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European stocks fall after Trump's visa crackdown and rate outlook is in focus
The euro markets fell on Monday as automakers warned of their profit. Meanwhile, the dollar remained steady, as the markets waited to determine if geopolitical worries would offset the optimism about the Federal Reserve's loosening monetary policy. The STOXX 600 index for Europe was little changed. Spanish and German stocks were down by 0.6% and 0.50%, respectively. Both Porsche and its parent Volkswagen cut their profit estimates after announcing a delay in the launch of EVs due to low demand. The MSCI world stock index was little changed, while India's benchmark fell 0.2%, after the Trump Administration announced that it would charge companies $100,000 to obtain new H-1B visas. This is a blow for the tech sector, which relies heavily on skilled workers in India and China. Stocks in China were choppy, even though U.S. president Donald Trump claimed that he and Chinese president Xi Jinping made progress on a TikTok deal. The Shanghai Composite index.SSEC rose by 0.2%, while the blue-chip CSI300 index rose by 0.5%. India's $283-billion information technology sector will feel the pain soon. More than half of its revenue comes from the U.S. Trump doubled tariffs last month on Indian imports to 50%, in part due to New Delhi's purchase of Russian oil. It's a threat to operating costs and margins. Kyle Rodda is a senior financial analyst with Capital.com. He said that it was possible to increase wages and labour costs. If they are unable to find enough workers within the U.S., tech companies could also face punitive measures. FED POLICY A OUTLOOK Investors are still keen to assess the U.S. policy direction after the Fed announced a future phase of gradual easing. The traders have priced in 44 basis point easing for the last two policy meetings. The week will see a number of policymakers speak, including John Williams and Thomas Barkin on Monday and Raphael Bostic, Michelle Bowman and Fed Chair Jerome Powell on Tuesday. James Rossiter is the head of global macro-strategy at TD Securities. He hopes that these remarks over the next couple days will help shape market expectations. The Fed will release data on its preferred inflation gauge on Friday, which will help to set the tone of the rate outlook for the near term. Tony Sycamore is a market analyst for IG. He believes that the PCE core price index will rise 0.2% monthly, keeping the annual rate at 2.9%. This is the same as it was in July and higher than the 2.6% low reached in April. Sycamore stated that the U.S. Dollar short trade is crowded, even though a more modest rate-cutting would theoretically weigh on the U.S. Dollar. The dollar index, he added, has been losing its downward momentum after a tumultuous start. The dollar index (which measures the U.S. money against six other currencies) was down by 0.2% to 97.54. The S&P 500 and Nasdaq 100 futures are both down by 0.2%. The Japanese yen has remained steady at 147.87 U.S. dollars after strengthening on Friday, following the Bank of Japan hawkish stance where two members of its board voted against maintaining interest rates. Brent crude futures were 34 cents higher, at $67.02 per barrel. U.S. West Texas Intermediate Futures rose 36 cents, to $63.04. The gold price rose, reaching a record high at $3,719.65 an ounce at one time. (Reporting and editing by Nell Mackenzie, Ankur Banerjee and Shri Navaratnam. Editing and proofreading by Jacqueline Wong, Bernadette Baum and Jacqueline Wong)
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Markets brace themselves for more rate cuts as gold reaches new record highs
Gold surged on Monday to set a new record high, buoyed investors' increased expectations of a rate-cutting path. This was ahead of comments by Federal Reserve officials, and important inflation data that will be released later this week. As of 0820 GMT the spot gold price rose by 0.9%, to $3,716.27 an ounce. It had earlier reached a record high of $3.719.65. U.S. Gold Futures for December Delivery climbed 1.2%, to $3.751.20. The UBS analyst Giovanni Staunovo said: "I expect gold to hit new record highs in the coming week, with Fed officials likely to announce further rate reductions. However, data will also depend on how fast and how much they cut. Investors are closely monitoring the comments of several Federal Reserve officials this week. Chair Jerome Powell is scheduled to make remarks on Tuesday. Market participants are also looking for clues about the pace of future rate cuts in the U.S. when the core Personal Consumption Expenditure data (PCE) is released on Friday. The Fed announced its first rate reduction since December on Wednesday, lowering rates 25 basis points and signaling an openness to further ease. According to CME FedWatch, investors now expect two additional 25-bp rates cuts this year. One each in December and October, with 93% and 81% chances respectively. "There has been a change in the factors that support gold. "We are now seeing Western investors adding gold to their portfolios. This is evident in the gold ETFs. They do so because they expect U.S. interest rates to fall," Staunovo said. Bullion is up more than 40% in this year due to a combination of geopolitical, economic, and central bank uncertainty. Gold spot may test resistance around $3,705 an ounce. A break above this level could lead to gains in the range between $3,719 and $3,739. Staunovo said, "We expect gold to reach $3.900 by the middle of 2026." Silver spot rose by 1.3%, to $43.64 an ounce. This is a record high for more than 14 years. Palladium rose by 1.1%, to $1161.85, while platinum gained 1.1%, to $1419.65. (Reporting by Ishaan Arora in Bengaluru; Editing by Sharon Singleton)
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India is planning to sell minority stakes in a half dozen state-owned firms, an official has said.
Arunish Chwla, the Indian government's divestment minister, told CNBC-TV18 that it plans to sell minority shares in about a half-dozen state-run firms. Chawla has not disclosed which companies are being considered for stake sales, but had previously reported that India plans to sell shares of five public sector banks such as UCO Bank and Bank of Maharashtra. India must also reduce its stake in Life Insurance Corporation of India to meet the minimum public shareholding standards set by the market regulator. Chawla stated that the government would make a public offering of a natural resource-related state-run company in the current fiscal year. He said the IPO may be a state-owned company or one of their subsidiaries. Chawla didn't name the company but ONGC Green Energy (ONGC) and NHPC Renewable Energy (NHPC) have both been exploring the listing of their respective green arms. The government will benefit from a higher divestment amount through minor stake sales and initial public offerings. India plans to raise approximately 470 billion rupees in the current fiscal year, through asset monetisation and stake sales. Chawla stated that India's dividends received from the public sector would surpass its projected target. India is expected to receive 690 billion rupees (7.83 billion dollars) in dividends this year from public sector companies.
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Steel production increases as demand for building materials rises
Iron ore futures prices rose on Monday as demand for building material increased ahead of China's National Day holiday, and blast furnace steel production increased. The January contract for iron ore most traded on China's Dalian Commodity Exchange rose by 0.37%, to 808.5 Yuan ($113.65), per metric ton. As of 0709 GMT, the benchmark September iron ore price on Singapore Exchange was unchanged at $105.7 per ton. According to Mysteel, the production of Chinese blast furnace steel continued to rise in the week ending September 18. It increased by 0.2 percentage points, to 90.4%. This was largely because operations were resumed in North China. The combined hot metal production, which is an indicator of the iron ore market, grew 0.2% in comparison to the previous week, reaching 2.41 million tonnes per day. Broker Hexun Futures said that the demand for building materials has been increasing, with inventory reductions continuing and downstream restocking increased ahead of Chinese National Day holidays. Steelhome data shows that the total iron ore stocks in China's ports fell by 0.42% on a week-on-week basis to 132 million tonnes as of September 19. In September, China's benchmark lending rates remained unchanged for the 4th consecutive month, despite signs that domestic growth was slowing. According to the World Steel Association, global crude steel production in July was 150.1 million tonnes, down 1.3% on an annual basis. Chinese output, at 79.7 millions tons, was 4% less. Coking coal and coke were both up or down by 0.43% on the DCE. In August, China's imports of coal reached a record high for eight months. This was largely due to higher domestic prices. Volumes remained 7% below a year ago due to weak demand and increased domestic supply. The benchmarks for steel on the Shanghai Futures Exchange have also gained. Rebar increased by 0.85%, while hot-rolled coils gained 0.54%. Wire rod also improved 0.06%, and stainless steel grew 0.31%. $1 = 7.1141 Chinese yuan (Reporting and editing by Eileen Soreng; Lucas Liew)
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High stocks limit gains as copper prices rise due to improved demand from China
Copper prices rose again on Monday as restocking was undertaken ahead of the week-long holidays in China, the world's largest consumer. However, rising stocks and an advancing dollar limited gains. The Shanghai Futures Exchange's most traded copper contract closed the daytime trading at 80,190 Yuan ($11,272.46) a metric ton, up 0.44%. As of 0800 GMT the benchmark three-month price of copper at the London Metal Exchange stood at $9,991.5 per ton, having risen above the psychologically important level of $10,000 earlier in the day. Analysts at Minmetals Futures report that downstream consumers in China continued to restock the red metal from October 1 through October 8 in preparation for the National Day holiday. This helped to support prices. Copper prices were also supported by the lingering suspension of production at Freeport Indonesia’s Grasberg Mine, one the world’s largest copper mines. This was due to an incident that occurred in early September. The price potential for prices is limited by the rising stock market and the strong dollar. Copper stocks in Shanghai warehouses The price of the risen by 12.5%. The dollar is stronger, and commodities that are traded in dollars become more expensive to investors who use other currencies. Tin inventory on the SHFE closed at 272,510 Yuan per ton, up 1.5%. Tin inventories on the SHFE As of September 19, the market fell by 11.5%, reaching a new 12-week low. Analysts at Jinrui Futures noted that a tight supply of raw materials was also helping to boost tin's price, as the recovery of production in Wa State, Myanmar, missed expectations despite a still-weak demand for solder. Zinc, Nickel, and Lead were also little changed. The LME also saw a rise in aluminium, nickel, lead, tin, and zinc. $1 = 7.141 Chinese Yuan Renminbi (Reporting and editing by Amy Lv, Lewis Jackson)
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Oil prices rise as tensions escalate in Europe and the Middle East
The oil prices rose on Monday, despite concerns over the effects of trade tariffs and increased supply of crude. Brent crude futures were up 45 cents or 0.67% to $67.13 a bar by 0701 GMT, while the U.S. West Texas Intermediate Crude contract for October rose 47 cents or 0.75%. The WTI October contract expires Monday, and the November contract, which is more active, rose by 43 cents or 0.69% to $62.83 per barrel. Michael McCarthy, CEO Moomoo Australia & New Zealand's investment platform, said: "Reports from the weekend indicating that Russia threatened over the Polish border reminded traders of the continuing risks to European energy safety coming from the north-east." Armed forces of NATO member Poland said that Polish and allied planes were deployed on Saturday morning to ensure the security of Polish airspace following Russian airstrikes near the border of Poland. Three Russian military aircraft violated NATO Estonian airspace on Friday for 12 minutes, and on Sunday the German air force reported a Russian plane entering neutral airspace above the Baltic Sea. Diplomats have said that the United Nations Security Council will meet Monday to discuss Estonia's claim that Russian fighter planes violate its airspace. Ukraine has intensified drone attacks against Russia's energy infrastructure in recent weeks. These include terminals and refineries. Meanwhile, U.S. president Donald Trump has asked the European Union not to buy Russian oil or gas. Four Western nations recognized a Palestinian State in Middle East News, provoking a furious reaction from Israel, and increasing tensions in this key oil producing region. Brent and WTI fell more than 1% last Friday, marking a slight drop from the previous week. Concerns about excessive supplies and declining consumer demand overshadowed expectations that the first interest rate cut of the year by the U.S. Federal Reserve will lead to increased consumption. Iraq's oil exports have increased following the gradual unwinding voluntary production cuts in an OPEC+ Agreement, said the country's official oil marketing SOMO on Sunday. According to the Oil Ministry, Iraq exported an average of 3.38 million barrels a day in August. SOMO estimates that September's average oil exports will range between 3.4 million and 3.45 million barrels per day. Tim Evans stated in the Evans on Energy newsletter that "rising inventories have also confirmed the fact that supply has outpaced demand." Evans stated that "increased strategic reserve accumulation by China and the U.S. has helped absorb the surplus. However, the additional inventories have reduced the near-term potential upside for prices while leaving the downside open." (Reporting and editing by Christopher Cushing, Jacqueline Wong, and Florence Tan)
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Sources: RPT-Commodity traders Mercuria is betting on a boom with its foray into Uranium.
Three sources familiar with the matter said that Mercuria is the first major commodity company to start physical trading of uranium. It joins banks Natixis, Citibank and others as the expected nuclear energy boom fuels the interest in this niche market. Sources said that Mercuria started trading uranium earlier this year. Two sources confirmed that Citibank and Natixis both launched uranium trades this year. The information provided by the three sources is confidential, so they asked that their names not be disclosed. Citi and Natixis (part of French financial group BPCE) declined to comment. Three new banks will be competing with Goldman Sachs, Macquarie and other major players in the $15 billion market. Analysts and consultants expect institutions to benefit from the wave of new nuclear plants planned that will require financing and fuel supply. The World Nuclear Association predicts that the demand for nuclear fuel will double by 2040 as governments strive to achieve zero-carbon targets, and technology companies scramble for energy to support AI. Mercuria of Geneva, which is a major player in the energy market, has been expanding its metals business in recent years using cash from high oil prices. Louis Csango, who has worked for Goldman Sachs since the 1970s and is well-versed in uranium, was hired by the group in December to lead its uranium operations and work on gas and power. The traders said that it makes sense for Mercuria, which has a power desk already, to use the information about utilities in both areas. Bram Vanderelst, a trading manager at Curzon Uranium - one of the largest firms in the industry - said that there was a lot interest not only from traditional European trade houses, but also from banks from the U.S. He refused to name names. Goldman Sachs, Macquarie and some hedge funds have increased their activity in recent times. HISTORICALLY HIGH URANIUM PRICES SEEN RISING Uranium has a small market in comparison to other commodities like oil, copper, and aluminium, which are traded by Mercuria or commodity banks. According to UxC, the total global utility demand for Uranium Oxide Concentrate (U3O8) last year was around 175 million pounds, with 47 million pounds or 27% traded on the spot markets. Yellowcake or U3O8 is a fine powder that is packaged in steel drums and is created when uranium ore undergoes chemical processing. Jonathan Hinze is the president of UxC. He said, "I'm certain that there will be greater opportunities for traders if the market in nuclear power and uranium doubles." He added, "It is not a market that you can break into quickly. It may take a few more years before you get your footing on the market." The price of uranium at the spot market has doubled in the last five years, to $77 per pound. However, it is still down on the peak of $106 reached in February 2024 - the highest since November 2007. Citi analyst Arkady Gvorkyan expects spot prices to reach $100 per pound in the next year, as miners might not be able keep up with the demand. In the last 20 years supply has always lagged behind demand but secondary supplies have balanced the market. "This era is ending relatively quickly," he said.
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Outokumpu reports that one-third of companies have paused or deferred orders for stainless steel due to tariffs.
Outokumpu, a Finnish steelmaker, said that at least a third have delayed or paused stainless steel orders due to U.S. tariffs up to 50%. More than half of the companies surveyed are also reevaluating their sourcing strategies. Outokumpu CEO Kati Ter Horst said that the current European Union import quotas were too high due to the slowing demand in the world. She expects the European Commission will announce measures to reduce imports of rival steel to protect domestic producers by October. She added that the measures would replace existing safeguards, which are due to expire next summer. They could even come into effect a quarter sooner. Why it matters A third of businesses changed steel suppliers by May. The addition of hundreds of derivatives to the U.S. list in August created uncertainty among equipment and machinery buyers. Outokumpu is the only mine that extracts chromium in Europe and North America. This mineral, which is used to make stainless steel, has been exempted by U.S. Tariffs. The company has created a low-emissions metal alloy that contains 99% chromium compared to 53% before. It plans to increase production from 1 kilo to 1 ton per day at a future pilot plant. CONTEXT EU legislators expect import quotas, the CBAM Mechanism, and the imposition of costs at the EU-border on the CO2 embedded in imported steel, to help decarbonise, after green steel project around Europe has been delayed or cancelled due to worsening energy costs and a worsening market. Ter Horst stated that stainless steel is a material with a long-term positive trend. Buyers, who are hoping to save $2.5 trillion in corrosion costs each year and achieve climate targets, view the material as stronger and more durable than normal steel. She said that the trend is also supported by an increase in defence spending. Reporting by Alessandro Parodi, Gdansk; editing by Chizu nomiyama
What drives the gold market and how investors buy it?
The gold price reached a new record on Monday, following the Federal Reserve's announcement of further easing and last week's reduction in interest rates.
Bullion has increased by nearly 42% in the past year. This is due to a combination of geopolitical, economic, and central bank uncertainty.
Here are some ways you can invest in gold.
SPOT MARKET
Big banks are usually the gold buyers for large investors and large buyers. The spot market is determined by the real-time dynamics of supply and demand.
London has the largest influence on the spot gold markets, thanks to the London Bullion Market Association. The association establishes standards for gold trading, provides a framework for over-the counter trades, and facilitates transactions between banks, dealers and institutions.
China, India, Middle East, and the United States, are also major gold trading centers.
Futures Market
Futures exchanges are another way for investors to get exposed to gold. They allow them buy or sell commodities at a set price, on a specific date in the future.
COMEX, part of the New York Mercantile Exchange (NYMEX), is the world's largest gold futures exchange in terms of volume of trading.
Shanghai Futures Exchange (China's largest commodities exchange) also offers gold contracts. TOCOM (the Tokyo Commodity Exchange) is another major player on the Asian gold market.
Exchange Traded Products
Exchange-traded product or exchange-traded fund issue securities backed with physical metal, allowing people to gain exposure without having to take delivery of the metal themselves.
Exchange-traded fund demand has become the largest category for precious metal investment.
The World Gold Council reported that physical gold exchange traded funds saw a modest inflow of $3.4billion in 2024. This was their first net inflow in four years despite their holdings falling by 6.8 tons.
BARS AND COINS
Metals traders can sell bars and coins to retail consumers in shops or online. Both gold bars and coins can be used to invest in physical gold.
DRIVERS:
Investor Interest and Market Sentiment
The price of bullion has moved up due to the increased interest in investment funds over recent years.
Sentiment fueled by news, global events, and market trends can drive speculative gold buying or selling.
FOREIGN RATES OF EXCHANGE
Gold is an excellent hedge against the volatility of currency markets. Gold has historically moved in the opposite direction of the U.S. Dollar, as a weaker dollar makes gold priced in dollars cheaper for holders other currencies.
MONETARY POLICY & POLITICAL TENSIONS
In times of uncertainty, precious metals are widely regarded as a "safe-haven".
Trump's trade tariff threats and the imposition of additional duties against Chinese goods have sparked fears of an international trade war. They also rattled currency markets, causing fears of an increase in U.S. prices.
The global trade conflict that has caused financial market turmoil and recession fears is intensifying. Trump raised tariffs on Chinese goods to an effective rate 145% while China increased tariffs on U.S. products from 84% up to 125%.
Gold's direction is also affected by the policy decisions made by global central banks. Gold is less expensive to hold when interest rates are lower, since it does not pay interest.
CENTRAL BANK GLOBAL GOLD RESERVES
Gold is held by central banks as reserves. The demand for central bank gold has been high in recent years due to macroeconomic and political uncertainties.
In its annual survey, conducted by the World Gold Council in June, it was revealed that more central banks intend to increase their gold reserves in the next year despite the high price of the metal.
The World Gold Council reported that global gold demand, including the over-the counter trading, increased by 1% in 2024 to reach a new record high. Central banks also increased their purchases in the fourth quarter. (Compiled by Bangalore Commodities and Energy Team Editing By Joe Bavier and David Goodman)
(source: Reuters)