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Dollar firmer, copper eases due to growth concerns
The price of copper fell on Tuesday, as the escalating tensions between the Middle East and the United States heightened concerns about the global economy and the demand for industrial metals. A stronger dollar also exacerbated the negative sentiment. As of 1017 GMT, the London Metal Exchange reported that three-month copper was down by 0.1%, to $9,697 a metric ton. As fighting between Israel and Iran entered their fifth day, fears of a wider regional conflict grew. Oil prices rise, which dampens economic growth and increases inflationary pressures. Tom Price, Panmure Liberum's analyst, said: "Another conflict has erupted, unsettling investors and raising concerns about global growth in the long term. This is prompting a move away from cyclical investments like base metals to safe-haven assets." The U.S. Dollar Index ticked upward, making commodities priced in dollars more expensive for buyers of other currencies. Citi said in a report that it expects the price of copper to drop to $8,800 by the third quarter, if tariffs are imposed on imports from the U.S. It said that until then, U.S. imports of copper could worsen the supply shortages outside the United States. In February, U.S. president Donald Trump ordered an investigation into possible tariffs for copper imports in order to rebuild U.S. manufacturing. The investigation has led to a premium in price for COMEX futures contracts compared with LME contracts. Traders and producers have taken advantage of this by diverting supplies of copper from other markets into the United States. U.S. COMEX futures were traded at $4.806 lb. This brings the premium over LME Copper to $898 per ton. LME aluminium rose 0.4% to $2.522, zinc dropped 0.5% to $2.643, nickel fell 0.1% to $15.055 and tin fell 0.6% to $32,385. Lead fell 1.2% to $1,983.5.
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Solar stocks fall after Senate proposal to phase-out tax credits by 2028
U.S. Solar stocks fell in premarket trade on Tuesday, after a Senate committee proposed that solar and wind energy credits be phased out completely by 2028. This was part of the changes suggested for President Donald Trump's tax-cutting and spending bill. Enphase Energy, a manufacturer of solar inverters, was one of the largest decliners in the S&P 500 at the start of trading. Its shares fell 17.2% to $35. SolarEdge Technologies and Sunrun, both solar panel suppliers, each fell more than 20%. First Solar fell 10.5%. The draft bill, circulated last month by the U.S. Senate Committee, contains several changes to Trump’s budget, also known as "One Big, Beautiful Bill Act", which the House narrowly approved. The committee chair's language envisages the gradual phase-out of subsidies for solar and wind that were enshrined in the Biden era 2022 Inflation Reduction Act by 2026, by reducing it to 60% of its original value and terminating it by 2028. Tax credits will not be phased out under current law until 2032. Citi strategists stated that they "remain in a sell mode on residential solar." The bill had a phase-out beginning in 2029, and credits would be eliminated in 2032. This is a small improvement over the previous abrupt termination of credits when projects were not in service before 12/31/2028. Solar companies already face pressure due to a weak residential demand in the U.S., which is partly caused by high interest rates as well as metering reforms implemented in California's top market. These reforms have decreased the credits that customers receive for feeding excess electricity into the grid. Sunrun shares have fallen 27% over the last year while Enphase Energy has dropped 63%. Invesco's Solar ETF dropped by 22.8% in the last year. The Senate panel's proposed amendments to Trump's Budget extend tax credits for geothermal, hydro and nuclear power until 2036. Nano Nuclear Energy, Oklo, and other nuclear-related companies saw their shares rise by 2.2% and 2.1% respectively. The different versions of the bill in the two narrowly Republican-controlled chambers of Congress could complicate party leaders' goal of passing the bill, which is the centerpiece of Trump's domestic agenda, before a self-imposed July 4 deadline. (Reporting and editing by Devika Syamnath in Bengaluru)
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Wall Street futures fall as Mideast conflict continues
U.S. index futures fell on Tuesday, as the conflict in the Middle East entered into its fifth day. This dampened global investor confidence before the Federal Reserve’s upcoming policy meetings. The air war between Israel and Iran, which began Friday with Israel attacking Iran's nuclear facility, has raised fears that it could cause bottlenecks in oil exports to the oil-rich Middle East. Oil prices remain high due to uncertainty, and this has led to a rise in the premarket price of U.S. energy shares. Chevron shares and Exxon stock both rose by nearly 1%. The rise in oil prices coincides with the Fed's decision to maintain interest rates on Wednesday. According to CME Group’s Fedwatch tool, money market movements show that traders are pricing about 48 basis point rate cuts by 2025. There is a 59% likelihood of a rate cut of 25 bps in September. At 5:33 am. At 5:33 a.m. ET, Dow E Minis were 269 points down, or 0.63 percent, and S&P E Minis were 37.25 points down, or 0.62 percent. Nasdaq E-minis fell 138.5 points or 0.63%. The U.S. Senate Republicans released late Monday proposed changes to the President Donald Trump’s sweeping tax cut bill, which had passed through the House of Representatives earlier this year. Goldman Sachs strategists wrote in a report that the Senate's tax bill looks similar to the House version, but will likely cost more in the long-term. Solar stocks dropped after Senate changes to Trump’s tax-cut legislation revealed that solar, wind, and energy tax credit credits would be phased out by 2028. Enphase Energy shares, which make solar inverters fell 17%. Solar panel manufacturers Sunrun and SolarEdge Technologies both dropped by more than 21,6%. First Solar lost nearly 11%. The shares of nuclear power companies have risen after the Senate extended credit for nuclear energy until 2036. Oklo and Nano Nuclear Energy both rose by 1.9%. A rise in U.S. Treasuries, as investors seek out traditional safe-havens amid increased geopolitical unrest, has pushed down yields across the curve. The yields on the benchmark 10 year fell by about 3 basis points, to 4.42%. Reports claim that Eli Lilly, among other companies, is in advanced discussions to purchase gene-editing startup Verve Therapeutics. The deal could be worth up to $1.3billion. The drugmaker's shares fell by 1.2% while Verve rose 82.9%. The key data for today includes retail sales by month and import prices, scheduled to be released at 8:30 am. ET. (Reporting and editing by Maju Sam in Bengaluru, Kanchana Chakravarty from Bengaluru)
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Germany does not plan strategic gas reserves, Economy Ministry says
A spokesperson for the Economy Ministry said that Germany does not plan to create a national reserve of gas, as recent legislation requiring different filling levels in the winter months will encourage private companies to provide supply security. In order to avoid a supply disruption, European Union nations have increased their storage capacity in anticipation of the energy crisis that will follow Russia's invasion and occupation of Ukraine. Germany is the largest gas consumer in mainland Europe. Last month, German pipeline lobby group FNB suggested a new strategy for gas storage that included a permanent reserve. The spokesperson responded in writing to a question by saying that the Economy Ministry had not yet considered this strategy (storage). He added that the supply was generally secure. Bloomberg reported Tuesday, citing anonymous sources, that Germany is considering whether or not to build a strategic gas store. The new German coalition government has aligned its domestic regulations with the anticipated changes in European Union regulations. These include a requirement that gas storage facilities be filled to 80% by November 1, to ensure sufficient supply for winter. This is more flexible than the EU’s previous 90% filling capacity requirement. German utilities that operate gas storage facilities include Uniper SEFE, VNG Gasspeicher, and RWE. A spokesperson for the German Economy Ministry said that the ministry is aware of the fact that any additional government actions could increase the cost to consumers. GIE data showed that German gas stocks were last at 45.8% compared to the EU's 53.8 %. This was a significant drop from the 76.8% figure of a year earlier. Vera Eckert reported, Susan Fenton edited.
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Germany is down on wind turbines, but France has a nuclear deal with Germany
The wholesale electricity market in Europe showed mixed results on its two major markets on Tuesday morning. French prices rose on tighter supply locally, while German prices fell on the expectation of increased wind power output. The LSEG analysis pointed out that the increased production of brown coal and natural gas will also boost Germany's electricity supply. By 0930 GMT the French baseload day-ahead contracts had risen by 12.8%, to 53 euros (61.25 dollars) per megawatthour. The German equivalent contract was down by 14.5%, at 77.5 Euro/MWh. On Wednesday, wind power generation is expected to increase by 4.3 gigawatts in Germany to 11.3 GW. The French nuclear capacity has decreased by two percentage points to 69%. The power demand in Germany and France was flat on Wednesday. The average temperature is expected to rise by 3-4 degrees Celsius next week compared to Tuesday's levels. This comes at a moment when the energy markets closely monitor weather conditions, as they determine timing and intensity for air conditioning. The German baseload for the year ahead increased by 0.3%, to 92.3 Euros/MWh. In contrast, the French equivalent fell 2.3% at 66.7 Euros/MWh. The benchmark contract on the European carbon markets fell 0.7%, to 74.83 Euros per metric ton. In its monthly report for the month of June, Swiss utility Axpo stated that developments in U.S. China and U.S. Europe tariff negotiations would remain a source of major uncertainty on all commodity markets in the months to come. The EEX bourse in Germany celebrated its 25th anniversary on Monday. During this time, the exchange has grown from a small platform for electricity to a global leader for energy, environment products, freight, and agriculture.
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Trump claims that the EU is not offering a fair trade deal and Japan is also 'tough.'
U.S. president Donald Trump said that Treasury Secretary Scott Bessent stayed in Canada for the G7 summit, and suggested Japan is being "tough' in trade negotiations and the European Union has not yet offered him what he considered to be a fair deal. Trump left early from the G7 to deal with the developments in the Middle East. The president told reporters that the EU has been very tough with the United States over the years. Trump said, "We are talking but I do not feel they have offered a fair offer yet." "They will either make a fair deal, or pay what we tell them to pay." Trump said that there is a possibility of a deal between Washington, DC and Japan. "They are tough. The Japanese are tough. But you must understand that we will send you a letter stating 'this is the price you will pay' if you do not want to do business. "But there is a chance," said he. Trump said that pharmaceutical tariffs would be coming soon. We'll be doing pharmaceuticals in a very short time. "That's going bring all the businesses back to America," he said. It's going bring the majority of them, or at least a portion back in. Trump said that Canada would also pay for a part of the "Golden Dome", his missile shield project. (Reporting and editing by Jeff Mason, Kanishka Singh, Alex Richardson).
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Gold prices steady as markets focus on Middle East conflict and Fed decision
Gold prices were unchanged on Tuesday, as investors assessed the conflict between Israel & Iran and looked forward to this week's U.S. Federal Reserve policy meeting. As of 0851 GMT, spot gold was unchanged at $3,383.01 per ounce. U.S. Gold Futures dropped 0.5% to $3401.30. Israel and Iran traded attacks for the fifth day in a row on Tuesday. Donald Trump, the president of the United States, has called for an evacuation of Iran’s capital Tehran. He also cut short his trip from Canada to Canada's G7 summit. Separately, a report stated that he asked his National Security Council in the Situation Room to be ready. Han Tan, Exinity Group's chief market analyst, said that the markets are waiting to see if hostilities between Israel & Iran will escalate or remain contained. Gold still retains a bias to surge upwards when signs of an escalating Middle East conflict are present, given its status as a preferred safe haven in recent years. Sources claim that Iran has asked Oman and Qatar to encourage Trump to press Israel to agree to a ceasefire. In return, Iran is offering flexibility on nuclear talks. Bullion with zero-yield is seen as a hedge to geopolitical or economic unrest and thrives in low-interest environments. Wednesday is the day for the U.S. Central Bank's rate announcement and Jerome Powell, its chair. The market is currently pricing in two rate cuts before the end of this year. Citi has lowered both its short-term targets and long-term ones for gold. It said that the prices of gold could fall below $3,000 an ounce in late 2025 or even early 2026 due to a declining investment outlook and a better global growth outlook. Palladium dropped 0.4%, to $1,025.44, while platinum remained unchanged at $1246.59. (Reporting by Anushree Mukherjee in Bengaluru; Editing by Joe Bavier)
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EDPR, a renewable energy company, sticks to its US plans despite tax credits cuts
EDP? EDP? The Republican-controlled U.S. House of Representatives approved a budget reconciliation bill last month, which weakens clean-energy tax credits included in the 2022 Inflation Reduction Act. The Senate can still amend the bill. However, it is currently written in a way that would terminate 60 days after the bill's enactment several credits for projects which have not yet started construction. This makes most of the projects unfeasible. The CEO of the Portuguese company, Miguel Stilwell d'Andrade, told reporters at a late-night conference on Monday that he believes the firm will keep its forecasts for 2025 and 2026 in terms of the results and the installation of new capacities. EDPR has been preparing a business plan that will be revealed on 6 November and go beyond the year 2027. The renewables bet is here to remain in the U.S. He said that in 2024 we would install 2 GW, and this year 1 GW. We will also install up to 750 Megawatts by 2026. He added that the exact amount of investment in 2027 would depend on the final version approved of the reconciliation bill. He said, "Let's wait and see what the Senate produces." Senator John Curtis is one of only a few Senate Republicans to have stated that they would like to keep some tax credits. He said last week, however, that the bill needed to be changed to protect investors from major disruptions and to safeguard jobs. In December 2024, EDPR had installed capacity of 19,3 GW, with 51% in the United States.
Thames Water's crumbling assets are a sign of the challenges ahead as it fights to survive
The sheer volume of waste entering Thames Water’s Mogden Sewage Works in southwest London, overwhelms the 90-year old concrete tanks. This forces the utility to pump excrement directly into the River Thames 15 times per year.
The plant, hidden by trees, is a symbol of the crisis in Thames, which provides water and sewage to 16 million people in southern England. The company, which was privatised in 1989 and is now heavily indebted, struggles to survive let alone deal with the crumbling infrastructure in its care.
The U.S. Private Equity firm KKR walked away this month from a plan of injecting 4 billion pounds ($5.4billion) of equity. This leaves Thames' fate in senior creditors who are now negotiating a deal to rescue the water regulator Ofwat.
The group, which includes investment-grade banks and hedge funds, has offered to write off 20% of their debt in exchange for a new environmental and investment regime.
If there is no deal, the British Government - which already struggles with limited public finances – may be forced to take over a company that polluted waterways and paid dividends and bonuses for its former owners and managers.
Investors are unnerved by the prospect of a collapse. This could increase borrowing costs for upgrading UK infrastructure such as electricity grids, transport systems and other UK infrastructure.
The rescue plan would have its own financial and political costs.
Creditors believe that turning around the company will require some leniency in the fines and penalties of 1.4 billion pounds Thames Water expects to receive from the regulator Ofwat, and the Environment Agency during this five-year period.
A senior creditor in the plan said that "time is running out" and added that Ofwat had listened to their proposal now after months without engagement.
We're just asking for a small amount of movement, and we are there.
The creditor who spoke anonymously because the talks were private is one of over 100 creditors who hold debts totaling more than 17 billion pounds ($17.7billion) and are willing to invest in places like Mogden.
Dave Chowings of Mogden Plant Manager, described the magnitude of the challenge during a recent site visit. He pointed to storm tanks that were the size of Olympic-sized swimming pools and said, "All this concrete is 90 years older." It's time to rebuild."
DOOM LOOP
KKR spent months assessing the amount of money needed to upgrade plants such as Mogden.
Martin Young, a water industry consultant, said that Ofwat was at a critical moment when it came to finding a solution. It had been criticised for not being able to prevent the scandal.
If they don't change, we run the risk being trapped in this doomsday loop. "That's a doomsday loop for Thames but you can also extend it out to the larger industry," he said.
Ofwat announced that it has begun reviewing the submissions of senior creditors, including their turnaround plan, approach to financial stability and proposals for governance.
A spokesperson stated that "our focus is to assess whether the plans are real, achievable and will bring substantial benefit for customers and the environmental,"
The government referred to an earlier statement that said Thames was stable, and it was closely monitoring the situation.
POLITICALLY TOXIC
The failures at Thames, according to critics, are the result of decades of political and regulatory failures, as successive governments have focused on reducing customer bills rather than driving investments.
It would be toxic to the political system if Thames Water were given the special treatment that the creditor group wants in terms of regulation.
Ash Smith, from the campaign group Windrush Against Sewage Pollution, said that the terms demanded by creditors proved that nationalisation was only the answer.
He said that customers had grown tired of business owners who based their model on the ability to break the law.
The senior creditors' 20% "haircut", which threatens to wipe out junior debt holders has angered them as well.
Tradeweb data shows that the Thames Water 2040 bond has been bid at 68.99p on the pound.
Thames is a big challenge for whoever takes it over.
Mogden has struggled with the population growth and weather changes associated with climate-change.
Thames spent 100 million pounds on the site over five years, and will spend the exact same amount in the next five.
Four of the storm pumps on the Titanic were manufactured in the 1930s, but it's getting harder to locate people who can maintain them.
Thames Water's Chief Executive Chris Weston wrote to a legislative committee on May 30, "Historically, the funding for our asset replacement has not been enough to offset our assets deterioration."
Customers want clean rivers but don't want to pay for mismanagement.
Laura Reineke is a 52-year-old charity worker who works for Thames Water. She said, "I think water has been cheap for far too long, but I am not willing to pay what we have already paid for." ($1 = 0.7362 pounds)
(source: Reuters)