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Markets make a big bet on Goldilocks' payroll number
Kevin Buckland gives us a look at what the future holds for European and global markets. The markets are in a positive mood as they anticipate that the Fed will continue to reduce rates by this month, and again at year's end. The previous month's payrolls shockingly high reading sparked speculation that the U.S. would have to change its monetary policy quickly. This time, economists expect a slightly higher reading. Fed Chair Jay Powell shocked many last month at the closely watched Jackson Hole Symposium with a keynote suggesting a reduction on September 17, unless data get in the way. Fedspeak has generally been dovish. The window for further comments will close later today, as the central banks enters its blackout period leading up to the policy meeting. The U.S. Stock Futures are heading higher after the S&P 500 closed at a record high overnight and the Nasdaq Composite was just 6 points away from doing the same. European futures are also rising, while Asian markets are rising by about 1%. The bond markets, too, that had become so volatile at first of the week, were calmed down by the recent soft U.S. employment data. This has bolstered the confidence in a non-farm payrolls that will continue the narrative of easier Fed policy. The yields of Japanese 30-year government bonds have fallen by about half after reaching record highs Wednesday. U.S. Treasury yields of similar maturity have fallen to three-week-lows. Two-year and 10-year yields are at four-month lows. The yields on British 30-year gilts have returned to their levels of a week earlier, before the spike that lasted four days and reached the highest level since 1998. German and French yields have fallen from their multi-year highs. Gold is also waiting its turn, hovering just below the all-time high of Wednesday after a seven-day rally that was breathless. It's clear that a positive reading on U.S. payrolls is crucial. There's little to distract us from the main event, which is the release of German factory data, British sales, and the revised GDP for the euro area. The following are key developments that may influence the markets on Friday. Payrolls in the United States -Canada payrolls Euro zone GDP revised German industrial orders and manufacturing output Halifax house prices, UK retail sales
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Oil prices drop for the first time in three weeks as a glut of supply looms
The oil prices continued to fall into the third session of Friday. They are now headed for a loss on a weekly basis for the first time since three weeks, as supply expectations increase and a surprising buildup in U.S. crude stock adds to concerns about demand. Brent crude futures dropped 10 cents or 0.15% to $66.89 per barrel at 0420 GMT. U.S. West Texas Intermediate Crude fell 13 cents or 0.20% to $63.35. Brent is down 1.78%, and WTI is down 1% this week. ANZ Research analysts said in a Friday note that the price of crude oil remained low amid rising OPEC+ supplies. Analysts said that market expectations are increasing, with the expectation of the group pushing more barrels onto the market in order to regain the market share previously lost by U.S. producers. Two sources familiar with the discussion were quoted as saying that two members of the Organization of the Petroleum Exporting Countries (OPEC+) and their allies, such as Russia, will be considering raising production in October during a Sunday meeting. Another boost could mean that OPEC+ - which pumps around half the world's crude oil - would start unwinding a second layer, or 1,6 million barrels of oil per day. This would be more than a full year ahead of schedule. The Energy Information Administration reported on Thursday that U.S. crude inventories increased by 2.4 million barrels as refineries entered maintenance season. This was in contrast to expectations from a poll which predicted a draw of 2 million barrels. BMI analysts stated in a recent report that the strength in the downstream sector was a major support to prices. However, refining margins are likely to be squeezed over the next few months as global growth slows and refiners increase maintenance. The BMI analysts stated that this will reduce throughput and therefore the demand for crude. The market is still plagued by supply risks. A White House official confirmed that U.S. president Donald Trump had told European leaders Thursday to stop buying Russian crude oil. If Russia cuts its crude exports, or if there is any disruption in supply, it could drive up the price of oil globally. Reporting by Siyi LIu in Singapore and Arathy SOMASEKHAR and Georgina Mcartney in Houston. Editing by Tom Hogue and Sonali Paul.
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UN weather agency says wildfires fuel air pollution
According to a World Meteorological Organization report released on Friday, wildfires that are likely to be more frequent due to climate change contributed significantly to air pollution in 2017. World Health Organization reports that ambient air pollution is responsible for 4.5 million premature deaths each year. The WMO report on 2024 also highlighted pollution hotspots around places where there have been intense fires, such as the Amazon basin in Brazil, Canada, Siberia, and central Africa. Wildfires are becoming more common and widespread around the world as global warming, primarily caused by fossil fuel emissions, alters weather patterns. They also add to the airborne particle pollution produced by transport, farming, and the burning of wood, coal, oil, and gas. The WMO released a statement that said, "Wildfires contribute a lot to particle pollution. This problem will only get worse as the climate continues to warm. It poses a growing risk to infrastructure, ecosystems, and human health." Ko Barrett, Deputy Secretary General of the United Nations, added that "climate change and air pollution cannot be dealt with in isolation." To protect our planet, communities and economies, they must be addressed together. Although the WMO report is for 2024, it also stated that the WMO reported record wildfires this year in southern Europe had contributed to pollution on the continent. Despite the negative signs, some positive signs were also observed, as particle pollution in Eastern China has decreased due to efforts made by authorities.
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US jobs data and gold poised to be released
Gold prices increased on Friday, and are on track to have their best week for three months. This is due to growing expectations that the U.S. will cut its interest rates this month. Attention now turns towards the U.S. Non-farm Payrolls data, which is expected later in the afternoon. As of 0332 GMT spot gold was up 0.3%, at $3,556.21 an ounce. It is hovering around the all-time high reached on Wednesday of $3,578.50. Bullion is up 3.2% this week. U.S. Gold Futures for December Delivery gained 0.2% to $ 3,615. Tim Waterer, KCM Trade's Chief Market Analyst, said: "Gold is slowly creeping up today. Traders are not willing to push the price higher too much until we see non-farm payrolls printed." The market dynamics are still in favor of gold, with Trump's efforts to make the Federal Reserve a more dovish institution, and the Russia/Ukraine conflict continuing. The number of Americans who filed new claims for unemployment benefits last week was higher than expected, which is consistent with a softer labor market. The ADP National Employment Report also showed that private payrolls in the U.S. increased less than expected for August. This week, several Fed officials said that concerns about the labor market continue to motivate their belief that future rate cuts are imminent. Fed Governor Christopher Waller believes the U.S. Central Bank should cut rates at its next meeting. According to CME Group’s FedWatch tool, traders are pricing in a nearly 100% chance that the Fed will cut rates by 25 basis points at the conclusion of its two-day policy meeting on the 17th of September. Gold that does not yield is usually a good investment in an environment with low interest rates. The Fed will also focus on the U.S. Non-Farm Payrolls Data, which is due at 1230 GMT and could provide more clarity about the interest rate trajectory. Silver spot rose 0.4% per ounce to $40.85 and was on its way to a third consecutive weekly gain. Palladium increased 0.3% and platinum gained 1.3%.
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Iron ore declines as China's post-parade recovery of demand misses expectations
The price of iron ore futures fell on Friday as demand in China, the top consumer, missed expectations following the World War Two parade. As of 0321 GMT, the benchmark October iron ore traded on Singapore Exchange was down by 0.82% to $103.95 per metric ton. On Thursday, the contract reached its highest level since 24 July. As of 0331 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange added 0.13%. It now stands at 784.5 Yuan ($109.68). In the previous session it reached its highest level since the 14th of August, rising by 1.7%. The average daily hot metal production, which is a measure of iron ore consumption, fell by 4.7% compared to the previous week, reaching 2.29 million tonnes in the week ending September 4, the lowest level since February 28. The market participants expected that the output would fall more sharply this week, due to production restrictions in Tangshan's top steelmaking center, to prepare for the military parade to be held on September 3, to commemorate World War II. Prices were supported by the expectation that demand would improve after steel mills resumed production on Thursday. A fall of almost 5% caught some analysts and traders by surprise and weighed on sentiment and price. Iron ore prices were also limited by the growing supply. The Singapore contract, however, was headed for a second consecutive weekly gain, supported a weak dollar amid bets on a U.S. Federal Reserve interest rate cut. Dollar-priced goods are cheaper when purchased in other currencies. The Shanghai Futures Exchange saw a decline in steel benchmarks as the demand for steel remained low. Rebar fell 0.1%, while hot-rolled coils dropped 0.06%. Stainless steel declined 1.12%, and wire rod remained unchanged. Coking coal, coke and other steelmaking materials rose by 2.07% and 1,3% respectively on renewed supply concerns. $1 = 7.1529 Chinese Yuan (Reporting and editing by Amy Lv, Lewis Jackson)
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Viridien, TGS Start 3D Seismic Survey Offshore Northern Brazil
French seismic firm Viridien, in collaboration with joint venture partner TGS, has started the Megabar Extension Phase I survey in the Barreirinhas Basin offshore Northern Brazil.The 5,300 sq km multi-client 3D seismic survey will be acquired by TGS and imaged by Viridien and builds on Viridien’s existing Megabar survey coverage.The Barreirinhas Basin features proven petroleum systems and giant discoveries in adjacent Guyana and Suriname basins that demonstrate analogous deepwater plays.Recent licensing activity by IOCs along the equatorial margin, coupled with the success of Brazil’s 5th Cycle Permanent Concession Offer, supports growing momentum for the region.Megabar Extension Phase I will be acquired in a promising area with proven geological potential but no existing 3D data. TGS will deploy the purpose-built streamer vessel Ramform Tethys, equipped with its proprietary GeoStreamer technology, for high-quality 3D data acquisition. Acquisition is scheduled to commence in early September and conclude by late November.Imaging of the Megabar Extension survey will be conducted by Viridien’s Subsurface Imaging experts, leveraging their high-end proprietary time-lag full-waveform inversion (TL-FWI) and reverse time migration (RTM) imaging technologies to provide enhanced geological understanding.This will help to reveal new play potential, improve prospect evaluation and de-risk exploration. Initial imaging products are expected by the third quarter of 2026, and final data expected to be available in the first quarter of 2027.“We are pleased to commence this new Megabar Extension survey as part of our long-term commitment to unlocking high-potential frontier areas for new exploration opportunities in Brazil.2Megabar Extension will give our clients an unmatched early-mover advantage in a strategic area of the underexplored Barreirinhas Basin in one of South America’s most promising exploration plays.“With exclusive access to the first ultramodern 3D seismic data set in this area, explorers will be able to identify opportunities faster, make more confident decisions, and position themselves ahead of the competition for upcoming bid rounds,” said Sophie Zurquiyah, CEO of Viridien.
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James Fisher Makes ‘Historic’ Offshore Wind Monopile Cut
James Fisher and Sons, a provider of specialist marine and energy solutions, has completed the world’s first abrasive cut on a 10-meter-diameter offshore wind monopile, marking a significant milestone for decommissioning operations in the renewable energy and oil and gas sectors.The operation deployed a bespoke external abrasive cutting tool, which has been designed, built and tested in the U.K., to meet the growing demand for safe, cost-effective offshore wind maintenance and decommissioning solutions.The abrasive water jet system severed the full diameter of the monopile in a single, precision-controlled cut, enabling safe recovery to the deck of the vessel.This project addressed a unique complex challenge, correcting installation issues in turbine foundations.As offshore wind markets mature around the world, operators are increasingly faced with the need to decommission or remediate assets. Over the longer term, as the global fleet of projects expands and reach end of life, this capability provides a safe and efficient solution, which minimizes disruption to the surrounding marine environment, according to James Fisher and Sons.“This world-first achievement demonstrates what is possible when engineering expertise and innovation are applied to the evolving needs of offshore wind. By developing a new tool and approach, we’ve shown that large-scale decommissioning can be done safely, efficiently and with the environment front of mind,” said Mark Stephen, Product Line Director, Decommissioning, CFE and Subsea Tooling at James Fisher.“This project shows the difference that true engineering ingenuity can make when the industry faces unexpected or unprecedented challenges. Offshore wind is growing rapidly worldwide, and with that growth comes the responsibility to manage assets safely and sustainably throughout their lifecycle.“By developing and proving this capability now, we’re helping our customers prepare for both today’s complex challenges and tomorrow’s large-scale decommissioning needs,” added Neil Sims, Head of Energy at James Fisher.
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McGeever: Gold's rise as a reserve currency is unstoppable.
Concerns over inflation, the deteriorating fiscal health of the United States, Federal Reserve independence and geopolitical instabilities are raising concerns about the stability long-term Treasuries – traditionally the safest asset on the planet. Many central banks have responded by turning to gold, a "barbarous" relic. Gold and government bonds fortunes have diverged dramatically this year. This split was highlighted by the fact that bullion prices reached a new record high, and bond yields on long-dated bonds hit levels they hadn't seen for years, or in some cases ever. U.S. Treasuries aren't selling off as quickly as European or Japanese Bonds, in part because central banks and institutions that manage foreign exchange reserves still have a strong demand for U.S. government debt. In recent years, Treasuries' share of global reserves has remained essentially unchanged, while gold holdings by central banks have grown dramatically, thanks to an accelerating price rise and increased demand. GOLD STANDARD For the first time in 1996, gold has surpassed Treasuries as the second largest global reserve asset, after the U.S. Dollar. According to a study by the European Central Bank, central banks hold 36,000 tonnes of gold. They have accumulated huge amounts since 2022, when Russia invaded Ukraine and inflation spiked after the pandemic. In the last three year, they have bought more than 1,000 tons of gold each. This is a record and twice as much as the average annual purchase in the previous decade. Gold is currently trading at over $3,500 per ounce. This represents a 35% increase in the past year. Central banks' gold reserves are worth $4.5 trillion. This is a significant amount more than the $3.5 trillion in Treasuries that central banks have. In recent years, the share of Treasury bonds in total reserves has also been decreasing. By some measures, it is only 23%. This is down from a peak of over 30% in the 2010s and well below gold's 27%. DAYS CHANGED In 1996, gold was the last reserve asset to account for more than Treasury bonds. This date is important. In the late 1990s, many European countries aggressively sold gold in advance of the introduction of the euro. Unexpectedly, Britain was the largest seller, despite not even being a member of the single currency union. In August 1999, gold fell to $250 per ounce, a 40% drop from the beginning of 1996. The "Washington Agreement", which was adopted by central banks in September 1999, effectively capped their sales. The late 1990s were not gold-friendly. The late 1990s were a time of steady growth, low inflation, moderate macro volatility and the rarest occurrence - an American budget surplus. In the last three decades, global macro-environment has changed dramatically, and is now much more favorable to gold. Treasuries are in relative decline. Tavi Costa is a macro-strategist at Crescat. He says that there are many parallels with what we see today and in the 1970s, when inflation, monetary instability and geopolitical changes made gold an important strategic reserve asset. Costa says that the fact that foreign central bank reserves now exceed U.S. Treasury bonds is "a significant milestone" and signals a longer-term structural change to reserve management. What we're seeing could be the beginnings of a major realignment of global reserve composition. Could gold regain the 75% share it had in central banks' reserves assets during the 1980s and 1990s? This is unlikely, and would require years of double-digit inflation and a prolonged recession. What will stop the yellow-metal footprint from growing? This would require that inflation pressures and geopolitical risks, as well as economic uncertainty, to be significantly reduced. Reserve managers will continue to buy gold because none of this is likely to happen in the near future. You would not bet against that.
REFILE-Ghana to postpone more cocoa deliveries as supply crisis worsens
The world's second largest cocoa producer Ghana is seeking to delay delivery of up to 350,000 tons of beans to next season due to poor crops, five sources told in a more worsening of the outlook for the worldwide chocolate industry.
Chocolate makers all over the world are raising costs for consumers after cocoa more than doubled in value this year alone following a third year of bad harvests in Ghana and Ivory Coast, accountable for 60% of worldwide production.
The market had previously estimated Ghana would roll forward some 250,000 metric tons of cocoa, comparable to about half its present crop. Cocobod, Ghana's cocoa regulator, said the nation was wanting to roll over some volumes, but not in those ( 350,000 load) quantities.
The country's cocoa crop has actually been damaged by negative weather, bean disease and prohibited gold mining, which often displaces cocoa farms.
Ghanian farmers are likewise smuggling more beans to neighbouring nations to sell them at greater rates than the state getting price, additional eroding what bit crop is readily available for delivery in Ghana
5 sources with understanding of the matter stated Ghana. pre-sold some 785,000 heaps worth of beans for the current 2023/24 (October-September) season, but will likely just be able to provide some 435,000 heaps.
Ghana frequently offers one year forward about 80% of its crop - which usually amounts to 750,000-850,000 lots.
However, its crop was up to around 670,000 lots last season and is not anticipated to surpass 500,000 heaps this season. Traders and the industry fear it may not rebound considerably next season either.
The International Cocoa Organisation expects global cocoa production will fall 10.9% to 4.45 million heaps this season.
This suggests processors and chocolate firms will have to make use of cocoa stocks to fully cover their requirements.
FORWARD SALES
The rate rally is hindering a long-established mechanism for cocoa trade.
Authorities in Ghana use the average of their forward sales to set the minimum cost at which traders can purchases cocoa from farmers the list below season.
With some 350,000 tons of forward offered beans missing from this season's crop, Ghana is dealing with forward sales for next season, traders stated. 2 sources said the country has sold forward simply 100,000 heaps.
Sources said the 100,000 heaps, like the 350,000 tons being rolled into next season, were cost less than a half of existing world cocoa costs, indicating Cocobod will have a hard time to increase farmer rates next season based on these sales.
Cocobod stated forward sales were progressing as typical however declined to reveal volumes or prices.
Failure to raise prices will likely lure farmers to further ramp up bean smuggling, grow other crops or offer more of their farms to gold miners, stated the sources.
(source: Reuters)