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The specter of stagflation clouds Fed's optimism
Kevin Buckland gives us a look at what the future holds for European and global markets. The market is optimistic about monetary policy. Rising equity prices and falling bond values are a good indicator of this. A rate cut next week at the Fed meeting has a decent chance to be a big one. Wall Street closed with new record highs over night, Taiwan's benchmark has reached a new peak and Japan's Nikkei index is moving back to Tuesday's unprecedented level. The unquestionable weakness of labour market indicates that policy easing will be imminent. The question is, however, how much the Fed's rate cut trajectory is complicated by the still-sticky inflation. Markets will receive two crucial days of data, namely PPI today and CPI the following day. The Fed would be forced to take a risky course of action if inflation levels were high. The market currently has 66 basis point of easing priced for the end of the year, with 7% odds on a 50 basis-point cut coming next Wednesday. The Fed is still the most important story on the global markets, but European investors should keep an eye on the geopolitical situation after NATO member Poland shot down for the first time apparent Russian drones it claimed had infringed on its airspace when it launched an attack against western Ukraine. French politics is also a major topic. The deeply unpopular President Emmanuel Macron has named Sebastien lecornu, a 39-year old loyalist, as his fifth Prime Minister in less than two-years, raising the question of just how long either of them can hold on to power. The outcome of ECB’s two-day summit that begins today is now more certain. Economists are almost unanimous in their expectation for rates to remain unchanged. The ECB's two-day meeting that begins today is more certain, with economists almost unanimously expecting rates to remain steady. The following are key developments that may influence the markets on Wednesday. US PPI (August). -Sweden monthly GDP (July) -Norway, Denmark CPI (both August) Italy, Spain, Greece Industrial Output (all July).
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US inflation data and gold rates are in focus
Investors were watching for key inflation reports this week, as well as expectations of an interest rate reduction in the United States this month. As of 0101 GMT spot gold was up 0.3%, at $3,635.329 an ounce. It had hit a record-high of $3,673.95 per ounce on Tuesday. U.S. Gold Futures for December Delivery eased by 0.2% to $3673.70. "Sentiment has been very bullish." Gold prices are being driven by several factors. "The primary factor is U.S. interest rate expectations," Capital.com's financial market analyst Kyle Rodda stated. The near-term outlook is heavily dependent on these inflation data. If the data is a little spicy, rate cuts may be triggered marginally. This could spark a correction in a market that's technically overbought. Watch closely the U.S. producer prices inflation data due at 1230 GMT and the consumer price reading on Thursday for further clues about the Federal Reserve's rate path. The U.S. government reported on Tuesday that the economy probably created 911,000 less jobs than originally estimated in the 12-month period through March. This suggests that the job growth had already slowed before President Donald Trump imposed aggressive import tariffs. The U.S. Nonfarm Payroll Data released last week indicated a weakening of labor market conditions and sealed the case to cut rates at the Fed’s September Policy Meeting. According to CME Group’s FedWatch Tool, markets are pricing in a rate cut of 25 basis points, with a probability of a 50-basis point cut at 6%. Gold prices are up 38% this year after a 27% increase in 2024. This is due to a soft dollar, central bank accumulations, dovish monetary policies and increased global uncertainty. Gold that does not yield is usually a good investment in an environment with low interest rates. Silver spot rose by 0.3%, to $41 an ounce. Palladium remained flat at $1148.57 while platinum gained 0.9%. (Reporting and editing by Sherry Jac-Phillips in Bengaluru, Eileen Soreng and Brijesh Patel from Bengaluru)
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Asia stocks rise, bonds fall when traders look at odds of a bigger Fed cut
Asian stocks followed Wall Street higher Wednesday, while bonds fell. Traders increased their bets on the possibility that the Federal Reserve would cut rates next week by at least one quarter point due to a softening of U.S. labor market conditions. The dollar is also rising, as the U.S. Inflation figures will be released on two days, beginning later Wednesday. These data are crucial for the Fed to make its September 17th decision. After Israel's attack against Hamas leaders in Qatar, crude oil prices remained high. Geopolitical concerns remained at the forefront of investors' thoughts after Poland and NATO scrambled their air defences in order to shoot down drones as a result of a Russian air strike on western Ukraine. The markets also took in stride the court ruling which temporarily prevented President Donald Trump from removing Federal Reserve governor Lisa Cook. This case is likely to be heard by the U.S. Supreme Court. Investors are closely following the unprecedented court battle, as it could undermine the long-held independence of the central bank. However, there has been no immediate reaction on the market. In Asia, Japan’s Nikkei gained 0.3%, South Korea’s KOSPI rose 1.3%, and Taiwan’s equity benchmark reached a new record high of 1.46%. Hong Kong's Hang Seng rose by 0.5% while mainland Chinese blue-chips rose by 0.2%. Overnight, S&P 500 and Nasdaq Composite, as well as Dow Jones Industrial Average, each finished the day with new all-time records. S&P futures were 0.2% higher Wednesday. The CME Group's FedWatch Tool shows that traders see a Fed rate cut next Wednesday as an almost certain thing. They even place 7% odds on such a large half-point drop, according to the tool. Investors were convinced that the Fed could not wait to support the economy any longer after a dismal payroll number was released last week. The final obstacles to this view will be the readings of consumer and producer inflation on Wednesday and/or Thursday. Kyle Rodda is a senior financial market analyst at Capital.com. He said that an upside inflation surprise would cause the probability of rate cuts to be reduced, not just for September but also for future months. According to current risk appetite, the rapid deterioration of U.S. data on the economy, especially jobs, is the reason that markets are pricing such aggressive easing by the Fed. Treasury bonds, a safe-haven investment that has been around for centuries, fell for a second consecutive day on Wednesday. This pushed yields up. After a nearly 3-basis-point increase on Tuesday, the 10-year Treasury yield increased by almost 2 basis points. The equivalent yield on Japanese government bonds rose by 1.5 basis points, to 1.575%. In the last session, the U.S. Dollar held onto gains made on Tuesday. The dollar index (which measures the currency against its six main rivals) was unchanged at 97.78 after beginning Wednesday with a slight increase. The dollar was unchanged at $1.1705 to the euro, and down by 0.06% on 147.33 yen. This Thursday, the European Central Bank will set its policy and it is expected that rates will remain unchanged. A month ago economists were divided on whether the ECB would continue to reduce rates. However, recent data shows that inflation is close to the 2% goal and unemployment has reached a new low. On Friday of next week, the Bank of Japan will announce its latest policy decisions. It is widely expected that they will not raise rates this time. Bloomberg and the BOJ issued contradictory reports Tuesday regarding tone. Bloomberg reported that policymakers were looking at a hike in this year, while Bloomberg said they may delay tightening policy. Investors are also watching politics. They're focusing on Shigeru-Ishiba's successor as Japan's new prime minister and the ability of France's fifth newly appointed prime minister in just two years to stay on. The price of gold edged up by 0.2%, to $3,633 an ounce. This comes after the previous day's record jump to $3,673.95. Brent crude futures increased 0.5%, reaching $66.74 per barrel. U.S. West Texas Intermediate Crude futures climbed 0.6% to $62.99 per barrel. Prices settled at 0.6% higher in the previous session, after Israel claimed it had attacked Hamas leaders in Doha. Qatar's Prime Minister said that this attack threatened to derail talks between Hamas & Israel.
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Five-Well Drilling Campaign on BP’s Agenda for Mediterranean Sea
BP has signed a memorandum of understanding (MoU) with the Egyptian government to evaluate opportunities for a five-well drilling program in the Mediterranean Sea.The program, at water depth ranging from 300 to 1,500 meters, is designed to accelerate the development and production of national gas reserves, with the intent of extending the use of existing production facilities in the West Nile Delta.Drilling operations are expected to start in 2026, with possible tie-back options following evaluation of the drilling campaign and resource potential.The agreement comes as BP plans to increase production to 2.3-2.5 million barrels of oil equivalent a day in 2030 with the capacity to increase production out to 2035. It follows a successful exploration campaign in the first half of 2025 in which bp has made 10 discoveries including two in Egypt, where it completed drilling activity at the Fayoum-5 gas discovery well and El King-2 exploration well, both part of the West Nile Delta development.“Today’s announcement reaffirms our commitment to supporting investment in Egypt’s gas sector. We appreciate the continued engagement and support from H.E. Minister Karim Badawi. “We look forward to applying BP’s technological expertise to build on our recent exploration and development momentum to bring on new gas resources and accelerated production for the country as well as deliver value for our business,” said William Lin, executive vice president for gas and low carbon energy.“We are proud of our longstanding partnership with the Egyptian government. This memorandum represents a strategic step in our investments in Egypt’s energy sector during this decade, enabling us to develop additional gas resources in the West Nile Delta and bring them onstream as quickly as possible to meet the needs of the local market,” added Nader Zaki, regional president for the Middle East and North Africa.
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Asia stocks rise, bonds fall when traders assess the odds of a bigger Fed cut
Asian stocks followed Wall Street higher Wednesday, while bonds fell. Traders increased their bets on the possibility that the Federal Reserve would cut rates next week by at least one quarter point due to a softening of U.S. labor market conditions. The dollar is also rising, as the U.S. Inflation figures will be released on two days, beginning later Wednesday. These are the last data that will inform the Fed’s decision of September 17. Crude oil prices remained high after Israel's attacks on Hamas leaders in Qatar. The Nikkei 225 index in Japan rose 0.3%. South Korea's KOSPI increased by 1.3%. Taiwan's equity benchmark also increased by 1%. Hong Kong's Hang Seng rose by 0.5% while mainland Chinese blue-chips rose by 0.2%. Overnight, S&P 500 and Nasdaq Composite, as well as Dow Jones Industrial Average, each finished the day with new all-time records. S&P futures were 0.2% higher Wednesday. The CME Group's FedWatch Tool shows that traders see a Fed rate cut next Wednesday as an almost certain thing. They even place 7% odds on such a large half-point drop, according to the tool. Investors were convinced that the Fed could not wait to support the economy any longer after a dismal payroll number was released last week. The final obstacles to this view will be the readings of consumer and producer inflation on Wednesday and/or Thursday. Kyle Rodda is a senior financial market analyst at Capital.com. He said that an upside inflation surprise would cause the probability of a rate cut to be reduced, not just for September but also for future months. According to current risk appetite, the rapid deterioration of U.S. data on the economy, especially jobs, is the reason that markets are pricing such aggressive easing by the Fed. Treasury bonds, a safe-haven investment that has been around for centuries, fell for a second consecutive day on Wednesday. This pushed yields up. After a nearly 3-basis-point increase on Tuesday, the 10-year Treasury yield increased by almost 2 basis points. The equivalent yield on Japanese government bonds rose by 1.5 basis points, to 1.575%. In the last session, the U.S. Dollar held onto gains made on Tuesday. The dollar index (which measures the currency versus six rivals) was flat at 97.78 after beginning Wednesday with a slight increase. The dollar was unchanged at $1.1705 to the euro, and 0.06% lower at 147.33yen. This Thursday, the European Central Bank will set its policy and it is expected that rates will remain unchanged. One month ago, economists were divided on whether the ECB would continue to reduce rates. However, recent data shows that inflation is holding near the 2% target, and unemployment has reached a new low. On Friday of next week, the Bank of Japan will announce its latest policy decisions. It is widely expected that they will not raise rates this time. Bloomberg and the BOJ issued contradictory reports Tuesday regarding tone. Bloomberg reported that policymakers were looking at a hike in this year, while Bloomberg said they may delay tightening policy. Investors are also watching politics. They're focusing on Shigeru-Ishiba's successor as Japan's new prime minister and the ability of France's fifth newly appointed prime minister in just two years to stay on. The price of gold edged up by 0.2%, to $3,633 an ounce. This comes after the previous day's record jump to $3,673.95. Brent crude futures increased 0.5%, reaching $66.74 per barrel. U.S. West Texas Intermediate Crude futures increased 0.6% to $62.99 per barrel. Prices settled at 0.6% higher in the previous session, after Israel claimed it had attacked Hamas leaders in Doha. Qatar's Prime Minister said that this attack threatened to derail talks between Hamas & Israel.
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China's inflation figures are weak and iron ore prices have fallen due to profit-taking
The iron ore futures fell on Wednesday due to profit-taking, and lower-than-expected data for inflation in China, the top consumer. However, bets that demand would pick up, along with a resumption of production among mills, helped limit losses. As of 0320 GMT, the most-traded contract for January iron ore on China's Dalian Commodity Exchange slipped 0.06% down to 802.5 Yuan ($112.61) per metric ton. As of 0310 GMT, the benchmark October iron ore traded on Singapore Exchange was down by 0.56% to $106.75 per ton. Steven Yu, senior analyst at Mysteel, explained that traders have been liquidating some long positions in order to cash in on profits. This has led to a softerening of prices. It's not easy to predict the direction of the market and prices were largely driven by expectations. Therefore, it is normal to see a downward correction after a price rally. China's consumer price index in August was down 0.4% compared to a year ago, which missed the poll prediction of a dip of 0.2%, and weighed on sentiment. The Brazilian miner Vale announced on Tuesday that the fire at its maritime terminal Ponta da Madeira, which had damaged an auxiliary tower, was put out. The fire had no impact on the miner's schedule for iron ore shipment nor the volume of steelmaking material that it expected to ship. Ore demand is expected to increase after Chinese steelmakers resume production following the military parade in Beijing. This will limit price losses. Coke and other steelmaking materials, such as coking coal, fell by 2.11% and 1.111% respectively. The Shanghai Futures Exchange has seen a decline in most steel benchmarks. Rebar fell 0.67%, while hot-rolled coil fell 0.39%. Wire rod also lost 0.15%, and stainless steel remained flat. ($1 = 7.1261 Chinese Yuan) (Reporting and editing by Amy Lv, Lewis Jackson)
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Reports of CATL restarting a China mine have dragged lithium miners around the world
Shares in lithium mining companies around the globe fell after a report by China's state-run media said that Contemporary Amperex Technology, or CATL, is likely to resume production soon at a mine of lithium in Yichun in Jiangxi Province in south China. The prices of futures for lithium carbonate in China dropped more than 7% to a more than month-low on Wednesday. The potential reopening of the massive mine adds a fresh blow for the sector, which has been struggling with a glut following weaker-than-anticipated growth in demand for electric vehicles. Securities Times' report about the restart of production at CATL’s lithium mine was released during premarket trade in the U.S. Tuesday. This sent U.S. listed shares of lithium mining companies lower due to easing supply worries. On Tuesday, shares of Albemarle Corp., the world's biggest producer of lithium-ion batteries, and U.S. listed Sigma Lithium Corp. ended lower by 11.5% and 6.9%, respectively. In Sydney, Pilbara Minerals lost as much 16.7% - the highest among Australia's listed lithium miners - while IGO and Liontown Resources both shed as much 12.7% and 15%, respectively. As of 0126 GMT, the lithium miners also weighed heavily on the S&P/ASX 200 index benchmark, which was mostly flat. Shares of Tianqi and Ganfeng, both listed in China, opened at a loss of about 5%. CATL suspended operations at Jianxiawo Lithium Mine following the expiration of a license on August 9. This led to an increase in the prices of lithium futures and lithium mining companies' shares. (Reporting and editing by Sumana Aich and Rashmi Nandy in Bengaluru)
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Elliott reports that it has taken a stake in Japan's Kansai electric
The Financial Times reported on Wednesday that activist investor Elliott Management is now one of the three largest shareholders in Kansai Electric Power, with a stake between 4% and 5 %, according to people familiar with the situation. Kansai's shares rose 6% after the report. According to the report, Elliott has urged Kansai, a major nuclear operator, to increase dividends, and buy back shares, by selling non-core assets worth 150 billion yen per year. The FT reported that Elliott had identified non-core assets worth over 2 trillion yen. These include a stake in a building firm and property worth more than 1 billion yen. Kansai Electronic declined to comment about individual shareholders, but stated "we remain committed" to maintaining careful communications with our shareholders. Elliott did not respond immediately to a comment request. The Tokyo Stock Exchange and regulators are putting pressure on Japanese companies to increase shareholder value and returns, which is driving interest from foreign investors in the market. Elliott has expanded its investment activities in Japan, targeting companies such as Tokyo Gas and Dai Nippon Printing. Kansai Electric, Japan's largest nuclear power company by the number of reactors it operates, is planning to build a reactor in Fukui Prefecture in western Japan. ($1 = 147.4700 Japanese yen) Reporting by Rishabh Jaisewal in Bengaluru, Anton Bridge and Yuka Obaashi in Tokyo and editing by Himani Sarkar
Unknown trust links India's leading services with Modi's election war chest
Behind the doors of a. little, nondescript workplace in the heart of New Delhi lies the. head office of an electoral trust run by simply two guys that is. the largestknown donor to India's judgment Bharatiya Janata Celebration. ( BJP), according to a review of public records. The Prudent Electoral Trust has raised $272 million because its. development in 2013, funnelling roughly 75% of that to Prime. Minister Narendra Modi's party. The trust's contributions to the BJP. overall 10 times as much as the $20.6 million it issued to the. opposition Congress party, the records reveal.
The previous Congress-led federal government introduced electoral. trusts in 2013 to permit tax-exempt contribution to celebrations. It stated the mechanism would make campaign financing more. transparent by decreasing money contributions, which are more difficult to. trace. However some election specialists say the trusts contribute to opacity. around the financing of political celebrations in India, where this. year's general election-- due to be called within weeks-- is. anticipated to return Modi to power for a rare 3rd term, surveys. predict.
While Prudent does not disclose how contributions made by. private corporate donors are distributed, used public. records from 2018 to 2023 to track flows from some of India's. largest business.
Eight of India's most significant company groups contributed at least. $ 50 million in total between 2019 and 2023 to the trust, which. then issued cheques for corresponding amounts to the BJP,. according to the analysis.
Four companies whose transactions were determined . - steel huge ArcelorMittal Nippon Steel, telco Bharti. Airtel, facilities designer GMR and energy giant. Essar - have actually not given cash to the party straight and do not. appear on its donors' list.
GMR and Bharti Airtel said in reaction to concerns. that Prudent identifies how their contributions are distributed.
Prudent chooses as per their internal standards, which we. are uninformed of, said a GMR representative. He added that the business. does not like to align with any political party.
Bharti Airtel, which developed Prudent before transferring. control to independent auditors Mukul Goyal and Venkatachalam. Ganesh in 2014, stated it has no impact on the choices,. instructions and mode of disbursal of funds.
Spokespeople for the other groups did not react to calls,. text and e-mails.
Goyal and Ganesh did not respond to concerns sent out via email. and post. When asked on a brief call about how Prudent. functioned, Goyal said: That is something we do not discuss.
Sensible - the largest of India's 18 electoral trusts - is. legally required to state how much it has actually gathered from each. donor and the overall quantities disbursed to each celebration.
But it is the just one amongst India's four biggest electoral. trusts to accept contributions from more than one business. group.
Trusts supply one layer of separation in between companies and. parties, stated Milan Vaishnav, a specialist on Indian campaign. finance at the Carnegie Endowment for International Peace, a. Washington-based think-tank.
Political financing in India is extensively seen as dirty, with. most political contributions in India undisclosed, Vaishnav added. BJP said in its latest public disclosure in March 2023 that its. political war chest - funds it had offered consisting of cash. reserves and possessions - was valued at 70.4 billion rupees ($ 850. million). That offers it a colossal financial advantage over. Congress, which had 7.75 billion rupees in funds.
BJP spokespeople did not react to repeated requests for. remark for this story.
The records show that Prudent was also the largest-known. donor to the Congress celebration in the years to March 2023.
LAYER OF SEPARATION
India's Supreme Court stated in a February project finance. ruling that business contributions are purely service. deals made with the intent of securing benefits in. return.
was not able to develop if political parties know. the identities of donors that give through trusts that get. contributions from several groups.
MV Rajeev Gowda, head of research for Congress, told . that electoral trusts are a semi fig-leaf and that he believed. parties understood the donors' identities. Gowda, who doesn't manage. the celebration's financial resources, didn't supply evidence.
BJP's next largest recognized donor is Tata Group's Progressive. Electoral Trust, which has offered the celebration 3.6 billion rupees. collected from the salt-to-airline conglomerate's companies. Progressive is also Congress's next largest donor, having actually offered. it 655 million rupees.
Progressive's by-laws need it to distribute funds. proportionate to the variety of seats held by each party in. parliament. Sensible has no similar limitations and '. analysis of its contributions found no such pattern.
NEAR-INSTANT TRANSFERS
Trusts are enabled to retain an optimum of 300,000 rupees for. annual business expenses. Remaining funds need to be disbursed in. the fiscal year they were received.
In its analysis of contribution reports filed by Prudent to. electoral authorities, identified 18 transactions. in between 2019 and 2022 in which the 8 corporate groups made. big contributions to the trust. Within days, Sensible released. cheques for the very same total up to BJP.
Before the 18 contributions, which are not extensive of all. the contributions made by the groups to Sensible, the trust did not. have enough funds for the payments to BJP.
Business tied to billionaire L.N. Mittal's ArcelorMittal. group were among Prudent's many respected donors.
On July 12, 2021, for example, ArcelorMittal Design and. Engineering Centre Private Limited provided Sensible a cheque for 500. million rupees ($ 6.03 million). The next day, Sensible issued a. cheque to BJP for the very same amount.
ArcelorMittal Nippon Steel India also released 200 million. rupees to Prudent on Nov. 1, 2021, and 500 million rupees on. Nov. 16, 2022. The particular amounts were sent to BJP on Nov. 5,. 2021, and Nov. 17, 2022.
A representative for ArcelorMittal did not react to requests. for remark.
Bharti Airtel, meanwhile, issued 250 million rupees to. Sensible on Jan. 13, 2022 and 150 million rupees on March 25,. 2021. The trust sent out cheques to BJP for those amounts on. Jan. 14, 2023 and March 25, 2021.
And 3 companies in the RP-Sanjiv Goenka group - Haldia. Energy India, Phillips Carbon Black and Crescent Power - cut. cheques for 250 million rupees, 200 million rupees and 50. million rupees on March 15, March 16, and March 19, 2021. respectively. On Mar. 17, BJP received a 450-million-rupee. cheque from Prudent; a 50-million-rupee cheque followed on March. 20.
The RPSG group did not respond to ask for comment.
Contributions from Serum Institute and companies in GMR Group,. DLF Ltd and Essar Group moved to BJP instantly after. Sensible received them.
was unable to identify a similar pattern of funds. being sent out to the trust and transferred to Congress right away. afterwards.
However, found comparable patterns involving two. local parties. Megha Engineering and Infrastructure. transferred 750 million rupees to Prudent across 3. transactions on July 5 and July 6, 2022. The trust issued a. 750-million-rupee cheque on July 7 to Bharat Rashtra Samithi, a. centrist celebration in Telangana state, where Megha group is. headquartered.
And residential or commercial property developers Avinash Bhosale Group, based in the. western Maharashtra state, provided 50 million rupees to Prudent on. Nov. 27, 2020. The trust provided a cheque for that total up to the. Maharashtra Pradesh Nationalist Congress Party, which is. independent of the nationwide Congress celebration, on Nov. 30. The corporate groups did not instantly return ask for. remark. BRS's general secretary said he was not aware of. specifics about the contributions, while a senior NCP official said. that the party had just recently divided and every record will not be. available with us.
REASON FOR CONCERN?
Public records and party reports show BJP's war chest has. swelled given that Modi ended up being prime minister in 2014, from 7.8. billion rupees ($ 94.09 million) in March 2014 to 70.4 billion. rupees in March 2023. Congress' funds increased from 5.38. billion rupees to 7.75 billion rupees in the very same time period. The funding gap between the BJP and Congress is a reason for. concern, stated Jagdeep Chhokar of Association of Democratic. Reforms, a Delhi-based civil society group that was the primary. petitioner behind the electoral bonds difficulty in the Supreme. Court.
Level playing field is an important part of democracy, he. stated.
Some BJP authorities have actually said in the past that the large sums. it has raised on its books are an example of its transparency.
BJP has actually been the significant beneficiary of electoral bonds, a. system that permitted donors to offer unrestricted total up to. parties without public disclosure.
It got some 65.66 billion rupees of the 120.1 billion. rupees worth of such bonds sold between their January 2018. introduction and March 2023. Such bonds made up more than half. the contributions gotten by the BJP in all but one fiscal year. given that their introduction.
The Supreme Court called the system unconstitutional in. February and purchased the government-owned State Bank of India,. which issued the bonds, to launch purchasers' information. Specifics. are set for release by March 15.
(source: Reuters)