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Jackson Hole: US and European shares are little changed in advance of Ukraine talks
Wall Street and European stocks were flat or marginally lower Monday, ahead of an eventful week in U.S. rate policy. Meanwhile, attention was focused on Washington where Volodymyr Zelenskiy from Ukraine and European leaders would meet Donald Trump. S&P 500 was slightly down in midday trading but remained within striking range of its Friday all-time high. The MSCI All Country World Index was 0.1% lower but still not far off its record high reached on Friday. In the Asian session earlier, indexes from Japan, Taiwan, and China reached record highs, with a Chinese stock gauge reaching its highest level for a decade. After Trump's Friday summit with Russian president Vladimir Putin, investors were anticipating Trump's meeting later that day with Zelenskiy and European leader to discuss the next step to end the conflict in Ukraine. In a research report, Geoff Yu, EMEA's macro strategist, wrote that "Expectations are low for a breakthrough, but aside from assets and energy with direct exposure to this region, the marginal effect on sentiment has faded." Trump, despite the fact that there was no agreement at the Alaska summit, appeared to be more in line with Moscow when it came to seeking a peace deal for Ukraine rather than a first ceasefire. The Federal Reserve's Jackson Hole Symposium, which takes place from August 21 to 23, is another key event for this week. Chair Jerome Powell will be speaking on the economy and the central banks policy framework. The markets are pricing in a further rate cut by December, based on an 85% probability of a quarter point cut at the Fed meeting scheduled for September 17. In a research note, Andrew Hollenhorst wrote that Fed Chair Jerome Powell would likely indicate Friday that the risks to inflation and employment are becoming more equalized, which could imply lowering rates towards neutral. "But he won't commit to a reduction next month until he receives the August data on jobs and inflation." Stock markets have been buoyed by the prospect of lower borrowing rates globally. Japan's Nikkei has reached a new record high. MSCI's broadest Asia-Pacific share index outside Japan gained 0.1% after reaching a record high of four years last week. In Europe, Germany DAX slipped 0.3%. The FTSE in Britain was up 0.1%. Stocks are rallying due to a strong earnings season. The S&P 500's EPS increased 11% over the past year, and 58% of companies have raised their guidance for the full-year. Goldman Sachs analysts said that the results of mega-cap technology companies have been exceptional. While Nvidia is yet to release its earnings, Magnificent Seven grew their EPS in 2Q by 26%, year/year, which was a 12% improvement over the consensus expectations going into earnings season. Home Depot, Target Lowe's, Walmart and Lowe's all reported this week. A FED POLICY that is a concern The yield curve on bond markets has widened. The difference between the two-year and the 10-year Treasury yields reached 57,8 basis points. This is the biggest gap since mid-July. The rates on the back end of the curve increased much faster than the ones on the front, indicating higher inflation expectations. The prospect of higher borrowing for increased defence spending has also pushed German and French long term yields to the highest levels since 2011. The dollar has been impacted by bets that the Fed will ease further. It dropped 0.3% last week against a basket currency and was last at 98.102. The dollar increased 0.4% against the yen, to 147.75. Meanwhile, the euro dropped 0.3% to $1.1667. Gold was unchanged at $3,335 per ounce, after losing 1.9% the previous week. Prices of oil rose before the meeting between Trump Zelenskiy. Brent crude was up 0.3% to $66.09 per barrel. U.S. crude rose 0.5% to $63.09 a barrel.
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South Africa banks curb lending over climate-related default risks, study finds
Colleen Goko JOHANNESBURG - 18 August A study released by the South African Reserve Bank on Monday showed that South African banks are more reluctant to make loans as extreme weather events have increased the risk of default. The study, which looked at 38 banks from 2009 to 2024, showed that credit growth slowed down after climate shocks like floods and droughts as well as the introduction of carbon taxes in 2019. These findings are in line with global trends, such as those observed in Europe, Brazil and the United States where banks are struggling with the financial impact and regulatory efforts of reducing carbon emissions. Credit is tightening as businesses need more funding to meet climate-related challenges, and to shift to a low-carbon economic system. The authors of the study noted that "this could delay progress towards a low-carbon economic system and increase the exposure of companies to future climate related disruptions." The study included South Africa's biggest banks including Standard Bank FirstRand Absa Nedbank Capitec as well as foreign bank operating locally such as Citi, HSBC and Bank of China. The study concluded that banks reduced lending due to climate shocks, which increased the risk of defaults while reducing the value of collateral. Carbon tax measures, for example, impacted corporate profits. The report coincides this year with South Africa's G20 Presidency, where climate financing has become a major focus. Officials have called for greater international support to assist emerging markets in managing climate shocks while not stifling their economic growth. The report concluded that "Achieving an appropriate balance between prudential supervision and credit provision will be crucial to ensure climate resilience and economic development go hand in hand. This is especially true in emerging economies like South Africa." Reporting by Colleen Goko; Editing and proofreading by Olivia Kumwenda Mtambo, Christina Fincher
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Gold prices rise on lower yields and the focus on Trump-Zelenskiy summit and Jackson Hole summit
Gold prices rose on Monday as a result of lower U.S. Treasury rates. Investors also focused on the Federal Reserve annual symposium and Donald Trump's meetings with Ukrainian and European leaders. At 9:56 am, spot gold was up 0.1% at $3383.20 an ounce. ET (1355 GMT) after it hit its lowest level in August 1. U.S. Gold futures for delivery in December rose 0.2% to $ 3,388,80. Gold that does not yield is less appealing as the benchmark 10-year U.S. Treasury has fallen from its two-week-high. Investors will be focused on a White House summit between Trump and Ukrainian president Volodymyr Zelenskiy. They will also be joined by European leaders as Washington seeks a quick peace agreement to end Europe's most deadly conflict in 80 years. It follows Trump's Friday meeting with Russian President Vladimir Putin, in which the two leaders agreed that they would pursue a peace agreement without implementing any ceasefire. Gold did not react much to the Putin-Trump summit. I believe we will continue to trade in this range. "The Federal Reserve is next inflection point," said Marex analyst Edward Meir. The minutes of the July policy meeting of the U.S. Central bank are due Wednesday, just before the annual Fed conference, which will be held in Jackson Hole (Wyoming) from August 21-23. The event is expected to feature a speech by Fed Chair Jerome Powell. Meir says that the markets will be closely watching Powell's comments on interest rates. A 25 basis point reduction is already priced in but an outside chance exists of a 50-basis point cut, which would drive gold prices up. Gold tends perform well in an environment with low interest rates, and increased uncertainty. Silver spot rose 0.2% to $38.07 an ounce while platinum dropped 0.5% to $1.328.40. Palladium spot rose 0.3% to $1.115.68, after earlier falling to its lowest price since July 10. Noel John, Bengalur; Arun Koyyur, editing.
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Jackson Hole: Global stock markets fall as traders wait for Ukraine talks
The U.S. shares and European stocks started the week cautiously, ahead of an eventful week in U.S. rate policy. Attention turned to Washington, where Volodymyr Zelenskiy from Ukraine and European leaders would meet Donald Trump. S&P 500 remained near its Friday high in the early trading on Monday. The MSCI All Country World Index was also down 0.15% and within touching distance of Friday's record high. In the Asian session earlier, indexes in Japan, Taiwan, and China reached record highs, while an indicator of Chinese stocks hit its highest level for a decade. After Trump's Friday summit with Russian president Vladimir Putin, investors were preparing for the meeting between U.S. Presiden Trump and Zelenskiy as well as European leaders on Monday. The two will discuss the next steps in ending the war in Ukraine. Trump appeared to be more in line with Moscow after the summit, even though there was no agreement. Instead of first seeking a ceasefire with Ukraine, Trump wanted a peace deal that included all aspects. After the Russia-U.S. discussions on Friday, Lars Skovgaard said, "It's going to be a quiet start to the new week." Skovgaard said that, whether or not an agreement is reached, the focus is already shifting to the Federal Reserve’s Jackson Hole Symposium, which will take place from August 21-23. Chair Jerome Powell will be speaking on the economy outlook and central bank’s policy framework. The markets are pricing in a 25% rate cut during the Fed meeting on September 17 and a further reduction by December. Mark Matthews is the head of Asia research at Bank Julius Baer, Singapore. He said that he saw three rate cuts this year in the U.S., a slower GDP but no recession. The combination of these two factors should allow the rally continue. Stock markets have been buoyed by the prospect of lower borrowing rates globally. Japan's Nikkei has reached a new record high. MSCI's broadest Asia-Pacific share index outside Japan gained 0.1% after reaching a record high of four years last week. In Europe, the DAX in Germany fell by 0.2%. The FTSE in Britain was down by 0.1%. Stocks are rallying due to a strong earnings season. The S&P 500's EPS increased 11% over the past year, and 58% of companies have raised their guidance for the full-year. Goldman Sachs analysts said that the results of mega-cap technology companies have been exceptional. While Nvidia is yet to release its earnings, Magnificent Seven grew their EPS in 2Q by 26% over the previous year, which was a 12% improvement relative to expectations going into earnings season. Home Depot, Target Lowe's, Walmart and Lowe's all report this week. A FED POLICY that is a concern The possibility of Fed easing keeps short-term Treasury rates down, while the longer end of the curve is under pressure from the threat of stagflation, and huge budget deficits. This has led to the steepest yield curvature since 2021. The prospect of higher borrowing for increased defence spending has also pushed German and French long term yields to the highest levels since 2011. The dollar has been impacted by bets that the Fed will ease further. It dropped 0.4% last week against a basket currency to end at 97.858. The dollar rose slightly against the yen to 147.85 while the euro fell to $1.1673, after adding 0.5% the previous week. Gold, the most important commodity, rose 0.1%, to $3,340 per ounce, after falling 1.9% in the previous week. Trump has backed down from his threats to impose more restrictions on Russian crude oil exports. Brent crude was just 0.1% lower at $65.79 per barrel while U.S. oil stood at $62.71.
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IKAR, a Russian consultancy, raises its 2025 wheat export and crop forecasts.
IKAR, a Russian consultancy, raised its forecast for 2025 wheat production to 85.5 millions metric tons from 84.5 previously. This is the second time this month that IKAR has revised its estimate upwards. Dmitry Rylko said that the rise was due to improved assessments of the central part of the country, the Volga Region, the Urals, and Siberia. The forecast of wheat exports for the new season was also increased to 42.5 millions tons, up from 41.5million tons. IKAR has increased its 2025 total grain crop forecast from 130.5 to 132 millions metric tons. It also increased its grain export forecast from 53.0 to 54.5million tons. According to local authorities, the main grain-producing areas in southern Russia are finished harvesting barley and wheat. Stavropol Krasnodar, and Rostov produced in total around 28 million tons. On Wednesday, the Ministry of Agriculture announced that almost half of all Russian growing areas had already been harvested in preparation for 2025. The Ministry of Agriculture reported that grain production reached 75 million tonnes, with yields higher than in 2017. Current ministry forecasts for 2025 are 135 million tonnes. Forecasts for the grain exports of 2025/26 include 53-55 millions tons, including 43 to 44 million tons wheat. Reporting by Olga Popova, Editing by Mark Trevelyan
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Bayer settles Sky Valley chemical PCB cases
Bayer announced on Monday that it had reached agreements in principal with over 200 plaintiffs in the Sky Valley Education Center cases relating to PCB. However, the company said the payments have already been reflected in the recent financial reports. Bayer stated in its statement the terms of agreements made by its Monsanto division over environmental pollution caused by PCBs (polychlorinated bisphenyls), were confidential and would be subject to the approval of final settlement agreement between the parties. It added that the cost of additional settlements is covered by the PCB litigation provisions taken in the second-quarter. Bayer shares continued to rise after the news, and reached a new two-week high of 2.7% at 1305 GMT. Bayer said that the agreement did not cover previous adverse verdicts related to litigation involving the Sky Valley Education Center in Seattle, and they remain on appeal. In January, a jury in Washington ordered Bayer Inc. to pay $100,000,000 to four people who claimed they had suffered various health issues from PCB in the school. However, the jury found that the company was not responsible for the injuries alleged by eleven other individuals. The plaintiffs claim that their health issues are due to the PCBs leaked from light fixtures in schools. These chemicals were manufactured by Monsanto which Bayer purchased in 2018 for $63 Billion. Since the acquisition, the shares have been heavily impacted by lawsuits involving PCBs and, more importantly, claims that Roundup, a weedkiller, causes cancer. In the past, PCBs were used to insulate electrical appliances. They were also found in products such as caulking and floor finish, and in paint. In 1979, the U.S. Government banned them after they were linked to cancers and other health issues. Monsanto manufactured PCBs between 1935 and 1977. Bayer announced in July that it had added 1.7 billion euro ($2 billion) to its provisions and liabilities in the U.S., of which 1.2 billion euro was related to Roundup.
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The wooden church takes a slow Swedish road trip in order to avoid mining subsidence
The landmark Kiruna Church in Sweden will start a two-day journey to a new residence on Tuesday. It will be a slow, arduous trip down a polar road to protect its wooden walls against ground subsidence as well as the expansion of the largest underground iron ore mining. Workers have already lifted the 600-ton 113-year old church off its foundations, and loaded it onto a trailer. This is part of a 30 year project to move thousands of people from the Lapland City. The mine-operator LKAB spent the past year widening roads for the journey that will take the red painted church - often voted Sweden's most beautiful wooden structure - down a 5km (3 mile) winding route towards a brand-new Kiruna City Centre. The journey will not only save the church but also remove it from its site of more than 100 years. Lena Tjarnberg is the vicar in Kiruna. She said, "The church represents Kiruna in some ways, and it's also a place of safety." "It's a day full of joy for me." I believe that people are also sad about leaving this place. The feelings of many indigenous Sami people, who have herded their reindeer in the area for thousands of year, are not mixed. This move reminds us of the wider changes that have been brought about by mining expansion. Lars-Marcus Kuhmunen is the chair of local Gabna Sami. This area was used as grazing and also where reindeer calves were born. He said that if plans to build another mine near the current one go forward, it would block the path between the reindeer’s winter and summer pastures. This, in turn, would make herding “impossible” for the future. "Fifty-five years ago, my great grandfather said that the mine would eat away at our way of living, our reindeer-herding. He was right." TRANSFORMATION SYMBOL The relocation project is not just about the church. LKAB estimates that around 3,000 houses and 6,000 people will need to be relocated. Several public and commercial structures are being demolished, while others, such as the church, will be moved intact. Around the new centre of the city, other buildings are being demolished and rebuilt. A new city hall, hundreds of new shops, and new homes have been built. This shift will allow LKAB to continue operating in Kiruna, where it produces 80% the iron ore that is mined in Europe for many decades. Since the 1890s the state-owned company has produced around 2 billion tons of ore, mostly from the Kiruna Mine. Another 6 billion tonnes of mineral resources are estimated in Kiruna, Svappavaara, and Malmberget. LKAB plans to build a new mine near the existing Kiruna site. The proposed Per Geijer iron ore mine also contains significant deposits in rare earth elements. This group of 17 metals is critical for products ranging from iPhones to lasers, and it's vital to meet Europe's climate targets. Europe and most of the rest is dependent on China to supply and process rare earths. The EU has designated Per Geijer a Strategic Project in March of this year. This could speed up the process to get the new mine into operation. Kiruna’s new city center will be forming around 5km away. Mayor Mats Taaveniku said: "The church... is a statement or symbol for this transformation of the city." We are already half way there. "We have 10 more years to move the rest." Reporting by Tom Little; writing by Simon Johnson; editing by Andrew Heavens
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Wildfires in Spain disrupt Camino de Santiago routes and spread to the mountains
Spain's worst wildfire wave in at least 20 years spread on the southern slopes Picos de Europa Mountain range Monday, prompting authorities to close a popular part of the Camino de Santiago pilgrimage. Margarita Robles, Minister of Defence, told Cadena SER radio: "This is a situation that we have not experienced in the last 20 years." She added that "the fires have unique characteristics due to climate change and the huge heat wave" that lasted 16 days. This was one of the longest summer heat waves in 50 years, with temperatures reaching 45 degrees Celsius over the weekend. The weather is expected to ease off on Monday night or Tuesday. Spain and Portugal, two of the worst-hit countries in southern Europe, are experiencing one of their worst wildfire seasons for 20 years. According to the European Forest Fire Information System, Spain has burned an estimated 344.400 hectares (851.031 acres) so far this year. This is the largest area recorded in its records dating back to 2006. It's also more than four-times the average from 2006-2024. Robles stated that thick smoke hindered the waterbombing of aircraft. The Spanish army has sent 1,900 soldiers to assist firefighters. About 20 wildfires destroyed thousands of hectares of land in Galicia, Castile and Leon and forced authorities to suspend rail services. They also cut a 50 km (31 mile) stretch of "Camino de Santiago", a pilgrimage route that is walked by thousands every summer. The route links France with the Spanish city of Santiago de Compostela, located on the westernmost tip of Spain. It is believed that the remains of St James the apostle are buried there. 'TERRIBLE THING' Patrice Lepettre (75), a pilgrim from Astorga told reporters that the inconvenience hikers faced was only temporary and couldn't be compared with the locals. "It is a terrible thing to do for the local population." "It's terrible for the local population," he said. The death toll has now reached four after a firefighter was killed in a truck crash near the village Espinoso de Compludo. Leaders from regions controlled by the main opposition People's Party have criticized the central government's poor planning, and demanded more resources to combat the wildfires. Robles claimed that all available means had been deployed. Ester Munoz, PP spokesperson on Monday, dismissed the Prime Minister Pedro Sanchez's Sunday call for a "State Pact", which he had urged with all major political parties to address climate change. Since June, the Interior Ministry reported that 27 people had been arrested for arson and 92 others were being investigated. According to EFFIS, wildfires in Portugal have burned 216,200 acres so far this season - four times more than the average of 2006-2024 for this time period. Two people have also died. Inti Landauro, Andrei Khalip, and Bernadettebaum edited this article.
Grid operators to suppress Finland-Sweden cross-border capability for upgrades
The offered capability for crossborder electrical energy transmission between northern Finland and Sweden will be lower than usual in the summer season due to upkeep and building and construction work, grid operators stated on Tuesday.
The constraint might see higher power cost fluctuations than regular, particularly at times of concurrently low or high wind power production, disruptions in power plants or interruptions on other transmission lines, Finland's Fingrid said.
In between May 29 and June 23, capacity from Finland to Sweden will be 300 megawatts (MW) rather of the usual 1,100 MW, a. market message published by Swedish grid operator Svenska kraftnaet. on the Nord Swimming pool exchange transparency website revealed.
From Sweden to Finland, just 200 MW rather of 1,200 MW will. be readily available throughout the same period.
Similar constraints will be duplicated in July and August to. permit deal with the new Aurora Line cross-border connection,. which is set up to begin operations in 2025, Fingrid said in. its declaration.
Nord Swimming pool openness data showed the cuts will last from. July 15 till Aug. 11.
In addition, Fingrid stated work to strengthen the main grid. in Ostrobothnia in western Finland during the summer could see. wind power output cut regionally by as much as 2,000 MW to. keep system security.
(source: Reuters)