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MORNING BID EUROPE - Relieved as German vote avoids extremes
Wayne Cole gives us a look at what the future holds for European and global markets. Markets are relieved that the CDU/CSU, a relatively mainstream conservative party in Germany won the election. DAX futures have now risen 1.4% following a slow start. The euro is up 0.5% at a new one-month high of $1.0528. This top has been surpassed by the previous $1.0514. Next target is $1.0534. The Conservative leader Friedrich Merz has yet to form a government coalition. It is unclear whether he needs one partner or more, and the latter will take longer. Analysts believe a simple coalition with the SPD is the best outcome. However, there are still a few horse-trading negotiations to be done. Ifo's German survey, due to be released later, could reveal a rise in support for Merz. German leadership is needed in light of the questions surrounding President Donald Trump's support of NATO and Ukraine. On March 6, European Union leaders will hold an extraordinary summit to discuss how to fund Europe's growing defence needs and provide additional support to Ukraine. It is likely that this will require more debt and some loosening of EU budget rules. Perhaps they should bring back War Bonds, sorry Defence Bonds, to attract patriotic retail investors. The threat of tariffs alone was enough to send the services PMI tumbling. It's only going to get worse, as reports suggest that the White House has been pressuring Mexico to increase its tariffs on Chinese imports. Fed policy makers will not welcome a jump in U.S. consumers' inflation expectations, which have reached their highest level since 1995. They have always reassured themselves that the expectations are "well-anchored". This week, there are nine Fed speakers. There is plenty of opportunity to issue verbal warnings before the PCE report on Friday. Wall Street futures are at least up in Asian trading, possibly on the hope that Nvidia will deliver results Wednesday which justify its astronomical valuation. Investors expect fourth-quarter revenue to be around $38.5 billion. First-quarter guidance is expected to be around $42.5 billion. Any caution regarding future AI capex will pose a risk. Market developments on Monday that may have a significant impact German Ifo business survey for February, EU final CPI figures - BoE Research Conference where Deputy Governors Dave Ramsden, Clare Lombardelli and Toni Gravelle of the Bank of Canada speak. BoE committee member Swati Dhingra speaks.
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Oil prices slip as Kurdistan export resumption looms
Oil prices in Asia fell on Monday, continuing losses from the previous week, as investors awaited clarification on the talks to end Russia's conflict with Ukraine. Brent futures fell 14 cents or 0.2% to $74.29 a barrel as of 0441 GMT. U.S. West Texas intermediate crude futures dropped 22 cents or 0.3% to $70.18 a barrel. Brent and WTI both dropped more than $2 last Friday, registering weekly declines of 0,4% and 0.5% respectively. The downward spiral of crude oil prices was caused by the U.S. President's pressure on Iraq to resume oil production from Kurdistan, which would improve global oil supply after two years of disruption, said Sugandha Sagandha, founder of New Delhi based research firm SS WealthStreet. An Iraqi official from the oil ministry said that once oil shipments resumed, Iraq would export 185,000 barrels of oil per day through the Iraq-Turkey oil pipeline. The Iraqi oil ministry announced that all procedures were completed for the resumed exports via the Iraq-Turkey pipe, which could resolve a dispute that had disrupted crude flow. On Monday, the fourth anniversary of Russia's war against Ukraine will be celebrated. All eyes are on the progress made in talks to bring an end to this conflict. Officials announced on Sunday that European Union leaders would meet on March 6 for an extraordinary summit to discuss additional support and European security assurances for Ukraine. The announcement comes after U.S. president Donald Trump began talks with Russia to end the war, but did not invite Ukraine or the European Union. A senior Russian diplomat has said that the Russian and U.S. Teams plan to meet next week to discuss improving their relations. The U.S., EU and other countries have imposed sanctions on Russian oil exports. This has curtailed its shipments as well as disrupted the seaborne oil supply flow. If a peace agreement is reached and the sanctions are lifted, global energy supplies will increase. Sachdeva stated that oil prices are influenced in the short-term by geopolitical events and U.S. announcements of policy. Hamas officials in the Middle East said that talks with Israel via mediators about further steps to a ceasefire deal are contingent on Palestinian prisoners being freed as agreed. Israel and Hamas both accuse each other of violating the ceasefire, but it continues to hold.
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Petrobras Considers Cancelling FPSO Tender
Petrobras is considering cancelling a tender to charter an FPSO from India's Shapoorji Pallonji Energy, two sources with knowledge of the matter told Reuters.The state-run firm believes the bid by the Indian shipbuilding firm was too high, at $1.5 million per day, and also complained the FPSO would not have enough of its parts built in Brazil, said the sources.A final decision on the matter is set to be taken soon, according to one of the people.Petrobras said the bidding process is "still ongoing," without making any further comments. Shapoorji Pallonji Energy did not immediately reply to a request for comment outside working hours.The Shapoorji vessel would have the capacity to produce up to 100,000 barrels of oil per day and 6 million cubic meters of gas. The process of contracting it has been ongoing since August 2023.Brazilian President Luiz Inacio Lula da Silva has made bolstering the country's shipbuilding sector a priority and as part of that Petrobras has been focusing on using more local ships for its operations and creating local jobs.(Reuters - Reporting by Rodrigo Viga Gaier; Writing by Fabio Teixeira; Editing by Gabriel Araujo and Susan Fenton)
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New Zealand Foreign Minister to Question Chinese Naval Activity in Beijing
New Zealand's foreign minister Winston Peters is scheduled to arrive in Beijing for a 3-day visit on Tuesday. Relations between the two nations are strained following the live firing exercise conducted by Chinese Navy ships in the Tasman Sea. Officials from New Zealand and Australia said China conducted live-fire drills in international waters between their two countries, with little warning and forcing commercial airline to divert flights. New Zealand Defence Force reported on Monday that the three ships were currently 280 nautical mile (519 km), east of Tasmania and outside Australia's exclusive economy zone. Christopher Luxon, the New Zealand prime minister, said that on Monday China would raise in Beijing the notice given by China that it was going to conduct a live firing drill. Luxon said that the flights were compliant with international laws. "We'd like to have a bit more notice, especially on a busy route." Peters' trip to China is part a larger tour that also includes stops in Saudi Arabia and the UAE, Mongolia, and South Korea. Peters will meet with Wang Yi, the Foreign Minister of China, in Beijing. Peters stated in a press release last week that he will discuss bilateral relations with Chinese officials, as well regional and global issues of interest to the two countries. "China is New Zealand's most complex and significant relationship, with important cultural, trade and people-to-people connections. Peters stated that the New Zealand government intends to keep a regular, high-level dialogue with China. Peters also expressed concern that the Cook Islands, a country independent in free association with New Zealand had signed a strategic partnership with China and other agreements without consulting New Zealand satisfactorily. Jason Young, Director at the New Zealand Contemporary China Research Centre, Victoria University, Wellington, stated that while there would be questions asked about challenging issues, such as the Cook Islands agreement and the activities of the People's Liberation Army Navy in the Tasman Sea, the discussion would also include future high-level trade and visits. (Reporting and editing by Christian Schmollinger; Lucy Craymer)
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London Copper prices fall as US tariffs loom
London copper prices eased Monday, as metal demand weakened after President Donald Trump's recent threat to increase tariffs. The price of three-month copper at the London Metal Exchange fell by 0.4%, to $9.523 per metric ton as of 0356 GMT. ANZ Research stated that the sector was also experiencing dislocations as it prepared for tariffs and restrictions on certain metals. Trump announced last week that he would announce new tariffs in the next month, or even sooner. He will add lumber and forest products, to his previously announced plans of imposing duties on imported automobiles, semiconductors, and pharmaceuticals. Other metals include LME aluminium, which fell 1.02% at $2,660.5; LME zinc, which shed 0.5% to $2.914.5; nickel, up 0.8% at $15,640; tin, down 0.4% at $33,540, and lead, up 0.1% at $2,011. The price of SHFE aluminium fell 1.03%, to 20,660 Chinese yuan per ton. SHFE copper dropped 0.1% to 77,250 Yuan. SHFE zinc dropped 0.2% at 24,045 Yuan. Nickel rose 0.5% to 125720 Yuan. Lead lost 0.09%, to 17,145 Yuan. Tin increased 0.2%, to 265,290 Yan. ($1 = 7,2498 Chinese Yuan) (Reporting and editing by Sumana Arora, Mrigank Dhaniwala).
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The rise in iron ore is halted after four days due to increased duties on Chinese steel
Dalian iron-ore futures prices ended a four day winning streak on Sunday as increased levies against Chinese steel dampened prospects for demand. However, decreasing portside stocks in China limited the decline. As of 0250 GMT, the most traded May iron ore contract at China's Dalian Commodity Exchange was trading 0.89% lower. It was trading at 831.5 Yuan ($114.87), per metric ton. The benchmark March Iron Ore at the Singapore Exchange was 0.22% less expensive, coming in at $108.25 per ton. According to a document from the trade ministry, Vietnam will impose an anti-dumping temporary levy up to 27,83% on certain steel products imported from China. This move follows the announcement by U.S. president Donald Trump of 25% tariffs for all steel imports in early this month. South Korea followed suit, and imposed tariffs provisionally on Chinese steel sheets last week. Mysteel, a Chinese consultancy, said that "production among Chinese blast-furnace steel producers has continued to decline as more mills have begun regular maintenance work." Mysteel data revealed that the capacity utilisation rate in the surveyed blast furnace steel mills decreased for a second consecutive week. The daily hot metal production fell by 0.21% from one week to another, reaching 2.28 million on February 20. Iron ore demand is usually gauged by the hot metal production. Hexun Futures, a Chinese consultancy, said that despite the weather in Australia, iron ore exports worldwide have decreased slightly. Port inventories will also be falling, they added. SteelHome's weekly data showed that portside iron ore stocks in China dropped 1.15%, to 145.8 millions metric tons on February 21. Coking coal and coke, which are used to make steel, also fell on the DCE. The declines were 1.77% and 2.466% respectively. The majority of steel benchmarks traded on the Shanghai Futures Exchange suffered losses. Rebar fell 0.8%, hot rolled coil dropped 1.3%, and stainless steel declined 0.49%. Wire rod rose 0.76%.
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British Business – February 24,
These are the most popular stories in the British business pages. These stories have not been verified and we cannot vouch for the accuracy of these reports. The Times Axa IM Alts is the investment arm of French insurer Axa. They have submitted a planning request to build another skyscraper at the City of London. Bupa, a healthcare provider in the UK, will offer what it claims is the first genetic test that accurately predicts the risk of many common diseases. The Guardian The British Prime Minister Keir starmer announced a funding of 200 million pounds ($253.54million) to increase investment in the Grangemouth Oil Refinery. This refinery is closing with more than 400 job losses. The UK Home Office is accused of collecting information on "hundreds and thousands" of British citizens who were unaware of the situation, while performing financial checks on immigrants. The Telegraph Senior MPs will question BBC bosses about a controversial documentary that has been accused of providing a platform for Hamas propaganda. Sky News The Ontario Teachers Pension Plan is in negotiations to provide Quantexa with an undisclosed new amount of funding, which could be worth billions of dollars. ($1 = 0.7888 pounds) (Compiled from Bengaluru Newsroom)
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Oil dips on pending Kurdistan supply resumption
Oil prices fell in the early hours of Monday's trade, continuing losses from last weekend, as investors awaited clarification on talks to end Russia’s war against Ukraine. Brent futures dropped 20 cents or 0.3% to $74.23 a barrel at 0113 GMT. U.S. West Texas intermediate crude futures declined 28 cents or 0.4% to $70.12 a bar. The two contracts fell by more than 2 dollars on Friday and also posted weekly decreases. An Iraqi official from the oil ministry said that once oil shipments resumed, Iraq would export 185,000 barrels of oil per day through the Iraq-Turkey oil pipeline. Iraq's Oil Ministry said that all procedures were completed for the resumed exports via the Iraq-Turkey Pipeline, which could resolve a dispute of nearly two years that has caused crude flow disruptions. On Monday, the fourth anniversary of Russia's war against Ukraine will be celebrated. All eyes are on the progress made in talks to bring an end to this conflict. Officials announced on Sunday that European Union leaders would meet on March 6 for an extraordinary summit to discuss additional support and European security assurances for Ukraine. The announcement comes after U.S. president Donald Trump began talks with Russia to end the war, but did not invite Ukraine or the European Union. A senior Russian diplomat announced that Russian and U.S. teams will meet this week to talk about improving relations. The U.S., EU and other countries have imposed sanctions on Russian oil exports. This has curtailed its shipments as well as disrupted the seaborne oil supply flow. If a peace agreement is reached and the sanctions are lifted, global energy supplies will increase. Hamas officials in the Middle East said that talks with Israel via mediators about further steps to a ceasefire deal are contingent on Palestinian prisoners being freed as agreed. Israel and Hamas both accuse each other of violating the ceasefire, but it continues to hold.
Yemen's Houthis state ship assaulted in Gulf of Aden might sink
Yemen's Houthi militants stated on Monday they had actually assaulted the Rubymar freight vessel in the Gulf of Aden which was at threat of sinking, raising the stakes in their project to interrupt worldwide shipping in solidarity with Palestinians in the Gaza war.
The Iran-aligned Houthis have made repetitive drone and rocket strikes since November in the Red Sea and Bab al-Mandab Strait. U.S. and British forces have reacted with several strikes on Houthi centers however have so far stopped working to halt the attacks.
Houthi military representative Yahya Sarea stated in a statement that the Rubymar's crew was safe but that the ship was terribly harmed and at danger of sinking. The Belize-flagged, British-registered and Lebanese-managed vessel was assaulted on Sunday.
The Houthis had also shot down a U.S drone over the Yemeni port Hodeidah, Sarea added.
The U.S. military's Central Command (CENTCOM) validated that two anti-ship ballistic rockets were introduced from Houthi regulated locations of Yemen and targeted the Rubymar on Feb 18.
One of the missiles struck the vessel, triggering damage. The ship released a distress signal and a union warship in addition to another merchant vessel reacted to the call to assist the crew of the Rubymar, CENTCOM stated on X.
Security firm LSS-SAPU, in charge of security on the Rubymar, said earlier the crew evacuated after two missiles hit. They were picked up by another commercial ship which took them to Djibouti.
We understand she was taking in water, LSS-SAPU informed in remarks by phone. There is no one on board now ... The owners and managers are thinking about choices for towage.
Far, no ships have actually been sunk nor team killed from the attacks in a sea lane accounting for about 12% of worldwide maritime traffic. Some business have actually selected to go the longer and more expensive route via the southern suggestion of Africa.
Despite Western attacks on them in Yemen, the Houthis have promised to continue targeting ships connected to Israel until attacks on Palestinians in the Gaza Strip stop.
GREEK-FLAGGED SHIP HIT
In a second event within hours, the Greece-flagged, U.S.-owned bulk provider Sea Champion with 23 crew members was assaulted two times on Monday by rockets, with a window damaged but no injuries to workers, Greek shipping ministry sources stated.
The vessel was taking grain from Argentina to Aden.
Seafarers in the firing line have signed market wide arrangements providing rights to refuse to sail on ships passing through the Red Sea and to receive double pay when getting in high-risk zones.
Shipping industry associations on Monday called for the release of the 25 team members of the Galaxy Leader commercial ship pirated by the Houthis three months ago on Nov 19.
The 25 seafarers who comprise the crew of the Galaxy Leader are innocent victims of the ongoing hostility against world shipping, the associations said. It is abhorrent that seafarers were seized by military forces which they have been avoided their families and enjoyed ones for too long.
The CEO of QatarEnergy, the world's second largest exporter of melted gas (LNG) which has actually stopped cruising via the Red Sea, stated the interruption was postponing shipments.
Container shipping, which carries consumer products, is beginning to feel the impact from re-routing ships. S&P Global Market Intelligence said in a report on Friday that the garments market was now anticipating higher hold-ups and expenses.
The Houthis, who control Yemen's most populated regions, have targeted vessels with commercial ties to the United States, Britain and Israel, shipping and insurance sources say.
War risk insurance premiums have actually crept greater and are now around 1% of the worth of the vessels, excluding discount rates that are used, including hundreds of countless dollars of extra expenses per voyage, insurance coverage sources stated.
Shipping companies need to weigh up the increased expenses and journey times versus the danger to their vessels, and, most importantly, the security of the crew onboard, insurance broker Gallagher Speciality Marine stated in a report last week.
The European Union on Monday released a marine mission to the Red Sea to protect and restore liberty of navigation there, a relocation welcomed by the World Shipping Council.
The security scenario around the Red Sea continues to be alarming, with vessels trying to transit being bombarded with missiles and drones along with suffering attacks from equipped fighters on the water, the WSC said.
(source: Reuters)