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Oil rises as US-Iran tensions increase, causing gold to fall to an 11-week-low
On Wednesday, gold?fell?to an 11-week low, as oil prices?rose?on renewed hostilities between Iran and the U.S., fueling concerns about inflation. Gold spot was down 1.7% to $4,191.84 an ounce at 0747 GMT after reaching its lowest level since 23 March. U.S. Gold Futures for August Delivery fell?1.6%, to $4,215.60. Ilya Spivak is the head of global macro at Tastylive. He said, "We are seeing a readjustment in what central banks will do globally, and that there has been a major shift towards hawkishness." After President Donald Trump claimed that Iran had?shot down a U.S. Apache helo in the Strait of?Hormuz, the United States launched attacks against Iran on Tuesday. Iran's Revolutionary Guards claimed that they retaliated on Wednesday with attacks against an American base in Jordan as well as 21 other targets within the Gulf. The rise in oil prices has led to expectations of higher interest rates for longer. Gold is often seen as a hedge to inflation. However, rising rates can weigh down on this metal. According to the CME FedWatch tool, traders are now pricing in more than 70% of an increase in U.S. interest rates by December. The markets are waiting for key U.S. reports on inflation?this coming week. These include the Consumer Price Index (CPI) data of May, which will be released later that day, and the Producer Price Index, due out Thursday. This is to gauge the Federal Reserve’s monetary policies. Spivak stated that if we are able to 'break the $4.100 level then I believe the path of resistance for gold fundamentally changes, and we may be starting to?look at $3.500 as the next level towards the end of the year. Silver spot fell by 1.3%, to $64.54 an ounce. Platinum fell 3%, to $1675.25, while palladium dropped 0.7%, to $1213.47. (Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu, Sonia Cheema and Harikrishnan Nair)
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Copper prices fall as macro-concerns outweigh US Tariff Fears
Copper prices fell on Wednesday as the volatility of the Middle East conflict and macroeconomic worries overshadowed any price support that could be provided by potential U.S. Tariffs. Benchmark three-month Copper on the London Metal Exchange declined 0.32% as of 0700 GMT to $13,572 per metric tonne. The Shanghai Futures Exchange's most traded copper contract fell 0.29%, to 104110 yuan (15,366.79) per ton. Oil reversed gains and fell 0.1% even after U.S.-Iran exchanged some of their biggest "strikes" since they agreed on a ceasefire agreement in April. The war has pushed up energy prices and stressed manufacturing, which is a major sector for copper demand. Official data released Wednesday revealed that producer prices in?China rose for the third consecutive month in May to their highest level since 2022. This was due to a combination of?rising commodities prices and improved demand' in certain industries. The U.S. will release its May inflation data later on Wednesday. This could influence the Federal Reserve’s policy decisions. The dollar rose after better-than-expected U.S. job data were released last Friday, and the possibility of a rate hike this year increased. The demand for industrial metals that are dependent on growth is generally affected by higher interest rates. Prices were supported by a?decision about U.S. Copper Tariffs expected in the second half of the year. The U.S. is considering a 15% tariff on copper imports starting in 2027. This could be followed by 30% from 2028. Aluminium lost 1.03% among other LME metals. Zinc lost 0.7%. Lead lost?0.58%. Nickel lost 0.58%. Tin lost 0.98%. Other SHFE metals, such as aluminium, zinc, and lead, have also fallen. Nickel has dropped by 1.72%, while tin is down by 0.92%.
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Taiwan uses battle-tested missiles for a'shoot and scoot" anti-invasion exercise
Taiwan's military fired its mobile HIMARS missile system on Wednesday, which is used by Ukraine. The aim was to simulate an invasion of Chinese forces and demonstrate its ability to "shoot and run" while avoiding counter-attacks. China, which considers a 'democratically-governed Taiwan' as its own territory has never renounced using force to take the island under control. Its warplanes, warships, and other military assets operate daily on the island. Last year, Taiwan tested its Lockheed Martin High Mobility Artillery Rocket Systems (HIMARS) off its east coast. The precision weapon was fired for the first time on Wednesday in central Taiwan, Taichung. The drill was designed to show the HIMARS's mobility and its ability to "shoot and scoot", which is to withdraw after firing in order to avoid being tracked by enemy radar, thus "greatly increasing battlefield survivability". Ko Ming-pin, the company commander, said that "our HIMARS demonstrated solid combat abilities of the unit and completed this 'training' successfully." HIMARS is one of Ukraine's most important strike systems. It has been used many times in the war against Russia. In the event of an invasion, the Chinese military is most likely to attempt to land on the beaches and mudflats on Taiwan's west coastline, which face China directly across the Taiwan Strait. Taiwan's military modernizes to be able to fight an asymmetrical war with mobile weapons like the HIMARS that still have a punch. This will turn the island into a 'porcupine' that is?harder to attack - and can survive a Chinese invasion. HIMARS has a range of approximately 300 km (190 mi) and could target coastal targets on the other side the Taiwan Strait in the province of Fujian, located in the south-east of China. The weapon will be combined with Taiwan's own Thunderbolt-2000 launchers to allow Chinese forces to be targeted when they leave port or attempt to land on Taiwan's coastline. On the first day of drill, Tuesday, Thunderbolts have been fired. Taiwan's government has rejected China's claims of sovereignty, saying that only its people can determine the future of their island. (Reporting and writing by Angie Teo, David Lague; editing by Christopher Cushing).
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Pennon UK returns to profit in annual report; CEO warns about operational work ahead
The British water utility Pennon Group reported a profit on Wednesday. However, its new CEO warned that operational discipline was needed to improve after extreme weather conditions and rising performance targets led to regulatory penalties. South West Water's?owner? posted an adjusted profit of PS135.1 (US$180.95) million for the year ending March 31. This is after a PS35.1 loss in the previous year. Regulated water revenues increased by around 25% on higher tariffs and consumption. Below are some details. * Chief Executive Keith Haslett stated that "Improving the operational discipline and capital delivery will be key to meeting our commitments." * A net operational penalty of approximately PS42 million was a result of exceptional storms, sustained rain and stepped up?performance targets? and penalty rates at the beginning of the new 5-year regulatory cycle. Pennon's financial performance is expected to continue improving as revenues increase and the company continues its focus on cost control. * The company has forecasted higher revenues in 2026/27, and said it expects the core profit to increase by 5-10% per year. * "We're well-positioned for anticipated changes in the water sector, and are ready to support the government's Transition Plan," said the company. It added that an update on the strategic plan would be released before the end of September. *?The reported year saw capital expenditures of PS643.6m, with PS588.5m in the water business, part of an investment programme of PS3.2bn, which runs until?2030. * Pennon’s revenue for 2025/2026?also increased to PS1.29billion, up from PS1.05billion a year earlier.
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Japan's Nikkei falls as Gulf tensions cause a shift away from high-flying technology stocks
Japan's Nikkei?average fell on Wednesday, as investors shifted away from?highly-priced technology stocks that are sensitive to energy prices due to renewed Middle?East tensions. The benchmark?Nikkei?225 Index fell 1.89%, closing at 64,179.27. This is a reversal of the 2.1% gain in the previous session. The Topix index fell 1.25%, to 3,847.60. The United States launched attacks against?Iran in retaliation of the downing a military 'helicopter on Tuesday, which deepened doubts about a possible peace deal. The 'Gulf Crisis' caused Japanese wholesale inflation rates to rise at the fastest rate in three years, pushing up domestic bond yields. "Declines are ?centred on AI- and semiconductor-related shares, as heightened tensions in the Middle East and upward pressure on domestic interest rates prompted investors to focus more on relative valuations," said Wataru Akiyama, an equities strategist at Nomura ?Securities. The Topix's fall is therefore relatively small compared to the (tech-heavy Nikkei). The Nikkei Index had 99 movers in its favor compared to 126 decliners. All?technical stocks were the biggest losers, led by Taiyo Yuden with a 12.9% drop, Furukawa Electric at 11.7% and Sumitomo Electric down 11.7%. Nintendo stood out as a?decliner, with a drop of 6.76% following the video game giant’s disappointing presentation of its upcoming titles. Tokyo Disneyland operator Oriental Land was up 4.3%, followed by Screen Holdings, which rose 4.2%. Reporting by Rocky Swift, Tokyo; editing by Harikrishnan Nair
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Indian gold prices fall below levels before the duty hike as overseas prices drop
Indian gold prices fell nearly 2% on Wednesday, to their lowest level since early May. They are now below the levels before duty hikes. Dealers said that the price correction may lead to an increase in imports and increase gold demand. On Wednesday, domestic gold futures dropped 1.93% to 149.500 rupees for 10 grams. This is their lowest level since May 5. India raised its import tariffs on gold and sliver to 15% last month from 6% as part of an effort to reduce overseas purchases and ease pressure on foreign exchange reserves. The demand for gold jewellery has been sluggish?in the last few weeks. "The correction in prices may encourage buyers to come back," said a Mumbai bullion dealer at a private bank. India's soaring gray market margins allow smugglers of the precious metal to "undercut" banks and refiners, according to industry officials and gold dealers. (Reporting and editing by Janane Vekatraman; Reporting by Rajendra J. Jadhav)
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As US-Iran hostilities resume, oil prices rise and gold drops
Gold dropped?to an?11-week low on Wednesday as oil prices rose?on renewed hostilities?between the U.S. Spot gold fell 1.3% to $4,206.08 an ounce at 0558 GMT after reaching its lowest level since 23 March. U.S. Gold Futures for August Delivery fell 1.4% to $4,228. Ilya Spivak is the head of global macro at Tastylive. He said, "We are seeing a readjustment in what central banks will do globally, and that there has been a major shift towards hawkishness." After President Donald Trump claimed that Iran had shot down an Apache helicopter of the United States in the Strait of Hormuz, Washington launched airstrikes against Iran on Tuesday. Iran's Revolutionary Guards claimed they had retaliated with attacks on a U.S. military base in Jordan as well as 21 other targets within the Gulf region. Oil prices rose 1% on Wednesday, confirming expectations that interest rates will remain high for longer. Gold is often seen as a hedge to inflation. However, higher interest rates can weigh down on this metal. According to the CME FedWatch tool, traders are pricing in more than 70% of a U.S. interest rate hike by December. The markets are waiting for key U.S. reports on inflation this week, including the Consumer Price Index (CPI) data in the afternoon and the Producer Price Index (PPI) reading on Thursday to gauge the Federal Reserve’s monetary policies. Spivak stated that "if we are able to break the $4,100 barrier, the resistance path for gold will fundamentally change, and I believe we may be looking at $3,500 by the end of the year." Spot silver dropped 1.2% to $64.59 an ounce. Platinum fell 3% to $1675.50 and palladium was down 1% at $1,209.36. (Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu, Sonia Cheema and Harikrishnan Nair)
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Mike Dolan: The boom in stock-pay increases the US economy's drumbeat
Stock market gains are not the real economy but they offer more than just a warm fuzzy feeling for many families. Stock-based compensation for workers may be a factor that helps bind them'more closely' The U.S. economy has remained stable despite a turbulent post-pandemic period of high inflation, rising interest rates and political and trade uncertainty. Many theories have been put forward, ranging from robust corporate and household finances to tax "cuts" and a three-year old AI investment boom. One of the most popular is that the stock market's resilience has boosted the so-called "wealth effect" and kept the consumption on track. The direct impact on compensation of workers of the rising stock price is worth considering, regardless of the merits. Morgan Stanley released a report this week that quantified some of the impacts of stock-based compensation. SBC has also risen to record levels, up 9% per year to reach a quarter of a trillion dollar through the last year. It said that "the technology sector was the largest issuer of SBC (but) practically every sector increased their usage of SBC during the past year." The report revealed that, over the next 15 years, technology firms will be the largest users of stock-based compensation, with SBC increasing across retail, electronic and tech sectors. SBC growth varies from 8% for manufacturing to 28% for utilities. Information technology and communication remain the focus of the awards, with the largest concentration. The 25% increase in expenses last year was equivalent to over $170 billion, or 3.9% of the combined sector revenue. The aggregate picture is consistent with the anecdotal reports of astronomical tech compensation packages. It may even be understated, given some of those eye-popping tales. SBC will continue to grow as a result of the IPOs that are expected in this year's AI sector. Critics argue that SBC is concentrated in the hands of the richest people and that focusing on this issue only amplifies the fears of an expanding income gap and a "K"-shaped economy, as tech stocks soar to new heights. Although broad economic indicators such as retail sales and GDP may simply register SBC linked income as a part of the mix, they are increasingly registering it as a growing heat. Consumer spending accounts for almost 70% of the GDP, and it is dominated by the top 20% of income earners in America. 'HUMAN CAPITALISTS' SBC exploded in popularity when it became an expense for tax and accounting purposes, 20 years ago. SBC accounts for 10% of total compensation but is on the rise. In the tech industry, this share can reach 30%. Wall Street's fortunes are becoming more closely tied to Main Street. At least, from the perspective of a helicopter. In recent years, many studies have linked the increase in SBC with what they see as an enigmatic and persistent decline of labor's share in national income. The 2021 paper by Andrea Eisfeldt,?MindyXiaolan, and Fed board economist Antonio Falato traced the increase in equity-based compensation since the 1980s. It found that this represented 36% of the total compensation for high-skilled workers in U.S. Manufacturing. The paper concluded that equity-based compensation is not included in macroeconomic models for labor's share, which leads to mismeasurement. SBC in manufacturing almost eliminates the decline of the high-skilled share of labor and reduces it by one-third. They wrote: "The growing and widespread use of equity-based pay has transformed high-skilled workers from a simple labor input into a class called 'human capitalists.'" Since then, those findings have become even more relevant. Stock market?doesn't capture the complexity, diversification and difficulty of real economy. Nor does focusing only on its richest beneficiaries solve those underlying issues. The stock market has become an increasingly important part of the economy. Not only for companies listed on the stock exchange, but also for employees and households who are paid in equity. Stock prices may seem to be thriving on the economic fundamentals that Wall Street is based on, but you should always be cautious when they go into reverse. The opinions expressed are those of Mike Dolan a columnist at. This column is great! Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
US lukewarm on G7 Russian diamond restriction after market reaction
The United States is reviewing the strictest components of a ban on Russian diamonds from the Group of 7 significant democracies, after opposition from African countries, Indian gem polishers and New York jewellers, seven sources stated.
The sanctions package, concurred in December and consisting of a. restriction across the European Union, represents one of the industry's. biggest shakeups in decades.
2 of the sources familiar with the negotiations said the. Americans had actually disconnected from G7 working groups on the. stringent controls, with one explaining them as there but not. engaging.
The U.S. State Department declined to comment.
A senior Biden administration authorities stated Washington had. not altered its position which the United States would keep. working with the G7.
We will wish to ensure that we strike the best balance. between harming Russia and making certain that whatever is. implementable, stated the official, who spoke on condition of. anonymity.
The G7 sanctions intend to strike another stream of income for. the Kremlin's war effort in Ukraine, even though at around $3.5. billion, according to Russian state-run miner Alrosa's. 2023 outcomes, diamonds represent a small fraction of the profits. Moscow earns from oil and gas.
Since March, importers to G7 countries need to self-certify. that diamonds do not stem from Russia, the world's leading. manufacturer of rough diamonds. Sanctions were troubled direct. imports of Russian gems in January.
From September, the EU ban will require diamonds of 0.5. carats and above to go through Antwerp, a centuries-old. diamond center in Belgium, for traceability certification utilizing. blockchain - the digital journal utilized by cryptocurrencies.
Sources stated G7 powers had agreed that Antwerp would be the. rational very first center, with others to be added later.
But 3 of the sources stated Washington had actually cooled on. imposing traceability which conversations on executing. tracing had stalled.
The Biden administration authorities said the dedication to. implementing a traceability system by Sept. 1 used to the. European Union, not the United States, citing the language in a. G7 leaders' statement in December.
We need to do this in such a way that takes into account. concerns from African partners and African manufacturers, takes into. account Indian and UAE partners ... and makes certain we can also. make it workable for U.S. market, said the official.
Is there a traceability system that pleases all of. that? We're still engaged, we haven't ignored the. concept ... on the other hand, we could not sign up to definitely. having this in location by Sept. 1st.
The presidents of Angola, Botswana and Namibia composed to G7. leaders in February to state that a pre-determined entry point for. the G7 market would be unjust, strike flexibilities, and hurt. profits. The 3 countries represent 30% of diamond output.
Italy, which holds the presidency of the G7, decreased to. comment on the U.S. position.
Any softening of the phased restriction threats leaving loopholes and. permitting Russian diamonds into boutiques in New York, London and. Tokyo - a threat highlighted when Belgian authorities seized. thought Russian stones worth millions of dollars in February.
Supporters of the sanctions say a traceability mechanism is. required to provide a robust ban and that without the full. engagement of the United States, which accounts for 50% of the. G7 diamond jewellery market, it can not be effective. They blamed. a few of the industry pushback on worries of higher market. transparency.
A Belgian authorities acquainted with the negotiations stated it. was critical to preserve the determination to keep loopholes. strongly closed.
CERTIFYING AT SOURCE
A previous U.S. ban on Russian diamonds omitted stones. polished in other places, enabling diamonds processed in India and. traded in centers like Dubai to reach the U.S. market.
The G7 restriction followed months of wrangling in between Western. capitals.
Diamond miners such as De Beers, a system of Anglo American. , Indian cutters and jewellery sellers have highly. lobbied versus the ban. They say the procedures are poorly. developed, will increase administration and inflate costs.
De Beers told it supported a ban but that. diamond-producing nations should accredit origin at the source.
The opportunities for, and possibility, of Russian diamonds. penetrating the legitimate supply chain remain in fact higher when. you move further away from the source, the company stated.
Virginia Drosos, president of Signet, the. world's largest merchant of diamond jewellery, urged the U.S. federal government in a letter seen to stand versus ... the. G7 Belgian service.
Belgium has actually presented a pilot tracing plan based in. Antwerp in which some 20 diamond buyers are participating, amongst. them French luxury groups LVMH and Kering as. well as Switzerland's Richemont, one of the sources. stated.
An LVMH spokesperson said its Tiffany & & Co brand was. getting involved. Kering and Richemont did not comment.
Belgian Prime Minister Alexander De Croo informed in. March that he was open to extra centers being developed for. certification if they matched Antwerp's requirements, which. concerns were unavoidable.
If you execute something that is altering the video game,
(source: Reuters)