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Stocks drop from record highs ahead of US inflation data
The world's stocks retreated from their recent tech-driven record highs, on Friday, ahead of U.S. Inflation data which will feed the Federal Reserve’s increasingly politicised interest rate plans. The traders were looking to square up their positions after a bullish month in global equity markets. This was despite bond market concerns over Donald Trump's decision to fire Fed policymaker Lisa Cook and the renewed political tensions in France. The euro and Europe's STOXX600 share index both fell and were headed for their first weekly loss in four while the 0.6% drops on France's CAC40 and Germany's DAX set them up for trend-defying month drops. Michael Metcalfe, State Street's global macro strategy head, said that it was the very first time since a long time that political risks were on the increase after a period when international investors poured money into the area. Metcalfe asked, "Do you want to take on the risk of the Fed's independence in the dollar or do you want to take on the risk of the fiscal risk with the euro?" This week, it appears to be a draw. The key European 30-year bond rates are also expected to see their largest monthly increases since March. The biggest move was in France where Francois Bayrou, the Prime Minister, has scheduled a vote of confidence for September 8, which many expect to lose. The spread France pays to Germany on 10-year debt, which was 78 basis points last week, has risen over the past two weeks. The UK Bank Share Index fell by 1.4% after an influential think-tank suggested that the government might tax banks based on Bank of England Reserves. Overnight, Asia's markets were mixed. Chinese shares had their best month for almost a full year, with a gain of more than 10%, on the hope that its economy and especially the tech sector is improving. The Nikkei, Japan's largest stock index, ended the day down. However it has also risen 4% this August. It is now on a five-month streak of unbroken gains. In China, the STAR 50 Index, which is a tech-focused index, fell 1.7% after it soared over 7% the previous session. Shares in Cambricon Technologies, a chip company, also dropped more than 6% following a warning to investors via a stock exchange filing citing a steep rise in their stock prices since the end of July. Frank Benzimra is the head of Asia equity strategies at Societe Generale. WAITING ON PCE The focus of the market now shifts to the release of U.S. PCE Price Index data, the Fed's preferred inflation measure. Khoon Goh is the head of Asia Research at ANZ. He said that analysts will be watching to see if trade tariffs are starting to have an impact. There are three key pieces of information ahead of the FOMC meeting in September. The PCE is the first, followed by the payrolls data next week and the CPI. According to CME FedWatch, traders are now pricing in a 85% chance that rates will be cut in September. This is up from 63% one month ago. Fed Governor Christopher Waller said on Thursday that he plans to begin cutting interest rates in the next month, and "fully anticipates" further rate cuts. This will bring the Fed’s policy rate to a more neutral setting. On Friday, the expectation of an imminent Fed rate cut left the dollar in a position to fall 2% monthly against a basket currency. The euro last fell 0.1% to $1.1677. This was largely due to political and fiscal concerns in France. Sterling, however, eased by 0.2%, falling from $1.3477 to $1.3477. However, it was still on track for a gain of over 2% in the month. Dollar also faced headwinds due to concerns about Fed independence, as President Donald Trump intensifies his campaign to exert greater influence over monetary policies. This includes his latest attempt at firing Fed Governor Lisa Cook. Cook filed a suit on Thursday, claiming that Trump does not have the power to remove Cook from her office. Brent crude futures fell 0.6% on Friday to $68.20 per barrel. U.S. crude dropped to $64.21 a barrel. Bitcoin fell 2%, to just over 110,000 dollars per ounce. Safe-haven gold dropped 0.2%, to $3,408.78.
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PCE data will show gold's monthly gain.
Gold prices were slightly lower on Friday but are still on track for a gain in the month ahead of U.S. Inflation data, which will give more clues about Federal Reserve's rate-cutting trajectory. As of 0818 GMT, spot gold was down by 0.1%, at $3,414.07 an ounce. Bullion gained 3.6% this August, and reached $3,423.16 Thursday, the highest level since July 23, its highest ever. U.S. Gold Futures for December Delivery eased by 0.1% to $3471.70. Gold is feeling gravitational force around large, round numbers. The markets are reluctant to allow gold to stray too far away from the psychological level of $3,400 ahead of PCE results," Han Tan, chief analyst at Nemo.Money, said. The dollar was on track for a 2.2% monthly decline. Benchmark 10-year yields are slightly above the two-week low reached on Thursday but heading for a loss of 2.2% per month. The Personal Consumption Expenditures Price Index (PCE), the Fed's preferred measure of inflation, is due later today. As long as inflation does not rise faster than expected, bullion bears will be able hold their ground over $3,400. Tan warned that if the PCE prints shattered market expectations of Fed rate cuts in this year, gold spot could fall back to below $3,400. Gold that does not yield is usually a good investment in an environment with low interest rates. Fed Governor Waller reaffirmed his call on Thursday for a reduction in short-term borrowing costs. He said he would be supportive of a rate cut next week. According to the CME FedWatch Tool, traders expect a 85% chance that the rate will be cut by 25 basis points at the September meeting. In India, the demand for gold has increased slightly this week despite a slight recovery in price, as jewellers stockpiled ahead of the holiday season. Silver spot fell by 0.4%, to $38.91 an ounce. Platinum fell 1.1%, to $1343.98. Palladium fell by 0.3%, to $1099.0. (Reporting by Ishaan Arora in Bengaluru; Editing by Sonia Cheema)
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Iron ore prices rise on demand and lower inventories
Iron ore futures were in a tight range on Friday but were expected to gain weekly, supported by a steady demand from the top consumer China, and declining inventories. The January contract for iron ore on China's Dalian Commodity Exchange closed the daytime trading 0.77% higher, at 787.5 Yuan ($110.10) per metric ton. This represents a 2.3% weekly increase. As of 0814 GMT the benchmark October iron ore price on Singapore Exchange was down by 0.53%, at $103.55 per ton. However, it has gained 3% this week. The demand for this key ingredient in steelmaking remained strong despite the production restrictions in Tangshan - China's largest steel hub - to improve air quality before the military parade to mark the end of World War Two on September 3. According to Mysteel, the average daily hot metal production, which is a key indicator for iron ore consumption, fell by 0.3% on a week-on-week basis to 2.4 millions tons as of 28 August, but was still 8.7% higher than it was during the same period in 2013. Two analysts warned that the output could fall even more next week, as the effects of the most recent round of production control take hold. This could put downward pressure on the prices. Mysteel data shows that portside stock levels dropped by 0.4% compared to the previous week. This also helped support ore prices. The news that China would cut its steel production from 2025 to 2026 in order to combat overcapacity, which has impacted prices and sparked a global protectionist backlash, also boosted sentiment. Coking coal and coke, which are used in the steelmaking process, have declined by 0.13% and 0.87 %, respectively. The Shanghai Futures Exchange saw a decline in most steel benchmarks. Rebar dropped 0.83%, while hot-rolled coils fell 0.21%. Wire rod fell 0.69%, and stainless steel gained 0.16%. ($1 = 7.1529 Chinese Yuan Renminbi)
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The rouble is weaker against the dollar after Russia reduces GDP forecast
The rouble was slightly weaker against the dollar Friday, one day after Russia cut its GDP forecast. It is expected to end the month in modest losses, given the geopolitical tensions around the conflict in Ukraine. LSEG based its data on the over-the counter quotes to calculate the rouble's position at 0815 GMT. The rouble had fallen 0.06% to 80.35 dollars. The Russian currency, which is the most traded currency in Russia, was down 0.20% at 11,26 against the Chinese yuan. Since the start of August, the rouble lost 1.3% against yuan. The Russian government cut its economic growth projection for this year from 2.5% to just 1.5% on Thursday, citing high interest rates that were imposed in order to combat inflation. Analysts say that although the central bank reduced its key rate from 20% to 18% between June and July, the economy remains hampered by high credit costs and a lack of labour. The rouble has also been affected by concerns that Russia's oil revenues will fall following the addition of U.S. Tariffs on India for its purchases of Russian Oil. Brent crude oil, the global benchmark for Russia’s main export, fell 0.52% to $68.26 a barrel. However, it is expected to gain 0.6% per week.
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Shanghai locals try to beat the heat by indoor skiing
On Thursday, thousands of people in Shanghai flocked to the largest indoor ski resort in the world to escape the heat. The temperatures in the Chinese capital reached around 37 degrees Celsius. Shanghai L+SNOW Indoor Skiing Resort is a 98,000-square-metre (117207 square yard) indoor ski resort where temperatures are kept at or below 5degC all year. Tang Junqi spent a day with her mother. It was hot and felt like I was in a pot. The 10-year-old boy said, "But it feels like you're in a refrigerator inside." Shanghai experienced on Friday its 24th consecutive August day with temperatures above 35 degrees Celsius. This ties a record set in 1926. According to the Shanghai Meteorological Bureau, temperatures are expected to remain high for the remainder of the month. The city has declared an orange alert - the second highest level in its three-tiered heatwave warning system. Scientists claim that extreme weather is more likely to occur due to man-made climate changes, which are caused by carbon dioxide emissions. This is exacerbated by energy intensive activities such as maintaining indoor temperatures artificially low. Reporting by Xihao Jiang and Brenda Goh, editing by Barbara Lewis and Lincoln Feast.
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ASIA GOLD - Indian jewellers stockpile for the festive season; elsewhere, activity is muted
Jewellers in India stocked up on gold ahead of the holiday season. Activity elsewhere remained low. Indian dealers are charged a premium Up to $4 per ounce above official domestic prices. This includes 6% import duties and 3% sales taxes. Last week, the offers ranged from a discount of $2 to a premium of $3. A bullion dealer in Chennai said that "Jewelers had been sitting on the sidelines, but as prices refused to improve much, they have now started purchasing for the upcoming holiday season." This year, the Dussehra/Diwali festival, which is a time when buying gold is considered auspicious (and therefore a good sign), will be celebrated on October. On Friday, the domestic gold price was around 102,000 rupees for 10 grams, after reaching a record-high of 102,250 earlier in the month. Gold has been at 100,000 rupees now for three months, and the shoppers are slowly getting used to it. They're coming back to market," said a Mumbai bullion dealer from a private banking institution. Bullion was traded in China, the world's largest consumer of gold at a premium between $5 and $10 per ounce above the global benchmark spot rate . Last week, dealers were charging premiums between $3 to $8 per ounce. Bernard Sin, Regional Director of Greater China for MKS PAMP, said that the volume at Shanghai Gold Exchange was low, with little participation from retail investors and speculators. There has been little demand for gold in RMB. The price is still high, but there's no obvious catalyst to buy. "The absence of new import quotas further dampened the physical flows." Gold is available in Hong Kong and Singapore The price of the bullion was $2.50 higher or lower. In Japan, bullion According to a Tokyo-based dealer, the prices of swaps were equal to spot prices. We are seeing a greater number of clients come to sell. The buying has dropped significantly because the prices are so high.
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Wall St. lifts Asia shares as markets await US inflation figures
Asian stocks rose on Friday on the back of a tech-driven rally in Wall Street. Investors are now looking forward to the key U.S. Inflation reading that will be released later today for more clues about the Federal Reserve's interest rate outlook. The results from Nvidia, the artificial intelligence giant this week, fell short of expectations. However they confirmed that AI infrastructure expenditure remains strong. This helped to lift both Dow Jones Industrial Average and S&P 500 to record closes on Thursday. The Asian markets seized on the positive momentum of Friday, as MSCI’s broadest Asia-Pacific share index outside Japan rose by 0.26%. European and U.S. futures for stocks were mixed. Futures for the EUROSTOXX50 fell by 0.1%, while FTSE gained 0.06%. S&P futures fell 0.12%, while Nasdaq lost 0.21%. The headline revenue numbers for Nvidia don't suggest much of a decline in the AI story, despite the uncertainty surrounding China. "The expectations are already high," said Thomas Mathews of Capital Economics, who is the head of Asia-Pacific markets. The stock market in the U.S. will likely continue to do well if earnings don't change materially. The STAR 50 Index, which is a tech-focused index in China, fell 3% following a rise of over 7% the previous session. The shares of Chinese chip company Cambricon Technologies fell more than 7% on Thursday after the company issued a warning to investors via a stock market filing. It cited a steep rise in its stock price since late July. Frank Benzimra is the head of Asia equity strategies at Societe Generale. "For me, this is a normal way for the market to function, since we all know the market will undershoot to the downside, and overshoot to the upside." The CSI300 blue chip index rose 0.5%, while Hong Kong's Hang Seng Index grew 0.8%. Japan's Nikkei slipped 0.33%. WAITING ON PCE The focus of the market now shifts to the release of U.S. PCE Price Index data, the Fed's preferred inflation measure. Khoon Goh is the head of Asia Research at ANZ. There are three key pieces of information ahead of the FOMC meeting in September. The PCE is the first, followed by the payroll number the following week and the CPI. According to CME FedWatch, traders are now pricing in a 85% chance that rates will be cut in September. This is up from 63% one month ago. Fed Governor Christopher Waller said on Thursday that he plans to begin cutting interest rates in the next month. He "fully expects," more rate cuts to follow, to bring the Fed’s policy rate to a neutral level. On Friday, the expectation of an imminent Fed rate cut led to a dollar decline of 2% monthly against a basket currency. The euro last fell 0.16% to $1.1664, mainly due to political and fiscal concerns in France. Sterling, however, eased 0.09% at $1.3495 but was still set for a gain of over 2% in the month. Dollar also faced headwinds due to concerns about Fed independence, as President Donald Trump intensifies his campaign to exert greater influence over monetary policies. This includes his latest attempt at firing Fed Governor Lisa Cook. Cook filed a suit on Thursday, claiming that Trump does not have the power to remove Cook from her office. Brent crude futures fell 0.55% on Friday to $68.24 per barrel. U.S. crude dropped 0.6% to $64.21 a barrel. Spot gold fell 0.23%, to $3.408.78 per ounce.
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India increases its oil purchases from the US at competitive prices and narrows its trade deficit
Trade sources reported that Indian refiners increased their purchases of U.S. crude this month due to the competitive prices. This could help reduce the trade deficit between India and the United States, amid tensions. Indian Oil Corp., the country's largest refiner, purchased 5 million barrels U.S. West Texas Intermediate Crude for delivery between October and November through a tender. Other sources reported that Vitol had sold 2 million barrels to Reliance Industries, while Bharat Petroleum Corporation purchased 2 million from Vitol. Indian refiners and others in Asia increased their purchases following the arbitrage window The door for U.S. crude oil to Asia was opened. India has also been urged to purchase more U.S. crude oil following the United States Doubled its tariffs On Indian imports, New Delhi has increased its purchase of Russian oil. Sources said that Gunvor and Equinor, European traders, each sold 2,000,000 barrels, while Mercuria sold IOC 1,000,000 barrels. They added that BPCL also purchased its first Nigerian Utapate crude oil, as part of its expansion to include other grades in its crude diet. (Reporting and editing by Himani Sarkar, Stephen Coates and Siyi Liu in Singapore. Additional reporting by Florence Tan and Siyi Lu in New Delhi.
Northam CEO: Platinum miners are not safe despite recent price rise
Northam Platinum CEO Paul Dunne stated on Friday that the recent platinum price rally brought relief to South African miner, but it is still below the levels required to support new production.
Northam announced a 14.4% decline in its annual profit Friday as mining costs rose despite record sales. The company reported headline earnings of $3.81 per share ($0.2169) for the year ending June 30 compared to $4.45 rand one year prior.
Low metal prices have hit the earnings of platinum miners since early 2023. This is mainly because the demand for automotive parts has been weak and the outlook has dimmed due to the increasing electrification in transport.
The platinum group metals used in autocatalysts help reduce harmful emissions from fossil fuel powered vehicles.
South African miner, who account for over 70% of the global supply of platinum, responded by cutting loss-making production, and stopping projects.
Platinum prices have risen recently. They will rise 36% by the second quarter 2025, mainly due to Chinese imports, and a decline in South African supply.
Dunne, in a press release, said that recent price appreciation has brought some relief to the PGM industry.
He added that the level of funding is not high enough to support the sustainable mining in the entire industry, and it certainly does not allow for the development of much-needed new operations.
Dunne stated that tight PGM supply was likely to continue in the medium-term, and new demand for minor PGMs ruthenium is driven by data storage among other applications.
Northam stated in its results that many South African Platinum Mines were undercapitalised, and had a short remaining mine life. This resulted in a shrinking of primary PGM supplies.
"In 2008, 81 PGM shafts were in operation in South Africa. Northam stated that there are currently only 53 shafts in operation, and the number is expected continue to decrease.
Impala Platinum CEO Nico Muller issued a warning on Thursday against "flooding" the market with more ounces, as the sector faces a serious threat despite the slower adoption of electric cars than expected.
(source: Reuters)