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MORNING BID EUROPE - Three-alarm fire, as the tech selloff continues and Takaichi stimuli lands
Gregor Stuart Hunter gives us a look at what the day will bring for the European and Global markets. It seems that Nvidia's profits could only smother a fire on the markets for a limited time. Investor confidence is still in ruins after the stock markets tumbled again on Thursday following a new sell-off of tech shares on Wall Street. Investors are alerted on Friday following the explicit threat from Japanese Finance Minister Satsukikatayama, that an intervention in the FX market could be imminent. This was before the announcement of the lavish $135 billion stimulus package from the Takaichi government, which smashed Japanese government bonds and the Japanese yen. Data released by the Bank of Japan on Friday revealed that core inflation in October increased 3.0% compared to a year ago, well above the central banks' 2% target. The yen rose 0.2% to 157.19yen against the dollar on the back of the intervention talks and investor demand for safety havens. Meanwhile, the Nikkei dropped 2.4% to bring its weekly loss to 3.5%. The MSCI index for Asia-Pacific stocks outside Japan, which is the broadest of the three MSCI indices, fell 2.5% and its weekly loss reached 3.7%. This was the largest drop since the Liberation Day tariff crisis in early April. Early trading in Europe is expected to see the European markets join the selloff. Euro Stoxx futures for the entire region and German DAX were both down 1.4% each, while FTSE futures dropped 1%. Oil prices dropped for the third session in a row on commodities markets amid hopes of a possible peace agreement between Russia and Ukraine. Brent crude dropped 1.3% to $62.54 a barrel. Gold traded 0.7% lower, at $4.059.27 an ounce. In yet another sign of dismay, a fire broke at the venue that hosted the COP30 Summit in Brazil. It disrupted talks and triggered an evacuation, just as negotiators hunkered down to try and land a deal for strengthening international climate efforts. The U.S. Stock Futures were showing some signs of a recovery, but they are still well below their recent highs. S&P 500 futures e-mini were up last by 0.4%. The following are key developments that may influence the markets on Friday. Economic Data UK Flash PMI: November, UK Public Sector Net Borrowing Ex-Banks and Retail Sales for October France's Business Climate Manufacturing and HCOB flash PMI for November Germany: HCOB flash PMI for November Euro zone: Flash PMI from HCOB for November Debt auctions: UK government debt: 1 month, 3 months and 6 months
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Gold set to fall this week as US jobs data dents rate-cutting hopes
Gold slipped on Friday and was heading for a weekly fall, as a stronger-than-expected U.S. jobs report reinforced expectations that the Federal Reserve would refrain from cutting interest rates at its December meeting. As of 0436 GMT, spot gold dropped 0.6%, to $4,052.58 an ounce. Bullion prices have fallen 0.7% in the past week. U.S. Gold Futures for December Delivery edged down 0.2% to $4,050.30 an ounce. GoldSilver Central MD Brian Lan stated that "gold prices are currently consolidating and we can see the dollar strengthening quite a bit. Behind it, there's a lot speculation about whether or not the Fed will keep cutting interest rates." "I think the market is uncertain, and we expect that traders will take profit from their positions as we approach the end December. That's what we have seen at the end last week and this week." On Friday, the dollar was set to have its best week in over a month. Gold priced in greenbacks becomes more expensive to holders of other currencies when the dollar is stronger. The U.S. Labor Department's closely-watched report was delayed due to the shutdown of the federal government. It showed that nonfarm payrolls in September increased by 119,000. This is more than twice the expected increase of 50,000. The traders now expect a Fed rate reduction next month. Gold is a non-yielding investment that tends to perform well in low interest rate environments. Chicago Fed President Austan Goolsbee reiterated on Thursday that he was "uneasy' about the frontloading of rate cuts. This is especially true as the Fed's goal to achieve 2% inflation seems to be stalling and going the wrong direction. The physical gold market in major Asian markets has remained low this week due to the volatility of rates. This deterred buyers from purchasing. Silver spot fell 1.8%, to $49.69 an ounce. Platinum dropped 0.5%, to $1.502.80. Palladium fell 1.4%, to $1.358.06 (Reporting and editing by Sherry Jac-Phillips, Rashmi Aich, and Brijesh Patel in Bengaluru)
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Oil extends decline by 1.5% on hopes for Russia-Ukraine peace deal
Oil prices dropped 1.5% on the Friday, continuing a downward trend for the third consecutive session. The United States was pushing for a Russia/Ukraine agreement that could increase global supply while investors were hesitant about its rate reductions. Brent crude futures dropped 93 cents or 1.5% to $62.45 per barrel at 0416 GMT after falling 0.2% the previous session. U.S. West Texas Intermediate fell 1.7% or 98 cents to $58.02 per barrel after ending the previous session down 0.5%. The two contracts will fall by more than 2.5% on the back of concerns about oversupply, wiping out most of last weeks gains. The market sentiment has turned negative as Washington pushes for a plan of peace between Ukraine and Russia that will end the three-year conflict. Meanwhile, sanctions against top Russian oil producers Rosneft & Lukoil set to go into effect on Friday. Oil prices continued to fall as Zelenskiy, the Ukrainian president, agreed to collaborate with Russia on a peace plan. U.S. sanctions against two Russian oil companies are due on Friday. The slim chances of an agreement, which would eliminate much of the geopolitical premium for the war baked into crude, are weighing down on prices. Some analysts, however, were skeptical about how quickly a peace agreement could be reached. Analysts at ANZ told their clients that an agreement was far from being certain. They added that Kyiv had repeatedly rejected Russia's requests as inacceptable, preventing any breakthrough. The market is becoming increasingly sceptical about the effectiveness of the new restrictions on Russian oil firms Rosneft, and Lukoil. Lukoil still has until the 13th of December to sell off its vast international portfolio. Oil prices were also impacted by a stronger dollar, as the commodity denominated in dollars is more expensive to holders of other currencies. UOB analysts stated in a client letter that the dollar strength against Asian currencies became very apparent after investors further reduced the odds of a rate cut being made at the FOMC meeting scheduled for December, after the minutes of its highly divided October meeting were released. Investors bet that the Federal Reserve will not cut rates in January.
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Copper prices fall on week-end dollar firm as traders evaluate US employment data
Copper fell on Friday, and it was likely to be a loss for the week, as investors were cautious before the Federal Reserve's interest rate decision in December, and China's low demand added further pressure. As of 0330 GMT the most active copper contract at the Shanghai Futures Exchange fell 0.82%, to 85,670 Yuan ($12,045.16) per metric ton, resulting in a weekly decline of 1.42%. The benchmark three-month price of copper at the London Metal Exchange fell 0.39%, to $10,696.5 per ton. It is expected to finish the week with a loss of 1.41%. The September job data on Thursday, which was delayed due to the government shutdown, offered mixed signals to the Fed, with policymakers pondering the December rate decision, showing stronger-than-expected growth in new hiring but a rise in the jobless rate to a near four-year high. The September delayed data will be last official employment data before December's interest rate decision. The dollar remained strong, as Fed officials remained hawkish. This weighed on commodities that were traded in greenbacks by making them costlier for investors who used other currencies. Prices are still high this year, and demand is weak from China. Shanghai copper is expected to increase by more than 16 percent in 2025. London copper will rise by 22 percent this year. Yangshan Copper Premium The latest price of copper in China, which is a measure of Chinese appetite, was $33 per ton, down from the peak of over $100 at the beginning of May. Lead fell 0.43%. Nickel tumbled 1.70%. Tin lost 1.27%. Aluminium fell 0.73% among other LME metals. Zinc dropped 0.86%. Lead shed 0.45%. Nickel lost 0.59%. Tin was down 1.01%. Friday, November 21, DATA/EVENTS - (GMT) 0700 UK retail sales MM,YY Oct 0700 France Business Climate Mfg Overall Nov 0815 France HCOB Mfg Svcs Comp Flash PMIs Nov 0830 Germany HCOB Mfg Svcs Comp Flash Svcs PMIs 11 0900 EU HCOB Svcs Comp Flash Svcs PMIs 11 0930 UK Flash Svcs Comp PMIs - Nov 0930
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China warns its citizens that they could become'mining slavery' in the Central African Republic gold rush
The Chinese embassy in Central African Republic (CAR), has warned that its citizens could become "mining slaves", in the gold trade of the politically insecure nation. Chinese workers are now looking to sub-Saharan Africa for work as gig economies in Asia dry up. The embassy released a statement Thursday stating that Chinese nationals were killed or kidnapped, and some even scammed of large sums and deported because they illegally mined. China has sent workers to resource-rich sub Saharan Africa in search of fortune. Gold prices have soared amid massive Chinese state purchases, while factory and construction jobs are disappearing as China's economy slows. Illegal mining has exploded in Ghana, Mali, and the Democratic Republic of Congo (nearby), as a result of lax regulations and enforcement. The Chinese Embassy in Bangui warned that Chinese citizens involved in gold mining in Central African Republic faced significant security risks. It had heard reports of Chinese nationals whose documents were confiscated and who became "mining slaves." The embassy didn't say how many Chinese workers sought to work in illegal mines in CAR. The statement stated that "some were killed in a rampant antigovernment militia activity; others were tragically attacked after becoming embroiled in conflicts between forces and countries and some succumbed fatal illnesses such as malignant malaria." The embassy warns that "others met violent ends through staged accidents such as 'car crashes,' or hangings' after disputes with other shareholders." The Central African Republic embassy in Beijing has not responded to a comment request immediately. CAR is a country in civil war for over a decade. It's one of the poorest in the world but it has huge reserves of oil, diamonds, and gold. Analysts say that China's principle of non-interference is designed to protect its economic interests abroad. Beijing has increased its public diplomacy in recent years to protect Chinese nationals abroad. The Wolf Warrior 2 film, one of China's most popular films, is about a former Chinese Special Forces soldier who rescues Chinese workers from a war-torn African nation. It ends with an image a Chinese passport, and the message "Don't quit if you find yourself in danger abroad." Please keep in mind that a strong motherland is always there to protect you. China has for years deemed areas outside of Bangui, the capital city of the CAR, as "extremely high risk" and urges its citizens to evacuate. The U.S. State Department continues its "Do Not Travel "highest advisory. The Chinese Embassy quoted a mother who had lost her son as saying, "The biggest regret I have in my life is that I did not stop him from going to Central African Republic to search for gold."
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Japan's largest nuclear power is awaiting a key decision from the regional governor
On Friday, a Japanese regional governor will be expected to announce whether he is willing to allow a partial restart at the Kashiwazaki Kariwa nuclear plant, which is the largest in the world, as Japan attempts to revitalize its nuclear sector while reducing fossil fuel imports. The approval of Niigata Prefecture governor Hideyo Haazumi will remove the final major obstacle for Tokyo Electric Power Co. (TEPCO) in its plans to restart Kashiwazaki and Kariwa's two biggest reactors. TEPCO would be able to restart its power plant for the first time since March 2011, when the tsunami destroyed Fukushima Daiichi. This would be a major breakthrough for Japan which, after the disaster, shut down all 54 reactors. Sanae Takaichi - the new Prime Minister of Japan, who was appointed last month - has stated that she is in favor of more nuclear relaunches, both to improve energy security and reduce the cost of imported electricity, which makes up 60% to 70% or Japan's total electricity production. On Friday, Chief Cabinet Secretary Minoru K. Kihara stated that "the restart... is extremely crucial from the perspective to reduce power supply and prices and secure decarbonized energy sources." Japan has restarted fourteen of the remaining 33 reactors that were in operation prior to Fukushima. Governor Hanazumi will announce his decision on Friday at 4:00 pm (07:00 GMT). It was unclear whether the report released by Japan's nuclear regulator on Thursday about inadequate security management at Kashiwazaki Kariwa would affect his decision. TEPCO plans to restart unit No. 6 and No. TEPCO, if approval is granted for both, plans to restart units No. 7 can together produce 2,710 Megawatts, which is about a third the total power of Kashiwazaki Kariwa (8212 MW). TEPCO plans to decommission a few of the five other units. In July, Kansai, Japan's largest nuclear power company, announced that it would start conducting surveys in order to study the possibility of building a new reactor west of Japan. This would be the country's first new unit built since the Fukushima catastrophe. TEPCO's shares fell 1.3% on the Friday after the Nuclear Regulation Authority report. This was better than the Nikkei Index, which dropped 2.3%. (Reporting and editing by Tony Munroe, Tom Hogue, and Kaori Kaneko. Additional reporting by Katya Glubkova.
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Iron ore continues to fall due to softer China demand. Set for second weekly gain
The price of iron ore futures fell on Friday, for the second consecutive session. This was due to signs of weaker demand in China and the shrinking margins within steel. As of 0301 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange shed 0.25%. It was 786 yuan (US$110.52) per metric ton. As of 0251 GMT, the benchmark December iron ore traded on Singapore Exchange was down 0.24% at $103.7 per ton. The average daily hot metal production, which is a measure of iron ore consumption, decreased by 0.3% compared to the previous week, reaching 2.36 million tonnes on November 20. According to Mysteel, the steel margins have continued to shrink. Only a little over one-third of steel mills are operating at a loss, as opposed to nearly a quarter a month ago. Both benchmarks have gained 1% this week, which is a second consecutive weekly gain. Prices of seaborne iron ore The average price has remained well above $100 in November, despite expectations that it would be between $90-95. According to a report on Wednesday, long-running negotiations between China's iron ore buyer, the state, and BHP, a miner, have reduced availability of iron ore. This has led to lower prices, despite a decline in demand for this key ingredient. Exclusively reported, the state-run buyer of iron ore has ordered steel mills to stop buying a specific type of BHP ore. This ban is in addition to another one already in place, and escalates a dispute about a new contract. Coke and other steelmaking materials, such as coking coal, fell by 0.98% each and 0.28% respectively. The benchmarks for steel on the Shanghai Futures Exchange are mixed. Rebar was flat; hot-rolled coil fell 0.12%; wire rod increased 0.09%; and stainless steel rose 0.28%. ($1 = 7.121 Chinese Yuan) (Reporting and editing by Amy Lv, Lewis Jackson)
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Gold prices fall as US jobs data boosts rate-cut expectations
Gold inched down on Friday as a stronger-than-expected U.S. jobs report reinforced expectations that the Federal Reserve will refrain from cutting interest rates at its December meeting. As of 0242 GMT, spot gold was down by 0.1%, at $4,072.87 an ounce. U.S. Gold Futures for December Delivery edged up 0.3% to $4,071.90 an ounce. GoldSilver Central MD Brian Lan stated that "gold prices are currently consolidating and we can see the dollar has gained quite a bit. Behind it, there's a lot speculation about whether or not the Fed will cut interest rates further." "I think the market is uncertain and, especially now that we are approaching the end December, we expect many traders to take profit from their positions, as we saw last week and this week." On Friday, the dollar was set to have its best week in over a month. Gold priced in greenbacks becomes more expensive for those who hold other currencies. The U.S. Labor Department's closely-watched report was delayed due to the shutdown of the federal government. It showed that nonfarm payrolls in September increased by 119,000. This is more than twice the expected increase of 50,000. The traders now expect a Fed rate reduction next month. Gold is a non-yielding investment that tends to perform well in low interest rate environments. The minutes of the Fed's meeting in October, released on Wednesday, showed that it had cut interest rates despite warnings by policymakers that this could lead to inflation entrenched and a loss in public confidence. Chicago Fed President Austan Goolsbee reiterated on Thursday that he was "uneasy' about the frontloading of interest-rate reductions, especially with the progress on inflation toward the Fed's goal of 2% looking to be stalling and going the wrong direction. The price of palladium remained unchanged at $1,377.50. Platinum rose 0.4% to 1,521.41 and silver fell 0.5% to 50.35 cents per ounce. (Reporting and editing by Sherry Phillips, Rashmi aich, and Brijesh patel in Bengaluru)
Belem in Brazil, the host city of COP30, is trying to boost its economy and preserve Amazon rainforest.
Brazil's economic model is designed to benefit locals from a healthy forest. It was developed on the banks of Guama River, where the city Belem borders the Amazon rainforest.
The state government of Para, instead of clearing trees to make way for mines and cattle, unveiled this year a research-and-development program that will help locals turn forest products such as acai or Brazil nuts into goods destined for international markets. The program is a part of a larger plan to demonstrate to the world, in Belem, the host city for the COP30 climate summit, that Brazil can protect the Amazon rainforest while providing jobs and income for its citizens.
"Our intention for Para is to transform its forest assets into new strategic sectors that transform our biodiversity into new economies," Para Governor Helder barbalho said.
This will allow us to reduce our dependence on extractive industries that emit greenhouse gases in favor of low emission economies that value living forests.
Old meets New
Para's government opened in October the Bioeconomy & Innovation Park worth 300 million reals ($56.29 millions) across the river from Belem’s open-air Ver-o-Peso Market, where vendors sell rainforest products dating back to 1901. The facility has 6,000 square metres of warehouse space with machines where entrepreneurs can share their knowledge and experiment to create new products, scents and foods to appeal to the world's consumer. Leonardo Souza, a local chef, was one of the first people to use the labs in the new park. He said that they helped him increase production from 60 jars of artisanal sea salt with Amazonian herbs per day to around 1,000.
"We worked with over 42 families who supplied herbs. "Now it will be about 200," said he.
The idea of a robust Bioeconomy builds upon an already solid foundation for the state Para. In a 2019 study conducted by IDB, Nature Conservancy, and Brazilian cosmetics giant Natura, 30 forest products value chains generated 4,24 billion reais of local income in Brazil's state, almost equaling the 4,25 billion reais that livestock grazing produced.
This is not a niche. Paula Caballero is the Latin America director of Nature Conservancy.
Natura purchases Amazon ingredients such as cacao, murumuru and pataua for its health and beauty line. Carlos Nobre, Brazilian Earth System Scientist, stated that bioeconomy business can pay up to seven times more than ranching or soybean farming and employ many people.
ACAI BOOM According to the Brazilian government, acai is one of the most popular Amazon products. It's an antioxidant-rich berry whose growing popularity in the U.S. as a health product has led to market growth predictions from $1.23billion in 2024 to a projected $3.09billion by 2032. Riverboats load bushels of acai every night at Belem’s Ver-o-Peso Market for shipment throughout Brazil and abroad.
Damien Binois is 35 years old and has launched a business called NOSSA! ACAI after being inspired by the first taste of acai he had in 2012 when he was a student from France.
He exports today to France, Spain and Ireland, and provides technical assistance to 50 local producers. He will open a large plant in Barcarena - a city located two hours away from Belem - and employ 40 people by next year. By 2030, he hopes to have 200 employees. The company uses the lab until then to create new products, including acai.
Binois stated that "the income for acai farmers is very good, because the prices have increased significantly due to the growth of the market."
Acai now fetches $11 per pot compared to $3-3.50 in 2005.
COFFEE AND REFORESTATION Sarah Sampaio is the director of the NGO Amazonia Agroflorestal. She helps small farmers in southern Amazonia grow organic coffee while reforesting the land along the deforestation path opened up by the Trans-Amazonian Highway in the 1970s. Hundreds of migrants settled in the area, attracted by the new opportunities that the newly-opened land offered. But those who tried to cultivate coffee in the region found that it was easier for them to grow the bean desired by coffee drinkers all over the world under the shade provided by native trees.
Sampaio saw the opportunity to expand when she opened her lab, with new packaging types that would keep the beans fresh and new blends of premium coffee.
Today, 234 cooperatives in Brazil produce high-quality coffee blends that are sold in supermarkets in Brazil and exported abroad.
Sampaio stated that "we offer free soil preparation and coffee seedlings as well as technical assistance."
TRADITION MEETS INSOMNIA
Brazil's bioeconomy may be a new concept. Vendors at the Ver-o-Peso Market have been selling forest goods for over a century.
Bete Cheirosinha is a 72-year-old fifth generation herb seller. She uses plants from river communities, as well as indigenous knowledge, to create tinctures that treat ailments and even "natural Viagra."
She said, "There are over a thousand different types of herbs. Each has a specific meaning and each cures a particular problem."
Allison Charles, who sold cassava flour to his mother with Amazon, said that the value of Amazon's products went beyond price, by tapping into traditional values.
He said, "We awaken memory,". "That's rewarding."
(source: Reuters)