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Copper prices diverge due to US rate outlook and AI sentiment
The copper prices moved in opposite directions Thursday as the market focused on the outlook of U.S. Interest Rates, and a waning confidence within the artificial intelligence industry weighed on sentiment. The most-traded contract for copper on the Shanghai Futures Exchange ended 0.23% higher, at 92600 yuan (13,151.73) per metric ton. As of 0718 GMT, the benchmark three-month price for copper at the London Metal Exchange fell 0.16% to $10,718.50 per ton. In his Wednesday national address, U.S. President Donald Trump said the next Federal Reserve chairman will be someone who believes in lowering interest rates by a "lot". Trump has previously stated that he would announce his choice for Fed Chair Jerome Powell's replacement, whose tenure ends in May next year. The President's remarks?came after the U.S. Central Bank lowered its policy rate by 25 basis points, which helped copper outperform other base metals. Markets are unsure whether the known finalist, White House Economic Advisor Kevin Hassett and Federal Reserve Governors Kevin Warsh or Chris Waller would lower rates to Trump's desire. Dollar prices are rising, making commodities priced in greenbacks more expensive for investors who use other currencies. At the same time, AI skepticism grew after Oracle's data-center partner Blue Owl Capital was reported to have backed a $10 billion contract for its next facility due to concerns over?rising spending and debt? Copper is an important metal in data centers. Red metals still enjoyed a 'good level of support, both from the supply shortage and demand outlook. This helped to limit?the size of the session decline. Aluminium was up by 0.25%. Zinc gained 0.52%. Lead?nudged higher 0.06%. Nickel gained 1.07%. Tin surged by 2.88%. Nickel gained 1.0% and tin 0.37%.
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Uganda to reduce debt issuance by 21 percent in FY 2026/27
Uganda will cut its domestic debt by 21,1% during the financial year beginning July from the previous period in order to reduce its ballooning public debt. The finance ministry announced this in a budget paper seen by by on Thursday. The paper states that in 2026/27, (July to June), a total of 9 trillions shillings worth of Treasury bonds and bills will be issued, compared with 11.4 trillions shillings the year before. The paper stated that "this reduction reflects the government's intent to avoid crowding out the private sector, to curb the rising debt to GDP ratio, and to address the increasing burden of interest payments relative revenues." According to the Ministry, interest payments on Uganda's?public?debt will consume nearly a third?of?all?internal revenues in 2026/27. Public debt as a proportion of the gross domestic product rose from 46.8% to 51% during the period ending June. The paper stated that "such elevated debt service obligations shrink fiscal space and leave fewer resources available for discretionary expenditure in high-multiplier growth-enhancing areas." Uganda's public debt totaled $32.3 billion as of June. This is up 26.2% compared to the same period a year earlier. The paper projected that economic growth would increase to 10.4% by 2026/27 from 6.6% the previous fiscal year. The paper stated that "this robust growth outlook will be primarily fueled by the start of oil production. This is expected to generate substantial revenue and boost productivity through strong inter-sectoral links." Uganda plans to begin commercial crude oil production in 2026 from fields located in the west of the country.
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As production increases, Simandou's mega-mine in Guinea is being overshadowed by mass layoffs
Guinea's Simandou Mega Mining Project, promoted by the government's military as a symbol for the country's transformation in terms of economics, is now laying off tens of thousands of workers as it finally begins to export iron ore, after years of delays and scandals. Simandou, the first election since the 2021 military coup that brought Mamady to power, was launched in November with pomp and?a public holiday. Political analysts believe that the junta's leader will be the favorite to win and could stay in power for seven more years. Guinea, even without Simandou - the largest untapped iron ore reserve in the world - is the biggest exporter of aluminium bauxite. Its mining wealth, however, has not improved the lives of many people. World Bank data from 2025 revealed that more than half of the population lives in poverty. We interviewed 12 workers, former employees and senior sources from the company. They asked not to be identified because the matter was sensitive. They said that the process of firing thousands of employees had already begun. Simandou's plans to produce 120 million metric tonnes of iron ore per year, or 7% of the global demand, is a disappointment for all those who had hoped that their lives would improve in the long run. EMPLOYMENT RISES TO MORE THAN 60 000 Companies and government sources said that the number of jobs created by Simandou would peak at over 60,000 in 2024-2025. This was because contractors were racing to meet the deadlines set forth by Guinea's ruling military to speed up iron ore exports, which had been delayed for nearly 30 years. The mines, ports and 670 km (416 miles) of railway, which was built specifically to facilitate exports from this landlocked project, will require less than 15,000. Two consortia are involved in the project - the Winning Consortium Simandou (WCS), which is mainly composed of Chinese companies, and Rio Tinto. The way that the work is organised, the reduction in the workforce is extreme. The executive said that the project was "simultaneous spread", meaning all sections were built simultaneously, and the construction workforce was boosted to the peak. "Then, everything finishes, so the whole thing falls off the cliff." WCS, who manages the majority of the rail via more than 12 subcontractors did not respond when asked for comments on its workforce. Rio Tinto is responsible for two mine blocks and 78 km of rail that connects them to the main railway network. It also manages the transshipment facilities in the new port located on the Atlantic coast of Guinea. It has employed around 25,000 people, 82% of whom are Guineans, during the construction phase. A spokesperson for Rio Tinto stated that the Simfer project would require "a workforce of approximately 6,000 people to work at a terminal for transshipment vessels at the port and in the mine." The mine construction and rail construction are scheduled to be finished next year. Work at the port is expected to continue until 2027. Chris Aitchison said that he was concerned about the risks posed by sudden job loss, also known as demobilisation in the industry. It's what's coming next? He said. He said. In similar projects, like Mongolia's Oyu Tolgoi Copper Mine, former mining workers had more job options. Risk of Social Unrest and Accidents Sources in the workforce said that job cuts had already begun. In Dantilia (a hub near the border with Sierra Leone) 8,000 out of 10,000 workers lost their jobs in the past three months. The remaining 2,000 workers have been informed that their jobs are going to end in the next few months. The workers in Kamara, which is part of the same district said that around 1,500 workers had already been fired. "We're waiting in hope, but they don't yet have any solutions and haven't made any promises," said a Winning Consortium Simandou pick-up driver, who asked not to be identified. "There's no other job." According to three Western companies, there is growing concern that a reduction in staffing may increase the risk of accidents and social unrest. They were concerned about possible community protests, which could take the form of blockades on the Simandou Railway, where trains had already killed cattle and angered local residents who depended on their livestock. Sources at the company said that risk assessments conducted by consortia over the past six months highlighted the areas where people or animals could wander onto tracks and derail them, leading to the construction of fences, which the original design had not provided for. Reports in March stated that 12 workers died as a result of accidents while working on the railway project at Simandou between June 2023 to November 2024. At least five locals were also killed in traffic accidents caused by vehicles used for the construction. Rio Tinto reported five more worker deaths. Bouna Sylla, the Minister of Mines, said that the government is strict with partners regarding safety and environmental protection. GOVERNMENT PROMISES FOR FUTURE WORK The impact of job losses is magnified by Guinea's narrow skill base and lack of income buffers. Sylla, who spoke to the media days before Simandou's launch on 11 November, acknowledged that the layoffs will be painful. Sylla stated that it is not easy to lose a job after earning a good salary and waking up every morning for work. He described the government's plans for new infrastructure, such as roads, refineries, and power plants. However, he didn't give a time frame. The official launch of the new export terminal at Morebaya, on Guinea's Atlantic Coast, was full of energy, featuring brass bands, honor guards, traditional dancing and visiting dignitaries. Doumbouya, wearing a white Guinean Boubou tunic, watched from the sidelines. Guinea's military-led government is promoting "Simandou 2020" as a 15 year strategy for transforming the country into an economy based on investments in agriculture, transportation, technology, finance, and health. The government owns a 15% stake and has estimated that the cost of the plan will be $200 billion. This would be partially funded by mining revenue, but the majority should come from private capital. Sylla stated that the Administration et Controle des Grands Projets, Guinea's infrastructure agency was currently working on feasibility analyses. Two sources confirmed that the government had also commissioned KPMG to produce a report on reemployment programmes. The report will be released after the elections. KPMG declined to comment on a request. The agency for infrastructure said that the plans include 3,000 km of new highways, which will be built over 15 years. The Long Wait for Prosperity Nearly 30 years after Rio began exploring the deposit, there is still no answer to the question whether Simandou will bring prosperity to most of Guinea. In its May publication "Selected Issues" on Guinea's Economy, the IMF published a paper entitled "Guinea's Economy: A Selective Issues Paper". The macroeconomic effects Simandou will have on 2024 were modelled. The report found that it could increase the real GDP of the country by 26% by 2030. However, it said that the reduction in poverty would be minimal - only 0.6 percentage points - without policies to manage the change. It said that the project's effect on increasing the number skilled workers "could even worsen inequality, particularly in rural areas." Clara Denina, Maxwell Adombila Akalaare and Barbara Lewis contributed to the report.
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Palm oil prices rise on the back of bargain-buying, while soyoil is spread.
Malaysian palm futures rose on Thursday for the?second session in a row, boosted by bargain-buying and an improved price competition against soyoil. By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for March delivery had gained 30 ringgit or 0.76% to $3,996 ringgit (US$978.21) per metric ton. Paramalingam Supramaniam is the director of Selangor brokerage Pelindung Bestari. He said that traders are buying the price drops following the recent sell-off. The price of palm oil also has become "increasingly appealing" compared to the prices for other oils, especially soybean oil. Dalian's palm oil contract gained 1.27%, but its most active soyoil contract dropped 0.31%. Prices of soyoil on the Chicago Board of Trade rose?0.45%. As palm oil competes to gain a share in the global vegetable oil market, it tracks the price changes of competing edible oils. Market participants assessed the risks of a blockade on Venezuelan oil tankers, which could threaten the supply. Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger. The palm ringgit's trade currency, the dollar, edged up 0.05%, making it slightly more expensive for buyers with foreign currencies. A circular posted on the Malaysian Palm Oil Board's website revealed that Malaysia had lowered the crude palm oil price reference for January 2026 to a level which would lower the export duty from 13% to 9.5%.
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Woodside shares tumble as CEO departs for BP
Australian shares recovered early losses and closed little?changed? on Thursday. Gains in heavily-weighted miners offset?a??drop? in top oil & gas producer Woodside Energy, after its CEO announced a surprising move to lead BP. After a three-day decline, the S&P/ASX 200 Index fell up to 0.4% and closed unchanged at 8,588.20. The main index, however, was on track to end its last full trading week in 2025, with a 1.3% drop, as sticky inflation and strong economic growth shattered expectations of future interest rate reductions. The markets now expect the central bank to make its next move upwards in the second half of next year instead of the rate cut they had expected earlier. Craig Sidney is a senior investment adviser at Shaw & Partners. "Volumes are expected to dry up significantly by Monday. Therefore, moves can be made in either direction." Banks finished flat with losses at the "big four" remaining banks offset by a 0.7% gain in Australia's top lender Commonwealth Bank of Australia. Energy stocks fell to their lowest closing in almost two months. This was led by a drop of 2.7% in?Woodside Energy. Woodside, the oil and gas company, has posted its lowest closing since late October following Meg O'Neill's departure to lead BP Plc. Woodside merged BHP's petroleum division with Woodside to form a top 10 independent?oil-and-gas producer in the world valued at $40 billion. It also doubled its production of oil and natural gas. Iron ore prices rose and miners eked out 0.2% gains. Sidney says that the sector, which usually outperforms when there is a strong Australian currency, will continue to gain next year, as rate hike expectations would lead to an increase in the Australian dollar. The benchmark S&P/NZX50 index in New Zealand fell 0.3% to 13,256.77. This is its lowest closing since late September. The third-quarter data confirmed early signs of a recovery in the economy. (Reporting and editing by Subhranshu S. Sahu in Bengaluru. Nikita Maria J. Jino is based in Bengaluru.
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The MORNING BID EUROPE - BoE will make it to the list as the others remain on course
Tom Westbrook gives us a look at what the future holds for European and global markets. The markets expect that the Bank of England will be the sole mover in a series of central bank meetings on Thursday. A 25-basis point rate cut to 3.75 percent is almost as predictable as the collapse of the top order at the Ashes Test in Adelaide. Investors were reassured by the unexpected drop in UK inflation on Wednesday. However, with inflation at the highest level among G7 countries, 3.2%, it is unlikely that further rate cuts will be imminent. Sterling is down to $1.3374. It is expected that the European Central Bank will keep its rates at 2%, signaling a lack of appetite for rate cuts. The bank may also increase its growth forecasts. The central banks of Sweden and Norway will also remain at their current rates, which are 1.75% and 4.0% respectively. Meg O'Neill is the new CEO of BP, the British oil and natural gas company. She was previously the CEO of Australia's Woodside Energy. BP wants to refocus its efforts on hydrocarbons following a diversion into renewables. Sources say that activist investor Elliott Management is in the process of lining up potential candidates for CEO. President Donald Trump announced in a rare evening speech from the White House that he would pay a "warrior's dividend" of $1,776 to 1,45 million U.S. military personnel. Investors should take note of Trump's statement that he will soon announce the choice for the next Federal Reserve chair, adding "someone who is a big believer in lower interest rates". The November U.S. Inflation data will be released on Thursday. However, it won't include a comparison of the month to month figures because October numbers were not collected due to the U.S. Government shutdown. The markets were roiled by AI fears that started on Wall Street. Asian bourses also suffered losses, while oil prices rose on the news of U.S. sanctions against Russia for its Venezuelan blockade. Oracle, a texan cloud computing firm, is the main focus of concern. Shares fell 5.4% when it announced that a deal for equity to support a project for a data centre would not include Blue Owl Capital as a partner. Stocks have fallen by almost 50% since mid-September, when a deal made with OpenAI led to a 35% rally in a single day. The Bank of Japan has begun a two-day session in Tokyo that is expected to result in a rate increase on Friday. If the markets aren't convinced of further increases, the yen could be the focus of sales. The following are key developments that may influence the markets on Thursday. Decisions made by the Bank of England and European Central Bank. Riksbank, Norges Bank US November CPI
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Investors weigh the future US interest rate cut, and AI bubble as they consider copper.
The market was focused on the future interest rate path in the United States, as confidence in artificial intelligence trades waned. As of 03:30 GMT, the most traded copper contract at the Shanghai Futures Exchange was?down 0.03% to 92360 yuan (US$13,114.85). The benchmark copper for three months on the London Metal Exchange fell 0.43%, to $11,686 per ton. In his Wednesday national address, U.S. president Donald Trump stated that the next Federal Reserve chairman will be someone who is a believer in lower interest rates by "a lot". Trump has previously stated that he would announce his choice for Fed Chair Jerome Powell, whose tenure ends in May next year. The President made his comments a week after the Fed cut its policy rate by 25 basis point, helping copper outperform other base metals. Market participants are unsure whether the known finalist -- White House Economic Adviser Kevin Hassett and Federal Reserve Governors Kevin Warsh or Chris Waller -- will lower rates to Trump's liking. The U.S. Dollar rose slightly. The dollar's strength makes commodities priced in greenbacks more expensive to investors who use other currencies. Despite the growing skepticism about AI, Oracle's data centre partner Blue Owl Capital was reported to have backed a $10 billion contract for its next facility. This is due to concerns over debt and rising spending. Copper is a "key metal" used in data centres. Red metal is still supported by supply shortages and demand prospects, which have limited the extent of today's drop. Aluminium was up by 0.09%. Zinc gained 0.35%. Lead rose by 0.15%. Nickel gained 0.66%. Tin surged 3.10%. Thursday, December 18 DATA/EVENTS (GMT) 0745 France Business Climate Mfg, Overall Dec 1200 UK BOE Bank Rate Dec 1315 EU ECB Refinancing, Deposit Rate Dec 1330 US Core CPI MM SA, YY NSA Nov 1330 US CPI Wage Earner Nov 201330 US Initial Jobless Clm 13, w/e 1330 United States Philly Fed Business Indx Dec ($1 = 7.0424 Chinese yuan renmin Thursday, December 18, DATA/EVENTS, GMT 0745 France Business Conditions Mfg Overall Dec 1200 UK BOE Rate Dec 1315 EU ECB refinancing, deposit rate Dec 1330 US Core Consumer Price Index MM SA YY NSA November 1330 US Wage Earner Nov 201330 US Philly Fed Indx Dec (1 = 7.0424 Chinese yuan renminbi). (Reporting and editing by Dylan Duan, Lewis Jackson, Harikrishnan
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Qatar reduces the February term premium on al-Shaheen crude, according to sources
QatarEnergy lowered the term premium on the?al-Shaheen oil loading for February, according to several 'trade sources'. This was due to the weakness of the spot benchmark premiums. The company, which is owned by the state, set February's prices at 53 cents per barrel over Dubai's quotes. This was down from 84 cents in January. Loading of January cargoes The price reduction?followed the decline in spot premiums of Middle East crude oil so far in this month. This was weighed down by abundant supplies on the?market, and an outlook for a surplus in 2026. QatarEnergy has sold five cargoes to Glencore, Indian refiners Reliance, and HPCL-Mittal Energy Ltd at premiums of around 42 cents per barrel, according to the sources. Separately, 'Qatar awarded an oil cargo from Qatar Marine at a discount price of 60 cents per barrel to Unipec - the trading arm of Sinopec - and a Qatar Land cargo to Reliance?at an additional premium of 30 cents, according to the sources. Companies typically do not comment on business deals. Each cargo is 500,000 barrels.
Oil, bonds divergence highlights United States financial fears: McGeever
U.S. Treasury yields often move in tandem with the cost of oil, however this relationship has broken down in current weeks, suggesting that the nearterm inflation outlook has taken a rear seats to longterm deficit fears in the bond market.
Falling oil rates-- especially negative year-on-year rate moves-- are normally disinflationary. And year-on-year crude oil prices have been unfavorable because mid-July, nearing -30% in September. This would generally be a bullish signal for Treasuries, as lower inflation increases the probability that rates will fall throughout the yield curve.
Yet yields and oil have diverged sharply. Because the Federal Reserve's jumbo 50 basis point rate cut on Sept. 18, the 10-year Treasury yield has actually spiked by almost 70 basis points-- a. traditionally large shift-- even as the price of oil has actually fallen.
Monday's price movements were particularly notable. Crude. dropped 6%, while the 10-year yield leapt 5 bps to strike 4.30% for. the first time in almost 4 months.
Oil's recent decrease was mostly driven by geopolitics,. specifically indications of de-escalation in the conflict between Iran. and Israel. Despite the motorist, a fall in oil of that. scale would normally be accompanied by lower bond yields.
The 10-year yield has declined on 7 of the 9 days in. which the oil cost has fallen by 4% or more over the previous year. The 2 occasions where it hasn't were both this month.
Significantly, the recent rise in yields accompanied a week. of heavy financial obligation issuance from the Treasury: some $178 billion of. 2-, 5- and seven-year bonds were on the block, not to. discuss a wave of costs sales and inflation-linked bonds too.
Financial problems nay be causing this market indigestion.
TRUMP TRADE
Can financiers expect the relationship between Treasuries and. inflationary pressures to reassert itself any time soon?
Bob Elliott, a former executive at Bridgewater and founder. and CEO of property manager Unlimited, notes that other bond. markets all over the world are also selling off, indicating a. broader concern.
My sense is the divergence remains instead of compresses. It. highlights that sovereign debt is increasingly out of favor for. not simply U.S. but international financiers, Elliott says.
Andreas Steno Larsen, CIO at Steno Global Macro Fund,. reckons the link will probably reestablish itself soon, but. notes that the present divergence is one aspect of the broader. Trump trade.
That is, investors are placing for incredibly lax financial. policy, with the expectation that previous president Donald Trump. will win the White House and perhaps be supported by both a. Republican house and senate. Because scenario, Trump would be. able to press through tax cuts and other potentially. budget-busting policies.
LOSING CONTROL?
The prospect of increasing bond yields amidst a Fed relieving cycle. could trigger headaches for lots of, consisting of Trump himself, a. former real estate operator and veteran singing supporter of. lower loaning costs.
This might also be rustling a few feathers on the Federal Open. Market Committee, especially among the doves, as home mortgage. rates are rising again due to the upward pressure of. longer-dated yields.
Could Fed Chair Jerome Powell address this problem next week? It wouldn't come as a total shock provided the enormous move in. yields because September.
According to Jim Bianco of Bianco Research, the 10-year. yield's increase of nearly 70 bps is the biggest rise following the. preliminary cut in a Fed relieving cycle considering that 1989. This super-sized. relocation suggests the Fed may have lost control of the longer end of. the curve, and Powell may be eager to restore the reins.
However, in the meantime, politics remain in the motorist's seat. With the. presidential election less than one week away, bond investors. appear to be voting with their feet, afraid that expanding. fiscal deficits will rise longer-term inflation and the danger. premium on federal financial obligation.
Possibly this will alter after the election. Perhaps President. Kamala Harris or President Trump will unexpectedly vow to. restore fiscal discipline, but that's a long shot. In the. meantime, Treasuries are likely to stay under pressure,. no matter the oil rate.
(source: Reuters)