rare-earth magnet material, and a higher ?share of heavy rare-earths sales and sales with pricing not linked to the market index. "Demand is strong for?rare earth permanent magnets in markets outside China and?Lynas's focus is on?optimising production assets and delivering 2030 growth initiatives, to meet the needs of customers today and tomorrow," stated interim CEO Pol Le Roux. Customers continue to prioritize sustainable rare-earths supplies outside China despite export restrictions, and efforts to secure alternative supply in the United States and Europe. Strong demand has also boosted sales. Lynas reported a net profit after tax of A$222.4million ($159.37million) for the?year?ended on June 30 compared to A$8million a year earlier. Visible Alpha's consensus estimate was A$242.5million. The company has also announced that it will be conducting a global search for a chief executive officer. It will "update" the market when necessary. The benchmark S&P/ASX 200 index was up by 0.2%, but shares of the company dropped as much as 2.7%.
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McGeever: The world braces for the escalation of Trump's Canada Tariff Stand-off
The renewed trade spat between U.S. president Donald Trump and Canadian prime minister Mark Carney occurs at a critical time for both North American nations - as well as the global economy. Mistakes between the G7 neighboring nations could have wide-ranging effects on the economy. After bilateral talks broke down on Friday, the Trump administration imposed 50% duties on a range of Canadian products on Saturday. These 'levies' may seem modest at first glance, as they apply to just?5.5%, or $20 billion worth of goods, that Canada exports to America. Oxford Economics says that if all else is equal, this will increase the U.S. tariff rate on Canadian imports from 5.1% to 6.9%. This is a small issue. The potential for an escalation of violence and its damaging effects is high. Canada is America's largest single trading partner, surpassing China. Total trade between the countries reached $715 billion in 2013, according to the U.S. Census Bureau. Canada also bought more U.S. products and services last year than any other country. Both sides appear to have already dug in. Carney has promised dollar-fordollar retaliation and Trump announced on Monday that 50% tariffs will be imposed on Canadian vehicles, trucks, and automotive parts on January 1 if a deal is not reached. A prolonged spat could cause serious damage to Canada's economy and even trigger a recession. The U.S. consumer and business community could also be affected by the spat, whether it is through higher prices, lost exports or increased inflation. The regional impact is the greater risk to the global economy. USMCA UNDER THREATEN Trump's battle with Canada may signal the end of America's largest trade agreement, the U.S.-Mexico-Canada Agreement. Mexico is America's biggest trading partner. The total value of goods traded between the two countries reached $872 billion in 2017. USMCA is the revised version 1994's North American Free Trade Agreement. Trump decided on July 1, not to renew the agreement, but it will be subject to annual reviews. Talks are still ongoing. The pact is likely to gradually wind down unless the three countries reach an agreement on new revisions. It will then be replaced most likely by bilateral agreements. This would add more uncertainty and complexity in the future of transshipment and investment as well as product sourcing. Trump's comments on the USMCA renewal are not exactly inspiring confidence. "I don't care. "I don't want to" is what I really mean. I'd prefer to be independent. Mexico and Canada are dependent on us. We don't require them. They are important to them. "It's not important to us," Trump said on Fox News, July 28. Trump has often backed down from his threats in the past 17 months, but the unraveling USMCA could threaten U.S. manufacturers, so he is unlikely to throw it out. The resurgence of tensions between the U.S. and Canada increases the probability that this will happen. It could lead to increased inflation, job losses, higher prices, longer supply chains and more investment uncertainty. Spillover Potential The spat between the U.S. and Canada could send a signal to other U.S. Trade partners. Carney is fighting for Canada's autonomy and seems to be willing to sacrifice increased trade friction to do so. But the Mexican president, Claudia Sheinbaum, has chosen the opposite approach, choosing to reduce friction with Trump to gain what she hopes to be more access for Mexican businesses to the U.S. Other countries are watching. It is not yet clear which approach will work. Carney's success in rebuffing Trump's aggressive tactic could further reduce the president's already reduced tariff power. In February, the Supreme Court struck down Trump's sweeping import tariffs. This forced the administration to use alternative legal justifications for imposing import duties. Trump may also want to make an international splash to show off America's global power, especially with his approval rating at record lows ahead of the November midterm elections and the Iran War still a stalemate. He may decide to stay true to his principles and "call Carney's Bluff" because Canada is more vulnerable. Sheinbaum may look more intelligent, but if the end result is a USMCA that has been severely weakened, everyone could lose. The latest flare-up occurs at a time when the world is facing a number of challenges. The yields on long-dated debt are 'near multi-decade-highs in the developed world.' The U.S.-Iran War is 'approaching its six month mark. It's not the right environment to put one of the largest and most important supply chains in danger. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Trump sends Saudi deal to Congress, but demands that Riyadh recognize Israel
A U.S. official said that President Donald Trump sent Congress a proposal for an agreement between the United States and Saudi Arabia to develop civil nuclear energy. The official also stated that the agreement would only be approved after Saudi Arabia normalized its relations with Israel. According to a U.S. official who declined to identify himself, the agreement was signed in July, and it would allow U.S. firms to export civil nuclear technology to Saudi Arabia. It was then sent to Congress. The Saudi Embassy in Washington didn't immediately respond to our request for comment. Trump's intentions were not made clear when he sent the nuclear deal to Congress for 90 days. The?U.S. official said in an email that "the president's position hasn't changed" and that the agreement would only be implemented if Saudi Arabia joins the Abraham Accords". In an email, the official referred to agreements that were mediated by the U.S. between Israel and Arab or Muslim majority nations in order to normalize relations. These accords were reached between Israel and the UAE in 2020 and 2021. They also included Bahrain, Morocco, and Sudan. After agreeing to the Saudi Nuclear Deal in July, Trump - who worked on a similar deal during his first term - set normalization as one of the conditions for its implementation. Joe Biden, the former president of the United States, also wanted to tie a nuclear agreement to these accords. Diplomats believed Riyadh would normalize relations with Israel by 2023. However, the war between Israel and Gaza that began in October 2023 radically changed the situation. Saudi Arabia demanded that a Palestinian State be established in an irreversible manner before it would recognize Israel. The '30-year nuclear agreement' calls for the construction of AP1000-type reactors. This?project is worth tens and tens billions of dollars, which would benefit Westinghouse. Westinghouse is jointly owned by Canada based Cameco Asset Management and Brookfield Asset Management. (Reporting and editing by Chris Reese, Cynthia Osterman and Jonathan Landay)
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Sources say that the Brazilian government will extend its gasoline subsidy to September 9.
Two sources close to the matter said on Tuesday that Brazil's government will extend its gasoline subsidy of 0.44 reais per liter ($0.0855) until September 9. The subsidy that was paid to gasoline importers and producers after the U.S. - Iran conflict began in the Middle East was to end on Wednesday. The last time the subsidy was extended by President Luiz inacio Lula's administration was on July 26, for an additional 30 days. This time, the government was unable to extend 'the benefit by another month as?the decree of the president allowing its creation expires September 9 and Congress approval is still pending. The local newspaper Valor Economico reported on the plan of the government earlier Tuesday, citing an anonymous source from the Finance Ministry. The ministry declined comment. The?government decided in June to remove part of the diesel subsidy as oil prices fell and tensions lowered in the Middle East. However, this external relief was only temporary, given the ongoing conflict. Subsidies and other measures, including those aimed at fuel, are part of a broader relief plan set up by?Lula after the beginning of the war in Iran. The leftist leader wants to run for a fourth four-year term at the upcoming presidential elections in October. $1 = 5.1469 Reais (Reporting and writing by Fabio Cardoso and Fernando Cardoso in Sao Paulo and Bernardo Caram, in Brasilia; editing by Oliver Griffin and Kyra Madry).
Markets are waiting for '9 to 5.'
Ankur Banerjee gives us a look at what the day will bring for the European and global market. A 'holding pattern' has developed as traders await Nvidia earnings that will test their confidence in the AI trade. Meanwhile, rising expectations of a resurgence of supply through the Strait of Hormuz have pushed down oil prices in order to help bond yields.
Brent crude futures dropped for the third day in a row on Wednesday. They fell more than $2, to $86.22 a barrel after Iran announced that it had resumed talks with Oman about?managing the Strait of Hormuz despite increased economic pressure by U.S. president Donald Trump.
Investors are putting themselves up for another disappointment by their 'growing optimism' in the face of a lack of evidence that supply issues will be resolved immediately.
Commodity vessels transiting through the Strait of Hormuz reached their lowest level since?three months. This highlights the global supply shortages caused by the conflict that has lasted for?nearly 6 months.
Nvidia's second-quarter results, the poster girl of the AI frenzy, will be the'main event' on Wednesday. In the 12 previous quarters, Nvidia's market value fluctuated by 7.4% on average following its earnings announcement. Options traders are pricing a more moderate reaction this time -- only $280 billion, or 5.4% of the market value will move after Nvidia reports.
As traders await clues about the monetary?policy, the U.S. Dollar was stable ahead of U.S. PCE data in the afternoon and Jackson Hole over the weekend. The U.S. Treasury Department's decision to buy back bonds in order to cap an increase in long-end yields has been a source of concern for the markets.
The "debasement" trade continues as the move to calm down the bond market has put pressure on the dollar. Spot gold and bitcoin have risen three months in a row.
We?end our sad news with the sad announcement that country music icon Dolly Parton died on Tuesday in Nashville. She was 80. The following are key developments that may influence the markets on Wednesday.
Data on U.S. PCE
* UK CBI Distributive Trades for August (By Ankur B. Banerjee, Singapore; Editing done by Sonali P.
(source: Reuters)