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After Russia-Ukraine meeting, defence stocks rise in the STOXX 600 index of Europe
European shares recovered from an early drop to close higher Thursday. Industrial stocks got the biggest boost while corporate earnings were in the spotlight. The STOXX 600 index for the continent was up by 0.6%. The majority of major regional indexes rose, with Germany up 0.7%. Russian President Vladimir Putin snubbed challenge To meet face-toface with Ukrainian president Volodymyr Zelenskiy in Turkey is to deal a serious blow to the prospects of a breakthrough for peace. Hensoldt, Rheinmetall and Leonardo all saw gains of 4% or more. The European aerospace and defence index rose 2.3%. Chris Beauchamp is the chief market analyst for IG. In the meantime, data from the U.S. revealed a surprise fall A slowdown in the growth of producer prices and in Retail sales growth. Beauchamp stated that there was a reasonable amount of anxiety to monitor the economy and check for signs of inflation. "The data were benign... that's the most important thing" (in this uncertain climate). After their quarterly reports, France's Engie and London's National Grid and United Utilities rose, and lifted utilities by 1.9%. The biggest gains were in the telecommunications sector, boosted by a 2.8% rise in Deutsche Telekom following its first-quarter results. Profit from the newest technology A little bit above expectations The benchmark STOXX600 index was higher in most sectors, but a drop in commodity prices hurt companies with a resource focus. Oil prices fell more than 3% in anticipation of a possible nuclear agreement between the United States and Iran that could increase supply. The major oil companies were the worst hit, with BP shares and Shell's Amsterdam-listed shares dropping by 3.3% and 1.55% respectively. Energy shares fell 0.9%, underperforming peers. The prices of industrial metals have also fallen, resulting in heavy losses for basic resources. The mood was positive in the markets this week as they welcomed the U.S. China trade truce, and U.S. president Donald Trump's Middle East investment deals. Trump is yet to announce any deals with the European Union. A flash estimate shows that the gross domestic product grew slightly less than expected on an annual basis. However, Britain's economy did better than expected in March compared to February. Among the single stocks, thyssenkrupp fell 12.5%, to the bottom of STOXX 600 after the group that makes everything from submarines to car parts posted a drop in its operating profit for the second quarter. Analysts attribute the 1% drop in Siemens shares to a weaker than expected free cash flow despite Siemens' beating expectations for its second-quarter results. Reporting by Nikhil Sharma, Purvi Agarwal and Varun H K; Editing by Sherry J. Phillips, Varun HK and Ed Osmond
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NOPA's April US soy crushing at 190.226 million bushels tops all trade estimates
According to the National Oilseed Processors Association's (NOPA) latest data, the U.S. soya bean crush decreased in April but was still higher than most estimates. It also marked the highest total ever for the fourth quarter of the year. NOPA members, who account for 95% or more of U.S. processed soybeans, crushed 190.226 millions bushels last month. This is down 2.2% compared to the March crush, 194.551 millions bushels, but up 12.3% compared to the April crush, 169.436million bushels. In recent years, the rate of soy crushing has increased as more processing plants came online and facilities have expanded their capacity to meet the rising demand for biofuels. Nine analysts surveyed estimated that the April crush would be above 184.642 millions bushels. Estimates ranged between 180.0 million and 191.0 million bushels with a median estimate of 184.3 millions bushels. As of April 30, soyoil stock levels among NOPA member companies rose to 1,527 billion pounds. This is up 1.9% compared to 1.498 billion at the end March, but down 16.6% compared to the 1.832 million pounds of stocks one year ago. Six analysts estimated that stocks would fall on average to 1.412 trillion pounds. The estimates ranged between 1.275 billion and 1.500 billion pounds with a median estimate of 1.425 million pounds.
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Gains in the South African rand on hopes for a change to inflation targets
Analysts said that the rand of South Africa firmed up on Thursday after a deputy minister of finance indicated that a lower target for inflation could be introduced in the near future. At 1525 GMT the rand was trading at 18.0775 per dollar, a 1.1% increase over the closing price of Wednesday. Shaun Murison is a senior analyst at IG. He said, "The rand has reacted positively to the news that Treasury supports the central bank's long-standing idea of changing the framework for inflation targets and lowering them." Analysts cited comments made by Deputy Finance Minister David Masondo at an investor's conference, stating that an announcement regarding South Africa's regime of inflation targeting would be made very soon. Lesetja Kganyago, the governor of the South African Reserve Bank (SARB), has been urging a lower inflation target for many years. He believes that the current range is too large. Murison stated that the central bank may reveal more details on May 29 when it is expected announce its latest interest rates decision. The market will also focus on the revised budget speech that Finance Minister Enoch Goongwana is scheduled to deliver next week. This coincides with a meeting between South Africa’s President Cyril Ramaphosa, and his U.S. equivalent Donald Trump. The South African presidency said late on Wednesday that the Meeting on May 21, The agreement would be a chance to reset the strategic relationship of the two countries. They have been at odds ever since Trump took over the White House. Data from the Statistics Agency earlier that day showed that South Africa's mine production fell by 2.8% in March, compared to a 9.7% decrease in February. The Top-40 Index closed the day on the stock exchange about 0.1% lower. The yield on South Africa's benchmark government bond for 2030 was lower by 8 basis points, to 8.87%. Reporting by Sfundo parakozov and Bhargav acharya, Editing by Louise Heavens, Ed Osmond
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Draft shows EU plans to give new subsidies to farmers who save water
A draft proposal seen by revealed that the European Commission had drafted plans for new subsidies to be offered to farmers who invest to waste less water when the huge farm subsidy program is renewed. Around 387 billion euro is the value of EU's Common Agricultural Policy's (CAP) farming subsidies. This represents about a third in the overall budget of 2021-2027. The EU is preparing to have tough negotiations on its next budget, for the period after 2027, in later this year. According to a draft EU policy proposal aimed at addressing the pressures on Europe's water supply from climate change and industry, the next CAP will include "transition packages" that provide advice and financial support to farmers in order to improve water management. The draft stated that "The Commission will include in the future CAP Transition Packages to support and reward the farmers who engage in transformational and structure changes to improve their environmental and climate performances of their holdings. This includes a better management of water." Subventions could be used to help farmers buy more drought-resistant plants or irrigation systems that use less water. Climate change is affecting agriculture the most. Europe's farmers have already suffered from increasing droughts and flooding that have ruined recent cereal and fruit crops. In response to the intense political pressure of farmers protesting against EU rules that they claim are too burdensome, the EU has also loosened up other environmental measures for farming. As part of its plans to reduce bureaucracy, the European Commission proposed Wednesday that environmental conditions for existing EU farm subsidies be weakened. In the draft water strategy of the Commission, it was stated that European Investment Bank would also increase their spending on investments in water sector. This includes restoring ecosystems such as wetlands which can act as a buffer against flooding. The EU has not yet decided on the exact amount of EIB financing. The European Commission spokesperson didn't immediately respond to an inquiry for comments on the draft. It is scheduled to be published by June. (Reporting and editing by Kirsten Doovan; Kate Abnett)
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EBRD approves investment in new African members
It said that the European Bank for Reconstruction and Development's (EBRD) board has approved new member countries Nigeria, Ivory Coast and Benin for investment following their approval. The move gives the countries the opportunity to access millions of euros worth of potential investment from EBRD. This is a long-planned expansion by the lender into Sub-Saharan Africa. In a press release, EBRD president Odile Renaud Basso stated that the EBRD would leverage its financial resources to boost economies in the countries and to provide new opportunities for their citizens. This will complement the work of the existing development partners. The EBRD Board formally approved the recipient country status of the three West African countries at its annual meeting held on Thursday. The bank has said that investments will start shortly after the amendment to the EBRD founding treaty enters into force in July. Kenya, Ghana and Senegal will also be considered for membership. However, they must still meet certain pre-membership criteria before the process can be completed. It was founded in 1991 to rebuild Eastern Europe after the Cold War. Since then, it has expanded to the Middle East and North Africa as well as Mongolia. Since its founding, it has invested over 200 billion euros ($223.72billion) and supported policy reforms for the development of the private sector. The private sector is partnered with to facilitate investments in natural resource, agricultural, infrastructure, and financial institutions. Renaud Basso, the CEO of the bank, said that the bank would focus on supporting the transition to a green economy, strengthening economic governance, and promoting human resiliency, including equal opportunities. Reporting by Libby George, Editing by Joe Bavier. $1 = 0.8940 euro
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Guinea cancels 46 mining licenses to signal stricter supervision of major operators
A government source said on Thursday that Guinea had revoked licenses for 46 mining companies in the country. This is seen by some analysts as a warning to the larger operators of the second largest bauxite producing nation in the world. The move coincides with a growing nationalist sentiment in Niger, Mali, and Burkina Faso where the authorities have tightened their control over their vast mineral resources since coups of 2020. The licences affected cover operations in bauxite and gold mining, as well as diamond and graphite production. However, industry sources claim that none of these companies are significant producers in Guinea's mines, which are dominated by international giants. One mining analyst, familiar with the situation and who asked to remain anonymous due to the sensitive nature, said: "These are small, underperforming licenses." "The impact on the market is negligible." Guinea is the largest producer of bauxite, which is the ore that's used to make aluminium. It also has significant reserves of iron ore and gold. The government didn't immediately respond to requests seeking comment on specific reasons for the revocation of the mining licences, or whether other large-scale operations could face similar action in the future. Guinea exported approximately 146.4 million metric tonnes of bauxite in the past year, according to a notice posted on LinkedIn by Guinea's Mines and Geology Ministry. Analysts say that major bauxite-producing nations in West Africa are on course to mine over 200 million tons of bauxite this year, a 35% rise from the record production last year. These producers are not affected by the license revocations. The revocation of a licence is in line with regulations, but "it could be interpreted by mining companies as a warning that the government wants to ensure projects are developed according to agreed terms," said an advisor from a pan African consultancy firm, who asked not to be identified.
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Brazil oil workers to strike in protest of Petrobras' austerity measures
The Brazilian federation for oil workers (FUP) announced a two-day strike warning against Petrobras, the state-owned oil company, on Thursday. "In protest at the stagnation in the negotiations with the company," a statement said. The oil giant has pledged to implement austerity measures in response to lower oil prices. Petrobras reported earlier this week a first-quarter earnings. Net profit The firm said it would need to reduce its investment by 35.2 billion reais (6.25 billion dollars) if Brent crude oil prices fall. Cut costs Where possible, please try to avoid using the internet. FUP stated that "dissatisfaction grew after statements made by Petrobras Chief Executive Magda Chambriard, signaling plans to contain expenses, despite the positive financial performance of the company," Petrobras’ variable compensation plan, and its cost-cutting policies that FUP called "incoherent", are the main issues of negotiation between the union and company. Petrobras didn't immediately respond to an inquiry for comment.
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Data shows that there is no rush to export in advance.
India's merchandise deficit in April was the largest in five months, according to data released by the government on Thursday. Imports of petroleum products increased, which limited the impact of a rise in exports to America. India's trade deficit in April was $26.42 billion, higher than the $20 million economists had predicted in a survey. It also increased from the $21.54 billion of the previous month. In April, exports totaled $38.49billion, while imports reached $64.91billion. This compares to $41.97billion of exports and 63.51billion of imports in march. India's oil imports increased to $20.72 Billion in April from $19 Billion in March. Gold imports dropped to $3.1 billion from $4.4 billion in March. The trade deficit is the highest it has been since November 2024. Madhavi Arora is an economist with Emkay Global. She said that the trade deficit was larger than expected. The surprise increase in electronic and oil imports surprised her. It is possible that the component imports for the final exports category may have increased, as orders are in process. This will reflect in data coming in future months. The tariff increases imposed by the U.S. on its trading partners have disrupted global trade and supply chain. India's purchasing manager's index indicated that export orders had increased. Official trade data, however, shows that April's outbound shipments were lower than March. This suggests that exporters did not make a concerted effort to increase their volumes in order to ship to the U.S. before the 90-day-pause in reciprocal tariffs on India and other countries. Trump announced on Thursday that a deal is near with New Delhi. Exports to the U.S. increased 27% in April to $8.42 Billion from $6.61 Billion a year ago. Electronic goods including mobile phones experienced the biggest year-on-year increase of 33% in March. Apple, the tech giant, had increased production of iPhones to avoid tariffs. In April, U.S. tariffs were increased by 145% on Chinese imports. The Chinese responded with a 125% duty on U.S. goods, which brought the trade between the two largest economies of the world to a complete standstill. Sunil Barthwal, India's Trade Secretary, said that trade talks between India & the U.S. are progressing well.
Gold set for weekly gains in the middle of geopolitical unpredictability
Gold prices relieved on Friday however were set for a weekly gain as investors gravitated towards safehaven assets in the middle of political uncertainty in the Middle East, eclipsing pressure from a firmer dollar.
Area gold fell 0.2% to $2,629.49 per ounce, since 0822 GMT. Bullion gained 0.3% up until now today. U.S. gold futures were down 0.4% to $2,644.50.
There stay geopolitical hotspots around the world, which is keeping gold in play from a safe haven point of view, stated Tim Waterer, chief market expert at KCM Trade.
In between Russia-Ukraine and events in Gaza, financiers stay keen on gold in case either situation flares up further.
In the Middle East, Israel struck multiple targets linked to the Iran-aligned Houthi movement in Yemen on Thursday.
While, Russian drones struck a multi-storey house building on Thursday in the front line town of Chasiv Yar in Donetsk region of Ukraine.
Restricting further gains in gold, the dollar index headed for a fourth straight week of gains. A more powerful dollar makes bullion more costly for other currency holders.
Gold has gotten 28% up until now this year, reaching a record high of $2,790.15 on Oct. 31 on the back of the Fed's rate easing and intensified stress around the world.
Following rate cuts in September and November, the Fed continued with its relieving policy in December. However, it likewise meant the possibility of less decreases in 2025.
As Donald Trump is set to return to the White House in January 2025, markets are bracing for substantial policy shifts, incorporating tariffs, deregulation, and tax amendments.
Gold usually performs well during times of financial and geopolitical unpredictability and flourishes in a lower rates of interest environment.
Area silver fell 0.2% to $29.75 per ounce, platinum was down 0.1% to $934.77, both metals were on track of weekly gains. Palladium shed 0.2% to $923.04.
(source: Reuters)