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Asian stocks to gain weekly on the back of fading US rate hike bets
The Asian stock market rose on Friday as the inflation data lowered expectations for an imminent U.S. interest rate hike. However, the faltering talks to end the Middle East war are likely to keep the risk sentiment in check. Brent?futures remained steady at $87.03 a barrel, following a decline on Thursday, but were on track for a weekly gain of 4%, ending a two-week loss streak. This was after the U.S. warned to increase economic pressure against Iran, including by extending a navy blockade. The markets have largely ignored the lack of progress made in the Iran War, focusing instead on the AI theme and global monetary policy outlook. The U.S. Inflation Reports this week indicated that pricing pressure was under control. This lowered the chances of a Federal Reserve rate increase next month. Charu Chanana is the chief investment strategist for Saxo. He said that risk appetite can be held because immediate Fed hike risks have been priced lower. Chanana said, "But it's still headline-driven rally and not a risk-free regime." "Without clarity about the Middle East/Hormuz a new oil spike could quickly bring inflation and Fed worries back." MSCI's broadest Asia-Pacific share index outside Japan rose by 0.28%. This is its best performance since mid-June. Japan's Nikkei?was 1.5% higher and set to gain over 5% for the week. John Sidawi is senior portfolio manager at Federated Hermes for fixed income. He said that the markets have been puzzling in recent months because of the disconnect between geopolitical uncertainties and asset prices volatility. For now, the markets seem to be willing to accept a considerable amount of uncertainty before demanding higher premiums. This equilibrium is not likely to last forever," Sidawi stated. Investors could be forced to leave the sidelines if there is a significant escalation of conflict or a clear road toward resolution. This could trigger a larger volatility reaction than what current market prices suggest. YEN STUCK IN INTERVENTION LOOP The yen is at 159.40 against the dollar. It's close to 160, which traders think could spark another round of yen purchases from Tokyo after the joint intervention with the U.S. ended in July. The idea that the Bank of Japan might finally start to support the yen has gained traction among traders, who have priced in the possibility of a rate increase next month. However, investors could be disappointed if they leave the meeting of September feeling that the BOJ was not aggressive enough. Padhraic G Garvey is the head of global rates at ING. He said that the yen was weak because of "a Bank of Japan which remains uber-cautious and whose policy rate?remains too low." Padhraic noted the yen has returned to 160 levels, as the underlying problems remain. Garvey said that rate increases can help to ease this tension. The sooner they are implemented, the better. While that may be seen as a negative for the economy it is also a decision. Do you think it's important to protect the yen or not? Gold was down 0.8% at $4,313 an ounce in?commodities as traders locked in profits following the yellow metal's highest level since early June the previous session due to dimming expectation of a short-term increase. CME FedWatch showed that traders now price in a 35% probability of a Fed hike next month, down from 55% one week ago. This led to an increase in U.S. Treasuries, despite a disappointing auction of 30-year bonds.
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Finland bans certain parts of Baltic Sea after Latvia shoots drones in its airspace
On Friday morning, fighter jets participating in a NATO air defense mission reportedly'shot down' a drone which had entered the airspace of Latvia - a member state of NATO and European Union. A threat to airspace in the vicinity of Russia was also raised by the armed forces. Finland, a member of the EU and NATO that shares a border in part with Russia, has temporarily restricted aviation and maritime traffic to certain areas within the eastern Gulf. This is a precautionary move against drones. The armed forces of Latvia did not immediately disclose any details about the drone's origin or its origin. As Moscow and Kyiv continue their exchange of attacks following Russia's full scale invasion of Ukraine, in February 2022, neighbouring countries to Russia and Ukraine periodically issue air threat warnings and down drones. Alexander Drozdenko, the regional governor, said in an early Friday morning telegram that Russia had shot down 15 drones overnight. The region is located near Finland and Estonia, and includes St Petersburg, which is the second-largest city of the country and a major hub for exports. The?NATO countries in northern Russia are increasing security around dams and power plants, as well as natural gas infrastructure. This is a sign that they're growing more concerned about a possible "false-flag" attack by Moscow using Ukrainian drones. (Reporting and editing by Tom Hogue, Raju Gopalakrishnan, and Jekaterina Glubkova from Tokyo)
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Oil prices rise after US threats to blockade Iran for indefinitely
After falling in the previous session due to a weaker global demand outlook, oil prices climbed a little bit on Friday. The U.S. had threatened to?maintain a naval blocade against Iran indefinitely. Brent futures were up 9 cents or 0.1% to $87.16 per barrel at 0130 GMT. U.S. West Texas Intermediate crude futures were up 4 cents at $81.29. Both benchmarks dropped more than 2% the previous session, paring their gains after a six sessions rally for Brent, and a five sessions rise for WTI. However, they were still on track to achieve a weekly rise of about 4%. The United States said on Thursday that it would maintain its naval blockade against?Iran for as long as necessary and would increase economic pressure on Tehran, since ceasefire negotiations have stagnated. In an interview with Newsmax's "Rob Schmitt Tonight", U.S. Treasury Sec. Scott Bessent stated that "we are going to take measures never before seen in history - of economic isolation" on a nation. The latest U.S. threat comes as Iran continues to restrict traffic through the Strait of Hormuz. This area carried 20% of world oil prior to the conflict. Fuel prices are rising and President Donald Trump is under pressure to end the war, which is unpopular in the United States. According to Fars News, the semi-official news outlet, Hossein TAEB, the newly appointed head of Iran’s paramilitary?Basj unit, has said that the strait "is under the management and the control of the Islamic Republic". OPEC 'and the International Energy Agency lowered their forecasts this week for growth in demand, and data showed that U.S. crude stock made its largest weekly gain since over three -and-a-half years. Tim Waterer, KCM's chief market analyst, said that the two forces were counter-weighted. He said that the market is still supported, but it struggles to move higher while these pressures are in place. The state-owned news agency WAM in the UAE reported that two vessels of the Abu Dhabi National Oil Company, owned by the UAE government, were attacked Thursday evening as they transited the Strait. The United Arab Emirates government denounced it as an Iranian strike.
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Exports of China's electric trucks are soaring due to the Iran war
China's?exports of electric trucks to other Asian nations have soared. This is in addition to an increase in domestic sales, as the?higher fuel costs as a result of the Iran War accelerate regional electrification. China's rapid adoption of etrucks - from lighter vehicles to tractors-trailers - has shielded the 'world's largest auto market' from the conflict. Other countries are now scrambling for a chance to catch up. China's heavy etruck exports have more than doubled in the last four months since the U.S. and Israel started the war, on February 28. They now total 16,823 vehicles. The majority of the trucks were shipped to South and Southeast Asia. South Asia saw a five-fold increase in shipments, while Southeast Asia saw a nearly three-fold increase. The war opens the door to markets for Chinese E-Trucks South and Southeast Asia are particularly dependent on the Middle East for oil, and Iran's ?closure of the Strait of Hormuz has triggered some of the biggest jumps in diesel prices, according to GlobalPetrolPrices.com, creating an opening for China, the world's largest e-truck maker. Diesel prices are up ?48% in Sri Lanka since the start of the war and 57% in the Philippines, according to GlobalPetrolPrices.com, while the fuel is 15% higher in China, government data shows. Zhaoting Yue is the vice president for international marketing of Sany, which makes the world's largest electric heavy trucks. The exports are still relatively small compared to the number of trucks in regional fleets, which is in the millions. If growth continues and is similar to the adoption of e-trucks in China, then it may be possible to reduce diesel consumption and carbon emissions. In China, e-truck sales have increased from a near-zero percentage in 2021 to 30% last year. 140,000 e trucks were sold in the first six months of 2018. Diesel consumption in China started to fall last year. Yue said that Sany had previously concentrated on Europe, but now is focusing on Southeast Asia to develop cheaper models. He said that in June the company had shipped its biggest single order of 880 heavy trucks. The contract, however, was not public. Yue stated that before oil prices rose in these countries, it could have taken 28 months for buyers to recover their investment in a heavy electric truck. "Now it only takes 18 months." Sany added that he expects rapid growth in Asia, Africa, and Latin America for at least the next 12 months. FUEL-PRICE SURGE WILL 'FOCUS MINDS' Electric delivery vans have become more common in the United States and Europe. However, the introduction of larger e trucks has been much slower. Tesla, for instance, promised to revolutionise trucking's economics with its electric semi almost a decade earlier, but has now dropped its goal of achieving "volume production" by this year. According to the Centre for Research on Energy and Clean Air, China's electric truck fleet can save 141 million barrels this year by not burning diesel. This is more than 3% and equal to its entire imports from Kuwait. The Helsinki-based centre estimates that China's etruck exports in the first six months of the year replaced fuel at a rate of 1.6 millions barrels per annum. The high cost of the trucks and the lack of charging infrastructure are obstacles to adoption. According to Daniel?Bleakley of Australian electric trucking company New Energy Transport, the cost of an e-truck in Australia is about A$500,000 (about $350,000). However, the fuel savings are so great that they can reduce operating costs by as much as 70% when compared with diesel. Yue said that to boost the charging infrastructure of its trucks,?Sany sells customers systems which can generate and store energy, as well charge their trucks. Lauri Myllyvirta, CREA's co-founder, stated that the rapid adoption of Chinese electric cars will help expand charging networks as well as provide a boost for truck adoption. He said that high fuel prices would focus the minds of businesses and make them move quickly.
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Croatian firefighters also battle a fire that has engulfed a Greek resort.
Residents and tourists fled by sea and land from villages in northern Greece's Halkidiki on Thursday, as a wildfire was fanned by strong winds and engulfed trees and houses near a resort during the holiday season. Local media reported that heavy gusts made firefighting on Croatia's Dalmatian Coast difficult. A major highway in the Lokva Rogoznica region south of Omis was closed due to an blaze. In Europe, "successive" heatwaves have intensified the drought, dried out vegetation and strained water resources, contributing to wildfires in Spain, France, Greece, which scorched land on a scale never seen before. People wearing face masks in Greece, some clutching pets or children, boarded dingies or boats at the seaside village of Siviri, as the fire burned through a forest. Large columns of smoke turned a cloudless sky dark gray. Flames scorched holiday apartments with balconies facing the sea as they approached from the inland. The coastguard said that over 300 people were evacuated from Siviri by boat. Siviri is located on a peninsula of olive groves, woodlands, and beaches, south of Greece's largest city, Thessaloniki. In a press release, the statement said that patrol and fireboats?and fishing boats were involved in this operation. More than 140 firefighters battled?flames on both sides the main road between Siviri and?the town Kassandreia. In a post on X, the fire brigade stated that nine aircraft and seven helicopters had also been deployed. Traffic was stopped and one firefighter injured. Giannis Artopios, a fire brigade spokesperson, told the?Protothema portal that "our effort is focused on extinguishing a fire and ensuring the safety of people." Local media reports in Croatia showed flames bursting out of trees around a main road, and along the coast. The reports cited the fire department to say that evacuations were underway.
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Hacking group claims massive data theft by Shell, Philips GE, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, FiServ, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserver, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fiserv, Fise
According to a post on the group's website, a prolific hacking group that exploits?software vulnerabilities in order to attack multiple targets at once claimed they had?stolen data from almost 50 companies around the world, including Philips, GE, Fiserv, and Shell. Shell confirmed that it was aware of an "incident" which occurred recently, while Philips said it had been targeted. This confirms a report by Dutch media outlet BNR on Thursday. Shell's spokesperson stated that "we are working with our teams of security experts and relevant experts" to investigate the current situation. Philips has 'identified and contained an attempted cybersecurity compromise on a specific enterprise data server,' Philips stated in a statement. The incident did not affect customer environments. Fiserv's spokesperson said that the company was aware of the claims made by the threat actor, but that "based on the comprehensive review we have done to date", there is no evidence that any customer data, banking or transactional information, or personal information, has been compromised. GE couldn't be reached immediately for a comment. We could not independently verify claims made by the hacking group about the type of data they stole and the amount. The hackers didn't respond to our request for comments. Although it is not known how the hackers gained access to the companies, Ransom ISAC, a group that shares industry information, published a warning on July 22, warning the hacking group of exploiting vulnerabilities in PTC Windchill, and FlexPLM software, used in manufacturing and engineering processes. PTC, based in Boston, did not respond immediately to a comment request. The company has posted multiple security alerts on its website dating back to June 18 urging customers to apply a patch to fix a vulnerability, and providing details about an unknown attacker who is attacking their products. Brandon Parsons, Ascent Solutions' threat intelligence manager and author of the RansomISAC advisory, says that some companies started receiving Cl0p?notices on July 19-20. He said the group targets vulnerabilities in software packages, rather than specific companies. They are "professional data extortionists." Charlotte Van Campenhout and A.J. Vicens, Kirby Donovan, and Shri Navaratnam edited the article.
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Stocks rise as traders reduce rate hike bets, oil prices drop
Oil prices dropped more than 2% on Thursday, as investors reduced their bets about a U.S. interest rate hike. Higher inventories and lower global demand expectations offset geopolitical worries. U.S. producer price data, which remained unchanged in July, reduced the expectations for a Federal Reserve rate increase next month. This helped tech stocks propel the S&P 500 up to an intraday high. The report was released on Wednesday, following the consumer price index, which showed that U.S. prices increased 3.4% over the past 12 months, as expected by economists. The traders have reduced their bets for a rate hike in September, putting a probability of 65% that the Fed will remain on hold next week compared to 50% on Wednesday. After reaching a peak of two months, gold prices dropped. U.S. Treasury yields continued to decline following the producer price data. The MSCI index of stocks around the world rose by 5.90 points or 0.51% to 1,160.43. WALL STREET TECH BOOSTS The Dow Jones Industrial Average rose by 69.72 or 0.13% to 53,839.99. The S&P 500 rose by 50.49 or 0.65% to 7,798.99. And the Nasdaq Composite was up 214.54 or 0.81% to 26,803.03. Mohit Kumar, a Jefferies economist, said that the earnings season for AI infrastructure names has been very strong. He also noted that there are no signs of a slowdown in "capex". He also said that Jefferies had an over-weight position in the AI industry. He said that the Fed's refusal to raise interest rates and the high amount of cash in circulation should continue to support risky investments. Investors waited for euro zone inflation figures after a good earnings season. Energy and mining stocks were also impacted by lower commodity prices. The STOXX 600?pan-European closed at 659.24, with little change. The benchmark fell from its record highs of the previous session. The MSCI broadest Asia-Pacific index outside Japan closed at 0.96%, and emerging market shares rose by 0.83% to 1,695.93. US-IRAN DEADLOCK Washington and Tehran exchanged accusations over Thursday's deal to reopen Strait of Hormuz. The United States said Iran failed to fulfill its obligations, and Iran countered that Washington did not deliver on the end of a blockade of Iranian port. Brent crude futures closed down 2.15 % at $87.07 per barrel, following a rally of six sessions. U.S. crude finished?down 2.4 % at $81.25 per barrel after rising for five sessions. The Organization of Petroleum Exporting Countries (OPEC) has lowered its forecast of world oil demand growth for 2026. Energy prices will 'have a greater impact on the economies of Japan and the Eurozone, which are both major energy importers. The United States, however, is considered to be'relatively immune from oil shocks. CURRENCIES AND BONDS The dollar index, which measures greenbacks against a basket including the yen, and euro, increased 0.03% at 99.98. The euro rose 0.02% to $1.1526. The yields on the benchmark U.S. 10 year notes dropped 4.73 basis points to 4.645%, and 30-year bonds fell 2.81 basis point to 5.2189% Analysts say that the U.S. budget deficit, which has risen to $432 billion, is likely to increase long-term borrowing rates. Evelyne Gómez-Liechti, Mizuho's strategist, said: "I am still cautious about chasing rallies in U.S. Treasuries, especially at the back end where fiscal concerns, oil-related term premium and supply are hard to dismiss." The Japanese yen fell?0.08%, to 159.55 dollars. The producer price index in Japan, which increased 7.2% from a year ago, confirmed that expectations of a Bank of Japan interest rate hike next month were earlier than expected. Gold spot fell 1.28%, to $4,350.72 per ounce, after reaching its highest level since early June. U.S. Gold futures fell 1.1% and settled at $4,420.40. (Reporting from Chris Prentice, New York, and Stefano Rebaudo, Milan; editing by Sharon Singleton and Andrew Heavens, Susan Fenton, and Aurora Ellis.)
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Gold falls on profit-taking following inflation data
Investors locked in gains on Thursday as gold prices fell by more than 1%. This was after the U.S. inflation figures were in line with expectations. This dampened expectations of a Federal Reserve rate increase next month. By 12:58 am EDT (1658 GMT), spot gold had fallen 1.2%, to $4.354.58 an ounce. The session began with prices at $4,449.39, their highest since June 5. U.S. gold futures fell 1.1% and settled at $4,420.40. "4,500 is an important resistance level for gold." Bob Haberkorn is a senior market strategist for StoneX. He said that we 'touched' it twice, and gold fell from there. The U.S. Producer Price Index remained unchanged in July, as a decline in goods prices offset an increase in service costs. This indicates that inflationary pressures may persist. The data follows Wednesday's Consumer Price Report, which showed that U.S. inflation increased 3.4% over the 12-month period ending in July, down from 3.5% during June, and in line economists' expectations. According to CME FedWatch?Tool, the markets now price a 35% probability of a rate increase at the September meeting. This is down from 40% after the PPI results. Fed policymakers will not feel any urgency to increase rates next month, after the inflation rate has cooled down for a second month in a row. Beth Hammack, the president of Cleveland's Federal Reserve, reiterated on Wednesday that rates must be raised "right away". Low interest rates can reduce the 'opportunity cost' of holding non-yielding gold. Independent analyst Tai Wong stated that "(Gold's) price rose by a solid 9% in one week, behind Chinese and Retail buying. We are seeing some profit taking?around the 100-day moving average." Oil prices fell on Thursday, as investors reassessed the prospects of a weaker global economy this year due to supply disruptions. A SEC filing revealed that Bank of Korea held a $250-million stake in a U.S. listed?gold ETF at the end of June. (Reporting by Sukanya Mitra and Anjana Anil in Bengaluru; Editing by Shailesh Kuber and Diti Pujara) (Reporting by Sukanya Mitra and Anjana Anil in Bengaluru; Editing by Shailesh Kuber and Diti Pujara)
UAE announces it will discuss currency swap lines with US
On 'Monday, the United Arab Emirates announced that it is in talks with the United States about a currency exchange line.
"We are having this discussion and conversation with many.?It's a part of an elite group with whom the U.S. has this swap policy. "They only have it with five countries," Thani al Zeyoudi told a conference in Abu Dhabi.
"To be part of this group means that the transactions...?trade, investment between both nations reach an level where that exchange is highly necessary...?so (it) is an elite issue, it's not about bailing-out," he said at the "Make It In The Emirates" conference.
Currency swap lines allow central banks to exchange currencies without having to use foreign exchange markets. This reduces transaction costs and exchange rate risk for international trade.
The U.S. Federal Reserve maintains permanent central bank currency exchange lines with five major central banks: the Bank of Canada (Bank of Japan), the European Central Bank (ECB), the Bank of England, and the Swiss National Bank. U.S. Treasury secretary Scott?Bessent stated last month that allies from the Gulf region, Asia and Europe had requested currency exchange?lines to deal with the?impact of the Middle East conflict. The conflict, which began with U.S.-Israeli strikes on Iran?on February 28th, has shut down the Strait of Hormuz. This is a crucial chokepoint where about 20% of oil and LNG shipments travel, and this has pushed up oil prices.
Al Zeyoudi?did not provide any further details about?the discussion, the size or the timeline for an agreement regarding the currency swap line? with the United States. Reporting by Federico Maccioni, Writing by Eman Aboushassira, Editing by Andrew Cawthorne & Alexander Smith
(source: Reuters)