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Stocks reach record highs, and gilt yields soar on uncertainty about the Finance Minister
Global stocks rose on Wednesday, after U.S. labor data revealed a surprising soft reading. Meanwhile, British government bond yields soared amid growing speculation over the future of Britain's finance Minister. ADP's National Employment Report shows that private payrolls fell by 33,000 last month, after a downwardly-revised 29,000 job increase in May. This is well below the 95,000 jobs expected by economists surveyed by. The data is released ahead of the government's payroll report on Thursday, but there is very little correlation between them. On Thursday, we will also see the weekly initial claims for unemployment. The market's expectations of a rate cut in July by the U.S. Federal Reserve increased to 27% following the release, from just under 20% the previous session, according CME's FedWatch Tool. "You throw it into the 'doesn’t look good' section and then look forward to tomorrow, which will arguably be much more significant," said Jim Baird. Chief investment officer at Plante Moran Financial Advisors, Southfield, Michigan. The S&P 500, Nasdaq, and Dow Jones all rose on Wall Street. This was partly due to a rebound in Tesla stock after it dropped by 5.3% Tuesday. Tesla shares rose 4.7% last after the electric carmaker announced its quarterly deliveries. The Dow Jones Industrial Average dropped 56.43 points or 0.13% to 44,438.51, while the S&P 500 climbed 19.17 points or 0.31% to 6,217.23; and the Nasdaq Composite jumped 163.36 points or 0.81% to 20,365.78. The MSCI index of global stocks rose 2.62 points or 0.29% to 920.02, after reaching an intraday high of 920.24. Meanwhile, the pan-European STOXX 600 closed with a 0.18% gain, boosted by renewable energy stocks and luxury stocks. The yields on longer-dated U.S. Treasury notes rose. The benchmark 10-year U.S. note was up 4.9 basis point at 4.298%. British government bond rates surged at one point, jumping almost 23 basis points. This was the highest since October 2022. The jump came after Finance Minister Rachel Reeves, who appeared visibly upset in parliament a day after the Government dramatically scaled back its plans to reduce benefits, spoke out. The yield of the 10-year Government Bond, or gilt was up 16.8 basis point at 4.621%. The pound fell 0.84%, to $1.3628. It had dropped as high as 1.35%. This was the biggest percentage decline since June 17. The dollar index (which measures the greenback versus a basket) rose by 0.19% at 96.82, and was on course to end a nine-day decline streak. On Wednesday, President Donald Trump announced on social media that the U.S. had reached a deal with Vietnam. He said previously that he would not consider extending the deadline to negotiate trade agreements, even though negotiations with Japan, his top trading partner, had failed to progress. However, he still expected to reach a deal with India. Baird said that the announcement of a Vietnam-U.S. Trade Deal "clearly alleviates a piece of the puzzle of uncertainty around trade. Not only because of its direct impact but also as an indication that more is to come in the next week or two, which will all help to relieve what has been causing uncertainty over the past three months." Investors also watched for progress on Trump's massive spending and tax bill, which is expected add $3.3 trillion to national debt and cut taxes. Republicans in the House of Representatives have scheduled a procedural voting on the bill, which could reveal if the party has the support it needs to pass the bill out of Congress. U.S. crude rose 3.09% to $67.38 a barrel while Brent soared to $69.10 a barrel, an increase of 2.98% in one day. This was due to Iran suspending its cooperation with the U.N. Nuclear Watchdog.
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Development bank chiefs insist that climate change and women's empowerment must be given priority.
The heads of the two largest MDBs from Asia and Europe said that they need to focus more on climate action, and empowering women. They are being urged to be bolder and more inclusive. Nadia Calvino and Jin Liqung are the presidents of the European Investment Bank (EIB) and the Asian Infrastructure Investment Bank (AIIB), respectively. They spoke at the United Nations Development Financing Summit, which takes place every decade in Seville. The event has been overshadowed both by criticisms that it showed a lacklustre ambition, and by the United States' absence. They were the largest international donor of aid before Donald Trump took office in the United States at the beginning of this year. Trump also pulled the United States out of U.N. efforts against climate change, and tried to revert policy on inclusivity. This has made many companies and organizations around the world hesitant to champion diversity and sustainability. Jin, AIIB's Jin, welcomed the civil society's call for MDBs do more about climate change as "positive force for greater impact and innovation". He said that the AIIB supports "climate resilient" infrastructures under a broad definition, which includes digital, education, health and health infrastructure. Calvino, of the EIB, said that high-level climate pledges must be translated into concrete investments and projects. He cited as an example a project for climate-related clauses in debt agreements which allows countries vulnerable to disasters to suspend repayments. In the pre-summit agreement, U.N. member states pledged to triple multilateral loan capacity. The U.S. claimed that this crossed one of their red lines, as it interfered in the MDBs independence. Jin suggested that rating agencies use different standards for MDBs than those used by commercial banks or private companies. Calvino said that the current system was working well. The EIB's rating of AAA enabled it to make higher-risk investments, and leverage EU guarantee. The U.S. objected also to the use the word gender in this document, saying that it did not support the "sex-based preference". Calvino, EIB’s first female president, stated that empowering women is "both the right choice and economically smart... no brainer". Jin said that the AIIB was putting a lot of emphasis on female empowerment. He cited a project in Ivory Coast which connected female farmers in isolated villages with main markets for selling products like cashews or coffee beans. (Reporting and editing by Aislinn Laing, Barbara Lewis, and David Latona)
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Oil futures and options traded at record levels during Q2 as investors navigated volatility
The total oil futures lots and options traded on the Intercontinental Exchange reached record highs during the second quarter as U.S. president Donald Trump waged a global trade war, and the geopolitical conflict in the Middle East intensified. Why it's important LSEG data show that there was significant volatility in the second half of the year. Brent crude futures dropped to a low of $60.23 a bar on May 5, and then surged to $78.85 a barrel on June 19. This is the highest level since January. CONTEXT Trump announced sweeping import duties on April 2. China's retaliatory actions stoked fears of a recession and led to a selloff on April 4, 2019. Brent prices fell to their lowest level since February 2021 on May 5, after producer group OPEC+ increased output. Brent reached a six-month peak on June 19, when investors were on edge due to the conflict between Israel and Iran. By the Numbers Investors traded 219,323,730 lots of oil futures, options and forwards from April to June, a record compared to the 181,520,640 lot previous record set in the first quarter of 2025. This new record includes 99,541,065 Brent futures lots and 20,333728 Brent options. The traders also traded 30,056,174 Lots of West Texas Intermediate futures and Options (Cushing), and 3,211,194 Lots of Midland WTI Futures (HOU). KEY QUOTE The analyst at UBS, Giovanni Staunovo said, "I believe hedging activities played a part. When oil prices dropped to $60 per barrel in Brent oil, oil consumers like airlines began to hedge. And when oil prices spiked mid-June oil producing companies decided that they would hedge." Staunovo continued, "At the time, investors were looking to either hold positions that are inflation-conscious (long) or growth-conscious (short) in oil due to the tariffs." (Reporting and editing by Stephanie Kelly, David Gregorio and Georgina McCartney from Houston)
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Brazil will hold an extra oil auction in order to boost revenues amid fiscal uncertainty
A senior energy official announced on Wednesday that Brazil will hold an additional oil sale this year in uncontracted offshore areas of the pre-salt region, following the approval by the Senate of legislation clearing the way for the sales. After Congress overturned the presidential decree that increased financial transaction tax for certain operations, the government is looking to boost revenues to meet fiscal targets this year. This comes after Congress overturned an executive order to increase financial transactions tax. In a post on social media, Pietro Mendes, Secretary for Oil, Natural Gas and Biofuels in the Ministry of Mines and Energy, announced that the state-run oil company PPSA would hold an oil auction this coming year. Mendes is also the chairman of Petrobras, a state-run oil firm. PPSA sells the oil portion that the companies who produce under the sharing contracts of pre-salt oilfields are required to give the Brazilian government. According to government sources, the auction was expected to raise between 15 and 20 billion reais. The lower house had already passed the measure, which now awaits approval by the president. Treasury Secretary Rogerio Ceron indicated that gains from the auction, with the full support of Congress, could be included in government's next semi-monthly report on revenue and expenditure, due July 22. ($1 = 5.4269 reais)
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Q&A: Is Venezuela on the verge of losing its prized foreign asset, Citgo?
At least three consortiums have submitted improved bids at the last minute in an auction of shares of Citgo Petroleum, the parent company of Venezuelan-owned Citgo Petroleum. This could increase the price of the refiner that is the seventh-largest in the United States. The Delaware court officer who oversees the auction will recommend a winner by Wednesday, unless he asks for more time to review the revised bids that were permitted through Tuesday. The auction was organized by the court in response to an eight-year old case Crystallex, a Canadian miner, filed against Venezuela in Delaware. Citgo Holding's parent company, PDV Holding was found liable by the federal court for Venezuela's past debts and expropriations. This allowed over a dozen creditors to seek compensation for nearly $19 billion. After a series of delays, a second round of bidding initiated this year will be completed shortly when a winner has been selected. However, results may be delayed until the evaluation of all improved bids. The final hearing for the results has been set for August 18 The round began in March with a $3.7 billion bid from Red Tree Investments of Contrarian Funds. This included a $2 billion agreement for the payment of holders who had defaulted on Venezuela bonds. In April, rivals began to make their bids. According to court documents and sources, rival bidders included a consortium headed by commodities house Vitol and a subsidiary of Gold Reserve, Rusoro Mining, and conglomerate Koch. Amber Energy, an affiliate of Elliott Investment Management, also considered a bid. However, it is unclear whether it made a revised offer in the "topping period", which ended on June 18, but allowed for revisions to be made up until July 1. Robert Pincus, a court officer who oversees the sale of assets, said last month that the recent resolutions of parallel legal proceedings pursuing the same assets encouraged new bids. What could be the possible loss for Venezuela? Venezuela would lose its largest overseas asset if it fails to retain equity in the refinery and its U.S. parent companies. With a foreign debt of $150 billion, the country has already lost assets in Europe, Asia and elsewhere to creditors. Leonard Stark, a Delaware judge, has allowed parties representing Venezuela the opportunity to make an offer. The boards that supervise the refinery would have to get the backing of politicians from both Caracas as well as Washington. This is a difficult task given the U.S. sanctions against the OPEC nation, and the strained relationship between the two countries. Prior to the sanctions, Citgo's 807,000-barrel-per-day refining network was a primary processor of Venezuela's heavy sour crudes. Citgo's parent company, the Caracas state-run oil firm PDVSA, cut its ties to Citgo in 2019. Venezuela is now struggling to find markets for its oil. The Houston-based refiner turned to other crude sources. Venezuela's opposition has been lobbying Washington and funding legal defenses to keep Citgo for years. Treasury Department must approve the winner of the auction. Treasury Department has protected Citgo in recent years from creditors. Citgo, according to opponents of Venezuelan president Nicolas Maduro, could help the nation's economy recover if democracy was restored. Maduro officials rejected U.S. sanction and called the auction a robbery. Can creditors claim post-auction compensation? Yes. Yes. If they are not satisfied with the results, creditors who rejected the result of the bidding round in the past due to the conditions set by Elliott's affiliate Amber Energy can file objections. The U.S. courts can continue the parallel cases that have so far not made significant progress in enforcing bond-related claims, or proving that PDVSA U.S. subsidiary should be responsible for Venezuela's obligations, a step necessary to pursue Citgo assets. Three of the original 18 creditors cleared by the court have withdrawn due to mounting legal fees and uncertain prospects for recovery. Other participants, such as the owner of artifacts belonging to Venezuelan independence hero Simon Bolivar and a collector of Bolivar-related items, failed to meet all requirements set by the court. All creditors will be compensated Unlikely. Citgo's value was between $11 billion to $13 billion in the Delaware case. The refiner's recent poor performance, which includes a loss that dropped to $305 millions last year, from $2 billion by 2023, may affect its valuation. This suggests that some of the registered creditors who collectively claim $18,9 billion may not be eligible to receive any distributions.
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Source: Glencore talks to UK government about insolvent Lindsey refinery supply
According to a source with knowledge of the situation, commodities trader Glencore has been in discussions with the British Government about the status and future of its contract for supply and offtake with the Lindsey oil refining plant. The 113,000-barrel-per-day refinery was owned by Prax prior to its insolvency which was announced on Monday, alongside the insolvency of Prax's parent group, putting hundreds of jobs at risk and potentially increasing Britain's reliance on fuel imports. Glencore has declined to comment. The government has launched an investigation into the directors of Prax and the circumstances surrounding its insolvency. Three sources familiar with the deal said that Glencore won the tender last year to supply crude to the Lindsey Refinery. Trafigura was replaced by Glencore. Consultancy FTI - the Special Manager hired by the Government to assist the so called Official Receiver of an insolvent refinery - directed questions about the refinery to the British departments for Business and Trade, Energy Security and Net Zero. The official receiver is responsible for dealing with the suppliers of the site. No one from either department has commented on the talks with Glencore, or how long it would take for the refinery to continue operating if a deal is not reached. A spokesperson from the Department for Energy Security and Net Zero referred to a statement made on Monday, which stated that the government will ensure the supply is maintained. (Reporting and editing by Alexandra Hudson, Ahmad Ghaddar added additional reporting).
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TotalEnergies UK assets to be purchased by Prax are still unsold
By America Hernandez PARIS, 2 July - TotalEnergies West Shetland Offshore assets, which it sold to Prax Group in the past year, remain under French oil major ownership. They will therefore not be affected by liquidation proceedings that affect the British company. TotalEnergies EP UK stated that the transaction to sell the West of Shetland Asset to Prax is not yet complete and we are still the operators of the Shetland Gas Plant as well as the related fields. TotalEnergies agreed to transfer employees from TotalEnergies to Prax in exchange for a portfolio mature offshore fields that produce about 7,500 barrels oil equivalents per day. The deal also included exploration licenses and a natural gas plant. State Oil, the parent company of Prax Group, and Prax's Lindsey Refinery in Britain have entered liquidation proceedings. An administrator said that all financial options are being considered. These included the sale of Prax’s upstream and retail businesses in Britain and Europe. The North Sea Transition Authority, the British oil and natural gas regulator (NSTA), declined to comment whether or not the sale of TotalEnergies assets by Prax would proceed in light of the insolvency proceedings. The NSTA referred back to its rules for change of ownership in oil and gas assets. These state that the regulator is concerned about the financial and technological capability of the potential buyer when assessing the transaction.
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Stocks rise after ADP is weak, and gilt yields soar on Finance Minister's worries
Global stock markets were essentially unchanged following U.S. labor market data that showed a surprising weak reading. Meanwhile, British government bond yields soared amid speculation over the future of Britain's finance ministry. ADP's National Employment Report shows that private payrolls fell by 33,000 last month, after a downwardly-revised 29,000 job increase in May. This is well below the 95,000 jobs expected by economists surveyed by. The data is released ahead of the government's payrolls report on Thursday, but there is very little correlation between them. The FedWatch Tool of CME says that after the release of the data, the market expectations for a rate cut in July by the U.S. Federal Reserve increased to just over 27 percent, up from 20,7 percent the previous session. "I see it as a mixed bag. One hand, wages are still high, which is important for the U.S. economic system. If this is not seasonality, it is the beginning of an overall trend for white collar jobs, said Ross Mayfield. Investment strategist at Baird, Louisville, Kentucky. Wall Street saw a modest increase in the S&P 500, Nasdaq, and Dow, thanks in part to a rebound in Tesla, after its stock fell 5.3% on the previous day. Tesla shares rose 4.5% last after the electric carmaker reported its quarterly deliveries. The Dow Jones Industrial Average rose 138.79 or 0.69% to 20,341.01. The S&P 500 gained 13.84 points or 0.22% to 6,211.70, and the Nasdaq Composite increased 138.79 or 0.69% to 6,211.70. Investors were looking for signs of a trade deal ahead of U.S. president Donald Trump's tariff deadline of July 9. The pan-European STOXX 600 rose by 0.09%. The yield on the benchmark U.S. 10 year note rose 4.8 basis points, to 4.297%. However, the yields of the shorter-term notes fell after the ADP report. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve fell by 0.9 basis points, to 3.768%. After Finance Minister Rachel Reeves, who appeared visibly upset in Parliament, had scaled back the government's plans to reduce benefits, yields on British government bonds surged. At one point, they jumped nearly 23 basis points. This was the highest since October 2022. The yield of the 10-year Government Bond, or gilt was up by 11.5 basis points to 4.572%. The sterling fell 1.17%, to $1.3584. This was the biggest percentage decline since April 7. The dollar index (which measures the greenback versus a basket currencies) rose by 0.44% at 97.06, and was on course to end a nine-day streak of declines. Trump announced on social media that the U.S. had struck a deal with Vietnam on Wednesday. He said previously that he would not consider extending the deadline to negotiate trade agreements, despite negotiations with Japan, his top trading partner, failing to progress. However, he still expected to reach a deal with India. Investors are also looking for progress on Trump's tax and spending bill, which will add $3.3 trillion to national debt and cut social safety net programs. The bill is now heading to the House of Representatives. Republican leaders have scheduled a procedural vote at 1300 GMT on the bill. Brent crude rose 0.18% to $67.23 a barrel as Iran halted its cooperation with the U.N. Nuclear Watchdog. A surprise increase in U.S. oil supplies capped gains.
S&P downgrades Woodside's credit rating to 'negative" after LNG investment decision
S&P Global Ratings changed the outlook of Australia's Woodside from "stable" to "negative" after the company made a final decision on investment for $17.5 billion in its Louisiana liquefied gas project.
The rating agency stated that Woodside's decision to move forward with the project, without a substantial sell-down of the offtake exposure, has reduced the headroom for ratings.
The agency has affirmed Woodside's 'BBB+ long-term issuer rating' and 'BBB+ long-term issuer ratings'.
The Australian oil and Gas Company approved an LNG project worth billions of dollars in Louisiana earlier this week. They were confident that the U.S. government would be pro-fossil-fuel and there would be a strong demand.
Woodside now holds a majority of the U.S. Project after selling a 40% stake to U.S. Infrastructure Investor Stonepeak.
S&P stated that Woodside was exposed to market risks of the entire project, compared to its current effective interest of 60% in the project.
Woodside's Chief Executive Officer Meg O'Neill reaffirmed this week that Woodside is seeking a further stake diluting in the LNG Project.
S&P anticipates that Woodside's fund from operations to debt ratio will track at around 50% in the next few years.
The ratings agency stated that future ramp-ups of the Louisiana project will likely reduce cash flow. This means the energy giant has very little capacity to cope with lower oil prices or cost increases at any of their major projects.
(source: Reuters)