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MORNING Bid EUROPE-Hormuz & hyperscalers
Tom Westbrook gives us a look at what the future holds for European and global markets. The stock markets have turned their attention to the AI boom, as U.S.-Iran negotiations are stalled and there is little oil flowing through the Strait of Hormuz. Artificial intelligence supply chains stocks surged to record highs in Japan, South Korea and Taiwan on Monday as a result of a wave buying triggered by Intel's unexpectedly positive revenue forecast. The G10 central banks are expected to leave rates unchanged this week, and the Middle East ceasefire is holding. This means that the focus will be on the key driver of AI growth -- the spending plans of the hyperscalers when they announce their earnings this week. Asia's chipmakers posted record earnings last week. SK Hynix reported a fivefold increase in quarterly profit, while Samsung projected an eightfold jump for an operating profit of almost $38 billion over the three-month period from January to march. TSMC has also recorded eight consecutive quarters of double-digit revenue growth. According to the World Federation of Exchanges, the value of South Korean, Taiwanese and German stocks has surpassed that of Germany's stock market. The markets were buoyed by a report from 'Axios that Iran has proposed conditions to reopen the Hormuz, and separate nuclear negotiations again. Investors may begin to adjust their aggressive short-term rate?positions bet on imminent increases?leading up to European and British central bank meetings. Market developments on Monday that may have a significant impact - U.S.-Iran peace talks - Economics: German consumer sentiment for May - Earnings: Deutsche Boerse, Verizon, Domino's Pizza
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Gold prices rise on weaker dollar following Iran peace proposal report
Gold rose?on Monday, aided by a weaker?dollar?as news of Iran's new proposal to end its war with the U.S. boosted hopes for a deescalation of the Middle East conflict. As of 0407 GMT, spot gold was up by 0.4%, at $4,726.62 an ounce. Last week the metal dropped 2.5%, ending a four-week winning streak. U.S. Gold Futures for June Delivery were unchanged at $4,742. The?dollar, which lends support to the bullion market, eased after it was reported that Iran had given the U.S. through Pakistani mediators a new proposition on the reopening of the Strait of Hormuz as well as ending the war. "We are just watching to see if there is any progress in (U.S. - Iran) talks in the next few days, and that will be the main?driver of gold," said Kyle Rodda a senior financial analyst at Capital.com. Donald Trump, the U.S. president, said that Iran can call if they want to negotiate a ceasefire in their two-month conflict and stressed that it will never possess a nuclear device. Trump canceled a visit by two U.S. ambassadors to Iran's war mediator Pakistan, a blow to the prospects for peace. The oil prices increased as the Middle East energy exports were disrupted by the stagnant peace talks. Inflation can be stoked by higher crude oil prices, which increase transportation and production costs. This increases the probability of 'higher interest rates. Gold is seen as an inflation hedge. However, the high interest rates are making yield-bearing investments more appealing, which reduces its appeal. Investors are now awaiting the U.S. Federal Reserve interest rate decision, which is expected to be announced on Wednesday. Rodda said that the Fed's policy could be unchanged for the remainder of the year due to the impact of inflationary costs from the energy crisis. Silver spot rose by 1%, to $76.45 an ounce. Platinum gained 0.7%, to $2,025.20. Palladium fell 0.2%, to $1,493.50. (Reporting and editing by Sherry Phillips, Subhranshu Sahu, and Noel John from Bengaluru)
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Gold recovers its early losses due to a weaker dollar following the Iran peace proposal report
Gold recovered?early losses to 'trade largely stable on Monday, helped by a'slightly softened dollar. Investors looked for progress in the stalled talks between Iran and the United States. As of 0233 GMT the spot gold price was unchanged at $4,707.75 an ounce after losing 0.8% earlier. Last week, gold fell 2.5% and ended a four-week streak of?winnings. U.S. Gold Futures for June Delivery fell by 0.4% to $4720.50. Dollar eased, lending support to the bullion after a report that said Iran via Pakistani mediators had given the U.S. an updated proposal on reopening the Strait of Hormuz. "We are just watching to see if there is any progress in (U.S. - Iran) talks in the next few days, and that will be the main?driver? for gold," said Kyle Rodda, senior financial analyst at Capital.com. Donald Trump, the U.S. president, said that Iran can call if they want to negotiate a ceasefire in their two-month conflict and emphasized it will never possess a nuclear device. Trump on Saturday cancelled the trip of two U.S. ambassadors to Iran's war mediator Pakistan, "dealing a blow to peace prospects". The oil prices increased as the Middle East energy exports were disrupted by the stagnant peace talks. Increased crude oil prices can cause inflation by increasing transportation and production costs. This increases the likelihood of higher interest rates. Gold is seen as an inflation hedge but high interest rates can make other assets that yield more attractive. This reduces its appeal. Investors are now awaiting the U.S. Federal Reserve interest rate decision, which is expected to be announced on Wednesday. Rodda said that the Fed could indicate its intention to keep policy the same for the remainder of the year due to the inflationary effects of the energy crises. Silver spot fell 0.3% per ounce to $75.44, while platinum rose 0.1% to 2,013.15, and palladium dropped 0.6% to $1,487.45. (Reporting and editing by Sherry Phillips, Subhranshu Sahu, and Noel John from Bengaluru.
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INDIA RUPEE - Rupee under pressure, high oil prices encourage importer hedging and dampen flows
The Indian rupee will continue to be under pressure on Monday due to importer hedging and a demand spurred by high oil prices. After settling at 94.2475 last Friday, traders expect the rupee to open between 94.26 and 94.30. Last week, the currency fell by 1.42%. This was its worst performance in over three and a half years. The fall was caused by a number of factors including the sharp rise in oil price amid the?absence of any sign of a solution to the disruptions around Strait of Hormuz? and the partial rollback of the central bank's measures that supported the rupee. These factors are likely to continue to weigh on the currency, traders said. Oil prices have played a larger?role in this trend, which has been going on for several weeks. Brent crude rose to just shy of $108 per barrel on Monday. This is the highest price in three weeks and extends last week's 16.5% rise. The U.S. and Iran have stalled their peace talks, and the shipments of oil through the Strait of Hormuz remain limited. This has led to a tightening of supplies and a rise in prices. A currency trader from a private sector bank stated that the rupee is not likely to benefit much at these prices. He added that high oil prices force importers to hedge, capital flows remain low, and exporters do not see any reason to increase dollar sales. The?outflows of foreign equity have not reversed despite recent easings in the selling by foreign investors. Lack of portfolio 'inflows', coupled with the prospect of increased oil import costs, are adding to rupee woes. Foreign?investors outflows of Indian equities have slowed this month to just over $5 billion from more than $12.5 billion last March. Traders have noted that despite the slowdown in flows, the rupee continues to be under pressure.
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Celtics' Payton Pritchard (32) defeats Sixers to lead 3-1
Payton Pritchard, a Boston Celtics bench player who has a career high of 32 points in the playoffs, scored a total of 32 points and helped the Boston Celtics take a 3-1 lead over the Philadelphia 76ers with a 128-96 road victory on Sunday. Jayson Tatum scored 30 points, including five treys. He also had 11 assists and 7 rebounds. Boston hosts Game 5 on Tuesday. Pritchard made six 3-pointers and was 12-of-21 from the field while Boston knocked down a franchise-playoff-record 24 ?treys to help finish off a second straight victory in Philadelphia. Joel Embiid returned to the 76ers' series after an appendectomy, which he had undergone two weeks earlier. He scored 26 points in 34 minutes on 9-of-21 shots, and had 10 rebounds and 6 assists. Tyrese Maxiey scored 22 for the Sixers, and Paul George added 16. For the second straight game, the Celtics scored more 3-pointers (18) than 2-point baskets. Boston shot 48.3% in total and 45.3% at 3-point range. Embiid, who was cleared just before the tip-off, was aggressive from the start by scoring eight of the 76ers first points. He wore a brace under his jersey to protect the midsection. Philadelphia scored 41.2% on its field goal attempts. This includes 9 of 30 (or 30%) from behind the arc. Quentin Grimes, who was on the bench, scored 12 points. Pritchard made an immediate impact, scoring 13 points in the first quarter. This included a 3-pointer at the end of the quarter to give Boston a lead of 34-18. Pritchard hit another three-pointer with 8:51 remaining in the first half. At the half, he had 18 points as the Celtics led by 56-38. Boston continued its offensive in the third period when Brown scored six consecutive points and Tatum added another trey. Boston's advantage grew to 70-43 with seven minutes left in the quarter. Pritchard scored the last four points in the period, as the score was 95-74 at the start of the fourth quarter. Tatum's 4-point play ended a 9-1 run that began the fourth quarter and increased the lead by 30. Boston's lead peaked at 32 points as they cruised to victory. Field Level Media
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Grain futures in Chicago and Chicago soybeans are rising on the back of crude oil gains, as US-Iran negotiations stall.
As U.S. and Iran 'peace talks' stalled at the weekend, Gulf shipping was blocked. As of 0112 GMT the most active soybean contract traded on the Chicago Board of Trade had risen 0.28% to $11.81-3/4 per bushel. This was the third straight session that the contract gained. Soyoil rose 0.95%, to 72.01 cents a pound. Johnny Xiang of Beijing's AgRadar Consulting said that prices are mainly influenced by a spillover effect from rising crude oil. The grain markets were supported by the soaring crude oil prices which rose almost 2% on Monday, and also the closure of the Strait of Hormuz. Corn and soybeans, both feedstocks for Biofuels, are mainly sold through this route. Traders anticipate a meeting in mid-May between U.S. president Donald Trump and Chinese president Xi?Jinping, hoping that China will agree on additional purchases of U.S. soya beans and other agricultural products. Corn?upgraded 0.54%, to $4.66 per bushel. This is near the highest price in a month. Prices were boosted by a robust export demand. Storms in the Midwest of the United States could delay seeding, but early soybean and corn planting is ahead of schedule. Wheat prices rose 0.89%, to $6.21-1/2 a?bushel. This is near the four-week high. Traders are watching for potential rain relief in central United States that could ease the stress on wheat crops parched by drought.
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Oil prices rise by nearly 2% after US-Iran talks fail
Prices of oil?rose nearly 2% on Monday as 'peace -talks' between the U.S.A. and Iran stagnated, while shipping through the Strait of Hormuz was limited. This kept global oil supplies low. Brent crude futures increased $2.16 or 2.05% to $107.49 per barrel at 2346 GMT. This is the highest price since April 7. U.S. West Texas Intermediate was $96.17, an increase of $1.77 or 1.88%. Brent and WTI both gained a combined?17% last week. This was the largest weekly gain since the beginning of the war. The weekend saw hopes of a resurgence in peace efforts fade when U.S. president Donald Trump cancelled a trip planned to Islamabad for?his envoys Steve Witkoff & Jared Kushner. This was just as Iranian Foreign Minister Abbas Araqchi landed?in Pakistan. Tony Sycamore, IG's market analyst, said that this move "puts the ball back in Iran’s court and the clock now is ticking loudly." He added that Tehran could be forced to close its aging oilfields when it runs out of storage capacity. Tehran has closed the strait in large part, while Washington has blocked Iran's ports. Shipping data from Kpler revealed that traffic through the Strait of Hormuz was limited. Only one oil product tanker entered the Gulf on Sunday. Goldman Sachs increased its oil price predictions for the fourth quarter citing reduced production?from the Middle East. In a note dated April 26, GS analysts headed by Daan Stuyven stated that "the economic risks are greater than our crude base-case alone indicates" because of 'the net upside risk to?oil price, the unusually high prices of refined products, the risks of product shortages, and the unprecedented size of the shock." (Reporting and editing by Edmund Klamann, Ethan Smith and Florence Tan)
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Oil jumps, stock futures slip as US-Iran talks stall
The dollar edged higher and U.S. stocks futures wiggled lower in early Asia trading on Monday, after the stalled 'U.S. - Iran peace talks' over the weekend. Benchmark Brent crude futures climbed more than 2%, reaching a new three-week high at $107.97 per barrel. S&P futures dipped by 0.3% after U.S. stock markets closed at a record high last week. The dollar was up against major currencies but not much. The euro fell 0.15% at $1.1706, and the yen was marginally weaker, trading at 159.53 to the dollar. The full-scale war in the 'war started by U.S. and Israeli strikes against Iran two months back has been halted, but no agreement on terms has been reached to open up the Strait of Hormuz, which had been closed all but, sending energy costs soaring. Donald Trump, the U.S. president, canceled a weekend trip by two envoys to Islamabad for talks. Meanwhile,?Iran’s foreign minister continued to travel between mediating?countries. "If they want to talk to us, they can either come or call us. You know there's a phone. Trump said on Fox News' "The Sunday Briefing", that the country has nice, secure phone lines. "They know what needs to be in the agreement." It's simple: they cannot have a nuke weapon. Otherwise, there is no reason to meet," Trump stated. (Reporting and editing by Edmund Klamann; Tom Westbrook)
Hengli Petrochemical plunges after US sanctions on Iran oil
The shares of 'Hengli petrochemical' fell by as much as 10 percent on Monday after the U.S. last week imposed sanctions against the firm. It is one of China’s largest independent refiners. They were sanctioned for allegedly purchasing Iranian oil. Treasury Department announced on Friday that the refiner was one of Iran's biggest customers for crude oil and petroleum-based products. In a?Sunday statement, the company denied any business with Iran. The Trump administration already imposed sanctions on a number of?other independent refining companies, including Hebei Xinhai Chemical Group and Shandong Shouguang Luqing Petrochemical.
Some independent refiners have been deterred from buying Iranian oil by these sanctions. They block U.S. assets and prevent Americans?from dealing with them.
Data from analytics firm Kpler showed that China bought more than 80% of Iran's oil shipped last year. Experts in sanctions have said for years that independent refineries have limited exposure to U.S. financial systems, and are therefore immune to their full effect.
(source: Reuters)