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Asia markets sell off in a broad scale due to AI fears
Asian markets dropped on Tuesday, led by chipmakers, on concerns?about massive funding requirements of the AI boom. A slide in oil prices didn't do much to lift bonds, and traders were worried about U.S. interest rate hikes coming this week. South Korea's KOSPI plunged more than 8 percent to a low of three months, setting off a circuit breaker. Japan's Nikkei fell 4% after a drop of 2.2% for the Philadelphia Semiconductor Index. Nvidia's shares fell 5% overnight, after the Wall Street Journal reported that the company was in discussions to provide approximately $250 billion in financial guarantees for OpenAI in connection with a massive data center project. CXMT shares in Shanghai surged 466% on their debut day, highlighting the growing interest of investors and the competitive threat from Chinese competitors. Chris Weston is the head of Pepperstone's research. He said that there was a growing sense of optimism in mainland markets regarding China's ability build a global competitive AI ecosystem. The Information reported that China had?also started manufacturing locally developed immersion deep UV lithography machines. This chipmaking tool was long dominated exclusively by Dutch supplier ASML. ASML's shares fell 8.5% on Monday. South 'Korea SK Hynix shares fell by nearly 11%, while Samsung Electronics shares dropped more than 9%. In Tokyo, Kioxia was down 18% and?Tokyo Electron was down 9.8%. CXMT, the chip-making indexes and CXMT were also lower in early trading. OIL SLIDES US YIELDS DIPLEAD Brent crude futures continued their nearly 9% drop on Monday, dropping to $87.55 per barrel as hostilities between Iran and the U.S. cooled following Washington's sudden suspension of airstrikes on Saturday. Donald Trump stated on Monday that the United States and Iran were having "good discussions" and that there was a possibility of a deal. The break in fighting has pushed benchmark U.S. Treasury 10-year yields down by four basis points, to 4.64%. Shorter-term rates have not moved much. The Federal Reserve is expected to hike by 25 basis points this Wednesday, according to traders. "The U.S. - Iran War, which is driving up the price of crude, remains the main determinant for what will 'happen in the global economy over the next few months and, as a result, what informs the central bank policy forecasts at the margin," said Thierry?Wizman, currency & rates strategist?at Macquarie Group. We expect the Fed to tighten its bias this week. The expectation of a hike?sooner rather than later' kept the dollar at $1.1370, the euro at $1.14 and the Australian Dollar just below 70 cents. The yen was trading at 163.78 per dollar, barely above a four decade low. Markets are on edge about Japan interfering in the currency pairing, especially if the Bank of Japan holds rates this week, and causes another yen drop. Wizman said that if BoJ communication was not hawkish, and USD/JPY continues to rise, traders can expect an official response. This could include verbal interventions, rate checks or direct FX market interventions, possibly on Friday. (Reporting and Editing by Shri Navaratnam).
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Origin Energy in Australia flags the possible exposure of data for about 900,000.
Origin Energy, a company in Australia, said that on Tuesday, data relating to 900,000 customers, both current and former, may have been accessed. The company is contacting the affected individuals. Last week, the country's largest electricity and gas retailer announced that it was investigating an alleged security breach which involved unauthorised access to some customer information. Origin stated on July 23 that the affected data could include financial information, such as last few digits of a customer’s credit card number or bank account number. As of 0121 GMT, shares of the company were down 1.7% at A$10.47. The broader ASX200 index was 0.3% lower. On its website, the company announced that it had finished its initial review phase and was notifying customers affected. It also offered identity protection and cybersecurity support services. Sydney-based company reviewed a possible security threat in early July but stated that, 'based on the information available at the?time, it was not considered credible. The company said that new information it received on the 22nd of July indicated that a possible security incident could?have taken place, prompting them to inform customers and investors. Origin has engaged cybersecurity and forensic experts, taken steps to secure its systems and is continuing its investigation into the incident. Customers are urged to be vigilant and watch out for scams.
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South Korea's KOSPI falls 7% as the global chipmaker sale deepens
South Korean shares fell 'on Tuesday, as a global sale of chipmakers weighed down on technology heavyweights. Pressured 'by concerns about a 'intensifying competitive environment - from China - and a steep drop in SK Hynix shares listed in the U.S. The benchmark KOSPI fell 500.47 points or 7.41% to 6,253.81, prompting "sidecar" trading restrictions on both the KOSPI index and junior Kosdaq, temporarily suspending programme trading. Memory-chip manufacturer SK Hynix fell 10% after 'its American Depositary Receipts (ADRs), which were issued in the United States, dropped to a new record low and below their original U.S. offering prices. Samsung Electronics fell 9.15%, another major index component. The KOSPI weighting is dominated by the two largest chipmakers, who together make up more than half the market. This amplifies the effect of the sell-off across the entire sector. The market sentiment was further dampened due to developments in China. These included a blockbuster debut of ChangXin Memory Technologies, (CXMT), and reports that a Chinese state-backed company began manufacturing immersion DUV equipment. Kim Seokhwan, a Seoul based analyst at Mirae Asset Securities said that the market is more concerned about CXMT's potential to expand its capacity?to Korean rival companies and?technology following?its IPO. Reporting by Cynthia Kim, Editing by Sherry Phillips
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Australia is considering building its first oil refinery domestically in 60 years
Australia announced on Tuesday that it will 'consider building its first new oil refinery for more than 60 Years, as the war in the Middle East squeezes overseas supplies and highlights the urgency of improving energy security. A government statement said that the federal government and Western Australia's state government would jointly spend A$4m ($2.8m) on a feasibility study of the refinery. Australia imports 80% of the fuel it uses and is racing to get supplies in light of the Iran 'war. The majority of Australia's oil refineries were built in the 1950s and 1960s. However, high operating costs as well as the rise of large refineries in Asia have forced many of them to close over the last three decades. "This is a matter of fuel security - for the entire nation. But, of course, Western Australia will be left with no fuel refining capability after the closure of the BP facility in Kwinana by 2021. It's an important initiative," Federal Resources Minister Madeleine King said to ABC Radio. Ampol's Queensland refining facility and Viva Energy's facility in Victoria – both?on Australia's east coast – are the only two operative now, compared with eight in 2000.
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Officials say seven people were killed in Russian attacks on eastern Ukraine
Officials said that on Monday, a Russian strike on frontline localities in eastern Ukraine killed seven people and injured more than twenty. Three people were killed in two locations near Kostiantynivka, a contested city, according to prosecutors in Donetsk Region. The Russian military claimed this month that its forces had captured Kostiantynivka. However, Ukrainian officials denied the city's change of hands. Four people were killed in the area of Kramatorsk. This heavily fortified "fortress city" is considered crucial to Ukraine's defenses. The prosecutors said that 18 people had been injured in the Donetsk Region. Oleksandr Hansha, the Governor of Dnipropetrovsk Region said that more than 50 artillery and drone attacks were conducted on five districts. Two people were killed near the town of 'Nikopol', which is a Russian target that is often used on the north bank if the Dnipro River. One person was killed near the town of Syneklykove in the east. A Ukrainian drone hit a building in Russia's Belgorod Region and killed one person. Two others were injured. (Reporting and editing by Nick Zieminski, Cynthia Osterman, and Ron Popeski)
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Retailers shun central Mexico produce as US cyclospora outbreak spreads, former FDA chief says
Scott Gottlieb, former U.S. Food and Drug Administration commissioner, said that some large retailers and restaurants stopped sourcing products from a central Mexican region linked to a growing cyclosporiasis epidemic in the United States because they were concerned about widespread contamination. A?FDA investigation? has linked the outbreak with iceberg lettuce served in Taco Bell restaurants that was sourced from Taylor Farms operations in central Mexico. Health officials are looking for other products that could be causing people to get sick, as the cases continue climbing. A widespread contamination of imported products could increase the risk for consumers to contract cyclosporiasis. Cyclosporiasis, a parasitic illness that causes explosive diarrhea, is caused by a parasite. Gottlieb stated that removing products from supply chain links to central Mexico could mitigate these risks. Gottlieb told CNBC that multiple clusters of outbreaks in New York, North Carolina and the Great Lakes Region appeared to be linked to parsley from central Mexico. However, investigators had not yet determined the exact source. Gottlieb: "I think everyone believes that area is suspect." "A large amount of this product is being removed from supply chains." He was unable to identify the companies that were removing their products and could not confirm immediately which retailers had stopped sourcing "Mexican Produce". CONCERNS OVER RAW SEWAGE Gottlieb stated that weather conditions increased the risk of contamination. He said that raw sewage may have reached the growing areas due to flooding, a sewage leak, irrigation water, or overflowing portable restrooms used by farmworkers. Gottlieb explained that "some event happened in central Mexico, we do not know what it was yet. It probably led to many fields getting contaminated." Taylor Farms and the U.S. Department of Health and Human Services did not have any immediate comments. Taylor Farms said that it voluntarily halted production at its central Mexico facility and removed immediately all potentially affected products when questions were raised about the source. After extensive discussions, the FDA stated that Taylor Farms had agreed to remove the affected products from their market. The company failed to meet the 24-hour deadline for deciding whether or not it would take voluntary actions after the agency provided it with evidence. CLIMB CASES According to the U.S. Centers for Disease Control and Prevention, there are 4,173 cases that have been confirmed in a laboratory. Health authorities also know of 7,400 other suspected cases. Gottlieb stated that cases are likely to be underreported and the true extent of the infection is likely 10-20 times greater than reported case numbers. He said, "This is by far the largest outbreak of cyclospora we have ever seen." Michigan reported 9,253 new cases on Monday, up 1,077 since the last update. Health officials in the county said that they believed other unidentified items were making people sick, besides Taylor Farms lettuce from Mexico. Avani Sheth is the chief medical officer for Wayne County in Michigan, which includes Detroit. MEXICAN INDUSTRIES URGES CAUTION Analysts in Mexico said that it is important to wait until the official investigation results are released. Mario Puente, head of health and safety at Mexico's CNA agriculture chamber, said that the trade association worked closely with the authorities to investigate the outbreak, and improve prevention practices. Raul Urteaga is a former Mexican official who founded the consulting group Global Agrotrade Advisors. Urteaga stated that the Mexican sanitary agency SENASICA and the U.S. Department of Agriculture's FDA conduct regular inspections at the border as well as on-site. SENASICA, as well as major U.S. grocery chains and restaurant chains, did not respond immediately to requests for comments. Mexican authorities confirmed last week that Taylor Farms' irrigation was from company-owned, certified wells. The Mexican authorities did not find any health problems among the workers and both water samples and lettuce samples tested negative. According to GCMA consultancy, Mexico exports 550,000 tons of salad each year. Almost all of it is to the U.S. where it accounts for four fifths of imported lettuce. Five states in the central and northern part of Mexico produce more than three quarters of all Mexican lettuce. Central Guanajuato, home to Taylor Farms main operations in Mexico, produces the most lettuce at 28%. GCMA Director Juan Carlos Anaya found it surprising lettuce samples had not yet tested for cyclospora, and that only a few confirmed cases of illness in Mexico. He said, "The situation in Canada is different from that of the United States and we also eat lettuce."
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Oil and Treasury yields fall on Iran-US pause
Oil prices fell and Treasury yields dropped on Monday after the United States paused its two-week long attack against Iran. News of the news sparked hopes of a diplomatic solution to deescalate conflict and allow shipping through the Strait of Hormuz. Investors were cautious as tensions continued to rise. Donald Trump stated on Monday that the United States is having "good discussions" with Iran and that there is a possibility of a settlement to their conflict. However, he added, if negotiations fail, U.S. attacks will resume. Jeff Klingelhofer is the managing director of Aristotle Pacific Capital, based in Newport Beach, California. He said, "What the markets are struggling with is the constant kind of back-and-forth where it appears that Donald Trump has the ability to control the sentiment, despite investors not having an off ramp or an end to war?and durable lower oil prices." Investors were also kept away from the market by central bank interest rate decisions, and earnings of key tech companies due this week. U.S. crude oil fell 8.21%, to $81.98 per barrel. Brent dropped to $87.77 a barrel on the same day, down by 9.31%. The yield on the benchmark U.S. 10 year notes dropped 3.03 basis points from 4.679% to?4.649% at late Friday. The Dow Jones Industrial Average had the best performance of all major U.S. stocks, gaining 262.98 points or 0.51% to 52,210.23. The S&P 500 gained 1.24 points or 0.02% to 7,413.22, while the Nasdaq Composite dropped 43.74 points or 0.17% to 24,932.08. The pan-European STOXX 600 Index rose 0.02% while Europe's FTSEurofirst 300 Index fell 1.11 points or 0.04%. Central banks are expected to remain unchanged when the U.S. Federal Reserve's?two day meeting concludes on Wednesday. However, traders still see a possibility of a rate hike. The Fed's expectations have been thrown into turmoil after recent increases in oil prices rekindled inflation fears. Fed Chairman Kevin Warsh’s preference for less guidance adds to the uncertainty about whether the central banks will raise rates. Fed funds futures traders currently price in 38% odds that a hike will occur on Wednesday, and 83% of an increase occurring by September. In a recent note, Edward Jones Senior Analyst Brian Therien stated that "a hold is most likely to occur. However, a few votes in favor of an increase are possible." The Bank of England is expected to announce its policy on Thursday. This will be followed by the Bank of Japan's announcement on Friday. Both are expected keep rates unchanged while indicating continued caution regarding inflation risks. The dollar fell 0.07% to 163.73 yen. Gold prices rose 0.73% on commodity markets to $4,082.16 per ounce. A WAVE of?Companies Report Earnings Investors will also be watching the earnings of S&P companies, as approximately one-third are due to report their results this week. The results of "Magnificent Seven' members Microsoft, Amazon.com Meta, and Apple are expected to be a major test for the AI industry. The negative cash-flow reports of Alphabet and Tesla from last week added to the concerns about debt-fueled spending by corporations, while Chinese Chipmaker CXMT’s strong stock-market debut signaled an intensifying competition in the U.S. Semiconductor Industry. The week's data highlights include the U.S. second-quarter advance GDP reading. Calendar highlights include the June PCE Price Index, personal income and?consumption?data and weekly jobless claims. Also included are the second-quarter Employment Cost Index, and the Michigan Consumer Sentiment Survey. The data released on Monday revealed that orders for U.S. manufactured capital goods rose strongly in June, while shipments increased by the most since 4-1/2 years. Businesses ramped up spending on artificial inteligence. This suggests the economy maintained an?economic growth rate of about 2% in the second quarter. The Eurozone data schedule includes the flash second-quarter GDP and July consumer confidence figures, as well as the flash inflation and June unemployment numbers. Ifo Institute survey released on Monday revealed that German business morale was higher than expected in the month of July. This was due to significantly higher expectations. Reporting by Karen Brettell, Additional reporting by Sruthi Shakar, Chuck Mikolajczak Johann M Cherian Will Dunham Ragini Mathematics Florence Tan Trixie Yap, Editing by Joe Bavier, Aurora Ellis.
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Gold increases as oil declines due to a pause in US/Iran strikes. Fed rate decision is in focus
Gold prices rose Monday as a pause between hostilities between the United States of America and Iran sent crude oil to a new low. This eased inflation fears ahead of this week's U.S. rate decision. Spot gold rose 0.5% to $4,074.22 an ounce at 1:45 pm EDT (1745 GMT), whereas U.S. Gold Futures for August Delivery settled 0.2% higher, at $4,077.00. The U.S. Dollar?index has weakened by 0.1%, allowing buyers to purchase greenback bullion at a lower price. Bart Melek is global head of commodity strategies at TD Securities. Brent futures dropped over 8%, to a new low in a week as?U.S. Donald Trump said to reporters that "good talks" are taking place with Iran "right away". After two weeks of strikes, the two countries have paused their attacks over the weekend. This has raised hopes of a diplomatic resolution that will de-escalate this conflict and allow shipping in the Strait of Hormuz to resume. Lower energy costs ease inflation fears and reduce bets on higher interest rates for longer. Gold is often seen as a hedge to inflation but higher rates can weigh down on the metal. CME FedWatch data shows that traders see a 62% chance of the policymakers keeping interest rates unchanged. They are, however,?pricing about an 82% chance that the U.S. will raise rates in September. Investors are also awaiting the U.S. The Personal Consumption Spending data for June is due Thursday. This will provide further clues on monetary policy. Data from Hong Kong's Census and Statistics Department revealed that China's net imports of gold via Hong Kong had more than doubled from June to the same month last year, but were down?more? than 5% on the previous months. (Reporting by Noel John in Bengaluru; Editing by Tasim Zahid, Jan Harvey and Joyjeet Das) (Reporting from Noel John, Bengaluru. Editing by Tasimzahid, Jan Harvey and Joyjeet Das.
Whitehaven Coal's output in 2026 is at the top of its guidance range, but costs are at the low end.
Whitehaven Coal, Australia's largest coal producer, said Tuesday that its annual sales and output were near the top end of their guidance range due to the recovery of its Queensland mines. However, the company expects its costs for the full year to be near the lower end of the forecast.
As the Sydney-based coal mining company tries to absorb higher diesel costs linked to Middle?East conflict, it is important to consider cost forecast.
Whitehaven has said that unit costs are expected to be around A$132 ($92.29), towards the low end of their forecast range. This is after they achieved savings in line with its annualised target between A$60 and A$80 million.
The company made A$222 for every ton of thermal coal it sold in the 'fourth quarter,' up from A$189 per ton a year ago, thanks to a stronger Asian demand after the supply of liquefied gas was interrupted.
The managed run-of mine production for the year ending June 30 was 40.3 Mt, up 3% on the previous year and close to the upper end of the 37-41 Mt range. The managed coal sales increased 8%, to 32.7 Mt. This was within the estimates of 29.5 to 33 Mt.
The Visible Alpha consensus estimate was that fourth-quarter production would rise by 1.3%, to 10.7 mt.
Queensland operations including the Blackwater and Daunia Mines, which were purchased from BHP Group for $4.1 billion in early 2024, have recovered from weather disruptions in previous quarters, with production increasing 41% sequentially.
New South Wales' mines including Maules Creek Narrabri, and Gunnedah posted a 1.6% increase in quarterly production year-on-year, but output fell by 8% from the previous quarter due to tougher mining conditions.
Whitehaven shares were down 1.1% at 0058 GMT, following the declines of the energy subindex and the wider market. $1 = 1.4302 Australian Dollars (reporting and editing by Shilpi Major and Subhranshu S Ahu in Bengaluru).
(source: Reuters)