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Iron ore futures reverse a two-day decline on China's policy signals and supply disruptions
Iron ore futures recovered on Monday, ending a two session losing streak. News of policy support from China, and new supply disruptions, fueled the bullish sentiment. The January contract for iron ore on China's Dalian Commodity Exchange traded 0.44% higher, at 790.5 Yuan ($111.23). As of 0700 GMT, the benchmark December iron ore traded on Singapore Exchange rose 0.87% to $104,85 per ton. ANZ analysts said that iron ore prices rose last week as Chinese state media suggested Beijing could provide support to the property market, including mortgage subsidies for new buyers, increased income tax rebates and lower housing transaction fees. Broker Galaxy Futures said that recent supply disruptions have supported iron ore price, affecting short-term market sentiment. Last week, China's state owned iron ore purchaser ordered steel mills in China to stop purchasing a particular type of BHP ore. This ban was added to an existing one and escalated a dispute about a new contract. China Iron & Steel Association's latest monthly report says that despite the fact that inventories are high and the demand is easing as we move into winter, domestic steel prices will remain under pressure in the near future. According to data from the World Steel Association, while global steel production declined 5.9% on an annual basis in October, crude output in China, the top producer and consumer, fell 12.1%. SteelHome data shows that total iron ore stocks across Chinese ports increased by 0.03% on a week-on-week basis to about 139.6 millions tons as of November 21. Coke and coking coal were both up, but coking coal was down by 1.48%. The Shanghai Futures Exchange steel benchmarks were mostly in the green. Rebar gained 0.95%. Hot-rolled coils gained 0.67%. Wire rod rose 1.09%. Stainless steel dropped 0.2%.
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Investors weigh US interest rate outlook as the dollar strengthens and gold falls
Gold prices fell for the third consecutive session Monday as the dollar strengthened near six-months highs and investors awaited further clarity about the U.S. rate trajectory. As of 0636 GMT, spot gold fell 0.3% to $4,055.73 an ounce. U.S. Gold Futures for December Delivery fell by 0.7% to $4.052.40 an ounce. The dollar index has reached a six-month high, is above 100 and will continue to do so if it trades above that level, which could put further pressure on the gold price, said Jigar Trivedi. Senior research analyst at brokerage Reliance Securities. Gold priced in greenbacks is more expensive to holders of other currencies. According to CME FedWatch Tool, the probability of a Fed interest rate cut in December dropped to 69% from 74% the previous day. Following the dovish remarks of New York Fed President John Williams, bets on rate reductions increased to 74%. The other Fed members were more hawkish. Dallas Federal Reserve president Lorie Logan called for the policy rate to be held "for a while" and the Fed presidents of Chicago and Cleveland warned that further cutting rates now would have a variety of negative effects on the economy. In low-interest rate environments, gold, which is a non-yielding investment, does well. Trivedi said that the next three to five week period will be characterized by a flattish or negative tone in gold, as the bulls are not likely to receive any major support in the absence geopolitical tensions. Monday, the U.S. and Ukraine will continue to work on a plan that ends the war with Russia. They have agreed to modify a proposal which was seen by many as being too favorable to Moscow. Palladium rose by 1.1%, while platinum increased 1.6%, to $1,535.85. Spot silver remained flat at $49.99 an ounce. (Reporting and editing by Sherry Phillips in Bengaluru, Mrigank Dhaniwala, and Ishaan rora from Bengaluru)
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Stocks surge as traders bet on December Fed Cut
Investors began the week with a positive outlook, as they took comfort in growing expectations that the Federal Reserve will cut rates by December. However, policymakers are still divided on this issue. The markets were preparing for possible catalysts such as the release of U.S. retailer sales and producer price data that is due later this week. Also, British Finance Minister Rachel Reeves will unveil her much-anticipated budget. Geopolitical events were also in the spotlight. The United States and Ukraine agreed to modify a proposal widely viewed as being too favorable to Moscow. This kept oil prices in check on the hope that a deal would allow more Russian production through an easing sanctions. The session on Monday in Asia was a welcome respite for stocks after a turbulent week in global equity markets, largely due to concerns over high tech valuations. Japan's markets were closed on Monday, resulting in a thin trading session. However, MSCI's broadest Asia-Pacific share index outside Japan gained 1% while South Korea's technology-heavy Kospi Index rose by 0.15%. Nasdaq and S&P futures both rose by 0.8% and 0.5% respectively, while EUROSTOXX futures gained 0.7%. FTSE futures rose 0.53% while DAX futures climbed 0.78%. The latest boost was a result of comments from John Williams, an influential Fed policymaker who stated on Friday that rates could fall "in a near-term" and boosted the likelihood of easing further in December. Goldman Sachs' chief economist Jan Hatzius wrote in a report that "we expect another Fed reduction in December followed by two additional moves in March 2026 and June 2026, which will bring the funds rate down to 3-3.25%." The risks of more cuts are likely to be a reality in 2019, as the news about underlying inflation is positive and the decline in the employment market could be hard to control with the modest growth we expect. Fed funds futures indicate that there is a 60% chance the Fed will reduce by 25 basis points in January. Due to the Japanese holiday on Monday, trading of U.S. Treasury cash bonds was suspended in Asia. Futures prices remained stable. The record U.S. shutdown, which ended earlier this week, has clouded the outlook of U.S. interest rates as policymakers struggle to fill in the gaps that would otherwise guide their view on the world's biggest economy. The U.S. Bureau of Labor Statistics announced on Friday that it would not be releasing the October consumer price report due to the shutdown. The problem is that there are no economic data available to determine if the U.S. is in a stalemate or is doing well. We won't have any definitive evidence until the meeting," said Ben Bennett of L&G Asset Management, who is head of investment strategy in Asia. The CSI300 blue chip index in China was up 0.13% and the Shanghai Composite Index was up 0.3%. However, stocks related to chips sold off following a report that said the United States might consider letting Nvidia export H200 chips into China. ALERT FOR YEN INTERVENTION The yen was the main currency of focus on the market. It fell by more than 0.1%, to 156.63 dollars per yen and remained stuck near its 10-month low. Traders are aware of the possibility that the Japanese authorities will intervene to support the yen's slide, as the yen has been under pressure due to growing concerns about Japan's fiscal health. Satsuki Katayama, the Finance Minister of Japan, increased her jawboning in recent weeks. This has helped to put a floor beneath the currency. "Dollar/yen is going to go up even if you intervene. They will have to accept this. They can only do this by intervening to slow down the pace, but not the direction, said Saktiandi Supat, regional head of FX strategy and research for global markets, Maybank. Takuji Aida, a member of the private sector of a government panel who is responsible for a major economic policy, stated in a Sunday television program on NHK that Japan could actively intervene on the currency markets to reduce the negative impact of a low yen on the economy. The dollar also eased slightly on greater Fed easing betting, while the euro rose 0.1% to $1.1523. The pound rose 0.09% to $1.3111 ahead of the budget announcement on Wednesday. Brent crude futures rose by 0.13%, to $62.64 per barrel. U.S. crude rose 0.1%, to $58.11 a barrel. Spot gold dropped 0.4% to $4.049.60 per ounce.
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EU urges US to implement more of July's trade agreement, including reducing steel tariffs
On Monday, European Union Ministers will urge U.S. top trade officials to implement more of the EU-US July trade agreement. For example, by reducing U.S. steel tariffs and removing them from EU goods like wine and spirits. On their first trip to Brussels after taking office, U.S. Commerce Secretaries Howard Lutnick & Jamieson Greer will be meeting EU Ministers for Trade. Lutnick and Greer will be hosted for 90 minutes at lunch by the EU Ministers to discuss important trade issues including Chinese restrictions on rare earths and chips. The United States imposed a 15% tariff on the majority of EU goods under the deal reached at the end of July, while the European Union agreed that many of their duties on U.S. imported goods would be removed. The approval of the European Parliament and EU government is required, which EU diplomats claim has exasperated Washington. While insisting that the process is proceeding, the 27-nation group also points to items agreed upon on which they want to see progress. Chief among these are steel and aluminum. Since mid-August, the United States has implemented a tariff of 50% on metals. This is applied to metal content in 407 'derivative' products like motorcycles and fridges. Next month, more derivatives could be added. EU diplomats claim that these actions, as well as the prospect of new tariffs for trucks, minerals critical, planes, and wind turbines threaten to erode the July agreement. One EU diplomat stated: "We are in a delicate situation." The U.S. looks for ways to criticize the EU, while we try to convince them to resolve steel and other issues. A broader range is also wanted, with only low tariffs before Trump. This could include olives, wine and spirits. The EU is ready to discuss other areas of potential regulatory cooperation such as the EU's purchase of U.S. Energy and joint efforts to improve economic security in response to Chinese Export Controls. Reporting by Philip Blenkinsop. (Editing by Jane Merriman.
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Oil prices fall as investors wait for the Ukraine peace talks and U.S. rate cuts
After a drop of around 3% last week, oil prices were a little lower on Monday as investors weighed up the prospects of a U.S. interest rate cut against a Russia-Ukraine agreement that could allow more Russian production through a easing of sanctions. After agreeing to modify an earlier version of the deal that was deemed too favorable to Moscow by critics, the United States and Ukraine are set to resume working on a revised peace plan ahead of a deadline set Thursday by U.S. president Donald Trump. Brent crude futures remained unchanged at $62.56 a barrel at 0458 GMT. West Texas Intermediate fell 2 cents or 0.03% to $58.04 per barrel. Both benchmarks reached their lowest settlements in the last 21 days. The sell-off in oil prices was triggered by President Trump's push for a Russia/Ukraine peace agreement, which the markets see as a quick way to unlock substantial Russian supplies," IG analyst Tony Sycamore said in a report. He added that the progress towards a deal outweighed any disruptions caused by U.S. Sanctions on Rosneft, owned by the Russian state, and Lukoil, a private company. These sanctions took effect last Friday. Nearly 48 million barrels (or nearly a third of all Russian crude oil) are now stranded at sea due to the sanctions. The U.S. president Donald Trump set a deadline for Thursday to sign the agreement, but European leaders want it improved. A peace agreement could reverse sanctions that have restricted Russian oil exports. According to the U.S. Energy Information Administration, Russia will be the second largest producer of crude oil after the United States by 2024. Investors' appetites are also affected by uncertainty regarding U.S. rate cuts. John Williams, President of the New York Federal Reserve, suggested that a cut could be made in the near future. The expectation of a possible Fed rate cut may also counterbalance the bearish sentiment, by improving global risk appetite, said Sugandha Sagandha, founder of SS WealthStreet in New Delhi. "Crude oil prices have fallen nearly 17% in the past year, reflecting persistently negative sentiment... At these lower levels, value-buying is expected to gradually emerge."
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Investors weigh US interest rate outlook as the dollar strengthens and gold falls
Gold prices fell for the third consecutive session Monday as the dollar strengthened near six-months highs and investors awaited further clarity about the U.S. rate trajectory. As of 0536 GMT, spot gold was down by 0.4%, at $4,045.58 an ounce. U.S. Gold Futures for December Delivery fell by 0.9% to $4.042.50 an ounce. The dollar index has reached near six-month highs and is above 100. If it continues to trade over 100, there will be more pressure on the gold price, said Jigar Trivedi. Senior research analyst at brokerage Reliance Securities. Gold priced in greenbacks is more expensive to holders of other currencies. According to CME FedWatch Tool, the probability of a Fed interest rate cut in December dropped to 69% from 74% the previous day. Following the dovish remarks of New York Fed President John Williams, bets on rate reductions increased to 74%. The other Fed members were more hawkish. Dallas Federal Reserve president Lorie Logan called for the policy rate to be held "for a while" and the Fed presidents of Chicago and Cleveland warned that further cutting rates now would have a variety of negative effects on the economy. In low-interest rate environments, gold, which is a non-yielding investment, does well. Trivedi said that the next three to five week period will be characterized by a flattish or negative tone in gold, as the bulls are not likely to receive any major support in the absence geopolitical tensions. The U.S., Ukraine and other countries will continue to work on Monday to develop a plan that will end the conflict with Russia. They have agreed to change an earlier proposal which was seen by many as being too favorable to Moscow. Other metals, such as spot silver, were down by 0.1% to $49.95 an ounce. Platinum rose 1.5% to 1,533.85, while palladium gained 1.3% to reach $1,391.26.
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Morning bid Europe- Holiday week could be a prime time for yen interventions
Rae Wee gives us a look at what the future holds for European and global markets. The week has started slowly in Asia, with the Japanese markets closed on Monday for a holiday. Currency traders are waiting with baited breath to see if Tokyo is buying yen to stop its decline. Black Friday will have shortened hours and will interrupt the trading week on Thursday. This could be an opportunity for authorities to intervene. In the past, the government has intervened during times of low liquidity. This allowed them to increase the price more quickly, or as analysts say, "get the most bang for their buck". The Bank of Japan is the agent of the Ministry of Finance in such situations. The yen dropped slightly Monday, in line with the wider market. It last stood at 156.62 to the dollar. The yen remained stuck near the 10-month low of 157.90 last week, but it appears to have found some support after Finance Minister Satsuki Catayama increased verbal warnings on Friday about official yen purchases. Takuji Aida, a member of the private sector of a government panel that oversees the economy, stated in a Sunday television program on NHK, the public broadcaster, that Japan could actively intervene on the currency market in order to mitigate the negative impact of the weak yen on the economy. John Williams, a policymaker at the Federal Reserve, said that interest rates could fall "in a near-term" on Friday. The traders increased their bets on further easing in the coming month. Fed funds futures indicate a 57% probability of a cut of 25 basis points. Still, with global equity market in the middle of a grim, gloomy month, the attention in the coming week will be on holiday shopping trends, and U.S. Retail Sales for signs of strength. Consumer spending accounts for over two-thirds the U.S. economy. In Europe, the focus will be on Britain’s upcoming Budget announcement. Finance Minister Rachel Reeves is seeking to reassure investors about the government's fiscal prudence, while also appeasing voters, by honoring pre-election pledges not to increase taxes on workers. Recent sales of bonds, sterling, and bank shares show that markets are on edge. UK market volatility will likely continue even though the budget is nearly over. Market developments on Monday that may have a significant impact German Ifo Business Sentiment (November) France: Reopening the 3-month, 6-month, and 11-month auctions of government debt Germany: Reopening 7-month auction of government debt
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Three suicide bombers killed at Pakistani paramilitary headquarters
Authorities said that three suicide bombers attacked the Pakistani paramilitary forces' headquarters on Monday. They killed at least three people and injured five others. Police said that the attackers forced their way into the HQ of the Frontier constabulary in Peshawar before blowing themselves up within the complex. Javed Iqbal said that three paramilitary members were killed. The first suicide bomber attacked the main entrance to the constabulary, and the other attackers entered the compound," said a senior official under condition of anonymity because he was not authorized to speak to media. The official said that law enforcement personnel including the police and army have cordoned the area off and are handling the situation carefully as we suspect terrorists are inside the headquarters. The force's headquarters is located in the densely-populated area of Peshawar – the capital of Khyber Pakhtunkhwa Province. Safdar Khan told Safdar, a local resident, that the road had been cordoned off and closed to traffic by police, the army and security personnel. Mohammad Asim, the hospital's spokesperson, said that two paramilitary members were among the five injured. So far, no militant group has claimed the attack. Islamist militants in the area have Increased attacks In recent weeks, following last month's deadly Border clashes Between Pakistan and Afghanistan Pakistan accuses the Afghan Taliban of harbouring militants it claims to have launched cross-border attacks Kabul denies the charge. (Reporting and writing by Mushtaq Al, editing by YPrajesh).
Investors say BHP needs to get past Anglo and focus on growth projects.
Investors said that BHP should focus on its own growth strategy and move away from Anglo American, following the Australian firm's last minute appeal to the London listed company, which is close to a $60 billion deal with Canada's Teck Resources.
In recent days, the world's biggest miner contacted Anglo's board to determine if there was any interest in a merger. This was reported by Sunday. BHP announced on Monday that it would not pursue the bid, but instead focus its efforts on growth.
The decision to leave comes before the votes of Teck and Anglo shares - scheduled for December 9th - that will create Anglo Teck - a copper giant, with major development in Chile and Peru.
Investors who were wary of top-of-the cycle acquisitions said BHP's decision shows it is working hard to shore-up its copper pipeline, which will be expected to support the energy transition.
Hugh Dive, who owns BHP stock at Atlas Funds Management of Sydney, said: "I believe that many BHP investors would be shocked to learn that BHP is still snooping around Anglo." BHP's growth projects will keep CEO Mike Henry busy, from potash production to copper expansions, in South America and Canada. Buying Anglo would add new complications, said Dive. BHP announced in July that its Jansen Potash Project was delayed and over budget. The project is scheduled to be operational by 2027. BHP is also pushing ahead with three options to grow copper in Argentina Chile and Australia.
Jason Teh is the chief investment officer at Vertium Asset Management, a Sydney-based asset management firm.
The question is, will the other party come to the table? If they fight tooth and nail, the buyer... may end up paying more than necessary.
Stephen Butel said that the company should refine its operations, cut costs, and grow its existing businesses instead of increasing complexity. Platypus Asset management, which sold BHP's holdings last summer, was a portfolio manager.
He said that organic growth was more valuable to shareholders than large-scale M&A deals such as the Anglo deal.
BHP spent $2 billion in the last year to acquire a stake in two copper projects in Argentina, in partnership with Canada’s Lundin. It also pushed hard for production improvements at Escondida in Chile.
The company is also planning to decide by mid-2027 whether or not it will double the South Australian production by the middle next decade. Joseph Koh, a partner at Blackwattle Investment Partners, based in Sydney and which holds BHP and Anglo shares, expressed his "relief" that BHP was showing some capital discipline. Details of the offer, however, have not yet been released.
He said: "We do not think BHP is making a crazy decision in their approach, because Anglo produces high-quality cobalt and we are very positive about the outlook for the copper." "But BHP is probably ready to move on." (Reporting and editing by Thomas Derpinghaus; Mel Burton, Melanie Burton)
(source: Reuters)