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Gold reaches record highs on US shutdown fears and rate-cut betting
Gold reached a new record on Wednesday, as investors flocked to safe-haven investments amid growing concerns about a U.S. shutdown. Meanwhile, weaker labour statistics boosted expectations for further Federal Reserve interest rate reductions. By 0206 GMT, spot gold had risen 0.4% to $3872.87 an ounce. U.S. Gold Futures for December Delivery gained 0.7%, reaching $3,901.40. Dollar-priced Gold is now more affordable to overseas buyers thanks to the dollar index. Nicholas Frappell is the global head of institutional market at ABC Refinery. He said that gold was benefitting from "concerns about a weaker US dollar and the political situation in the U.S. with the standoff over a government shut down and also the general geopolitical uncertainties". The U.S. Senate has failed to pass legislation extending funding for the government, pushing it closer to a possible shutdown. President Donald Trump also threatened further federal staff cuts. The shutdown may delay the release Friday of important economic data including the non-farm employment report. The JOLTS report released on Tuesday showed a marginal increase in U.S. jobs openings for August. This was accompanied by a decrease in hiring. These results indicate softer labour market conditions. According to CME Group’s FedWatch tool, traders priced in a 97% probability of a 25 basis-point cut this month, and a 76% likelihood in December. ADP's National Employment Report is due to be released later today and should provide more insight into the labour markets. Michael Hsueh of Deutsche Bank, precious metals analyst said that it was difficult to predict an end to the gold rally. Due to its low-interest rate nature, gold, which is a traditional hedge for economic and political uncertainties, thrives. It has risen by more than 47% in the past year. Silver spot also rose 1.5%, to $47.39 an ounce. This is a record high for more than 14 years. Palladium rose 0.9% to $1,267.75, while platinum gained 1.4% at $1,595.85. (Reporting and editing by Sherry Phillips and Subhranshu SAHU in Bengaluru, Anmol Choubey and Anjana Anil from Bengaluru).
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FT reports that BlackRock's GIP is close to a $38 billion acquisition of utility group AES.
The Financial Times reported Tuesday that BlackRock's Global Infrastructure Partners (GIP), which is owned by BlackRock, was close to a deal worth $38 billion, including debt, for the utility group AES. This information came from people who were briefed about the situation. Utilities will benefit from the surge in demand for electricity driven by artificial intelligence (AI) and data centers. This is causing companies and investors to make deals with utilities. The FT reported that although negotiations between GIP and AES had advanced, they could still fail to produce a deal. Could not confirm immediately the report. GIP, a fund that invests in infrastructure, refused to comment on the Financial Times. AES and GIP didn't immediately respond to an 'outside regular business hours request for comment. AES has seen its renewables division grow significantly over the last year. This is in line with Wall Street's expectations for AES' second quarter profit. The global drive for cleaner power generation coincides with predictions that U.S. electricity consumption will reach new records. AES shares surged by nearly 13% after Bloomberg News reported on July 8, that the power company was considering strategic options including a possible sale following interest from major investment firms. GIP is a utility specialist. GIP and CPP Investments purchased U.S. utility Allete for $6.2 billion, including debt, in 2024.
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Wall Street futures drop as the clock ticks towards a US government shutdown
Wall Street futures fell on Wednesday, as the clock counted down towards a U.S. shutdown which would delay the release crucial jobs data. It could also muddy up the outlook for interest rates. The shutdown will begin at 0400 GMT, after the Senate rejected an interim spending measure which would have kept government activities afloat for another few weeks. The Senate's 55-to-40 vote ensured that government agencies would have to cease all activities except "essential", disrupting everything from airline travel to the monthly employment report. S&P 500 and Nasdaq Futures both fell by 0.4%. Gold prices rose 0.2%, to $3,865 per ounce. This is back at the record high set on Tuesday of $3,871.45 an ounce. Investors may give greater weight to the ADP National Employment Report, due later today. Forecasts predict a modest increase of 50,000 jobs in the private sector. "Typically, a shut down is not important for the markets. The 2018-2019 shutdown lasted over a full month and actually led to a rise in Wall Street, according to Kyle Rodda. Rodda said that the markets face two issues. The first is the delayed release of non-farm payroll data. He said that the other issue is "U.S. president Trump has also threatened permanently to lay-off employees, which could turn this shutdown into a small labour market shock." The Federal Reserve is now expected to cut rates in October by 96%, up from 90% a day ago, and there's a 74% chance that they will do so again in December. The Nikkei 225 index of Japan fell 1% on Wednesday after a 11% increase in the previous quarter. South Korean shares increased by 0.7% to add to their 11.5% gains in the previous quarter. This was after data revealed that exports in September rose at the highest pace in 14-months. Taiwan's stocks gained 1.3%. The island's chief tariff negotiator stated on Wednesday that Taiwan would not accept a deal to have half of all semiconductor production take place in Washington. Chinese markets are closed, including Hong Kong. Overnight Wall Street closed the quarter in a positive way, with a higher closing price. The data showed that U.S. employment declined in August, while job openings were marginally higher. Consumer confidence also fell more than expected. The dollar index on the foreign exchange market held steady at 97.84 after three consecutive days of losses. It climbed 0.1% to reach 148.1 yen. This was a small reaction to the Bank of Japan's survey which showed that Japanese companies expect prices to increase by an average of 2.4% per year in the future, well above its 2% target. The Reserve Bank of India will likely keep its rate at 5.5% later in the day as it assesses the economic impact of previous rate cuts amid trade uncertainty. Asia's Treasury yields were stable. The benchmark 10-year Treasury yield in the U.S. was unchanged at 4,1561% after rising 1 basis point overnight. After two days of declines, oil prices stabilized on Wednesday as investors weighed the possibility of OPEC+ increasing output next month with the shrinking U.S. inventories. U.S. crude climbed 0.1% to $62.46 per barrel while Brent rose 0.2% to $66.16.
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Nova Minerals, Australia's antimony producer, receives US grant to produce antimony at Alaskan project
Nova Minerals, an Australian critical minerals explorer, announced on Wednesday that it received a U.S. grant of $43.4 million to produce antimony trisulfide in Alaska at its Estelle Project. This sent its shares to more than a two-and-a half-year high. The U.S. Department of Defense will grant Alaska Range Resources a grant to assist in the development of local supply chains to produce antimony trisulfide and meet the demand of domestic defence-related businesses. Nova stated in a press release that the grant would be used to fund the first phase of Nova's plan to establish a hub for antimony mining in Alaska. In a recent statement, Mike Cadenazzi, Assistant Secretary of the War for Industrial Base Policy, said that antimony metal and trisulfide are used to harden cases and produce primers in low- and medium-caliber munitions. The U.S. president Donald Trump ordered that the Department of Defense renamed itself as the Department of War. This change will require the action of Congress. The shares of the company rose 45.5% during early trading. This was their largest intraday percentage gain since October 20,21, and their highest level since Feb 9, 2023. The benchmark index is trading up by 0.1%.
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Investors weigh OPEC+ production increase against US crude inventory to determine oil price.
After two days of consecutive losses, oil prices were stable in early trading on Wednesday as investors weighed the potential OPEC+ plans to increase output next month against the prospect that inventories would shrink in the U.S. Brent crude futures, for delivery in December, rose by 12 cents per barrel to $66.15. U.S. West Texas Intermediate Crude rose by 12 Cents to $62.49 per barrel. Brent and WTI settled both more than 3% lower on Monday, marking their biggest daily drops since August 1. They both fell by at least 1.5% on Tuesday. Prices were held back by the prospect of a shrinking crude oil inventory in the United States. Market sources cited American Petroleum Institute estimates that crude oil stocks in the United States fell last week while gasoline and distillate stockpiles rose. Sources, who spoke on condition of anonymity, said that crude stocks dropped by 3,67 million barrels during the week ending September 26. Sources said that gasoline inventories rose by 1.3 millions barrels, while distillate stocks increased by 3,000,000 barrels compared to last week. Three sources familiar with the discussions said that OPEC+ may agree to increase oil production in November by as much as 500,000 barrels a day (bpd), triple the October increase, because Saudi Arabia is seeking to regain market share. Two sources claim that eight members of this group, who pump about half of the oil in the world, are considering an increase of 274,000 bpd to 411,000, according to the two sources. According to a third source, the increase could be as high as 500,000 bpd. OPEC posted on X a message saying that reports in the media about plans to increase output by 500,000 bpd are misleading. Hamas' stance was also uncertain in the U.S. President Donald Trump gained the support of Israeli Prime Minister Netanyahu for a U.S. backed Gaza peace plan, but it wasn't clear whether he would accept the proposal. (Reporting and editing by Laila Feast; reporting by Laila KEARNEY.)
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BWX Technologies wins $1.6 billion HPDU Contract
BWX Technologies announced on Tuesday that it had been awarded a contract worth $1.6 billion over ten years by the National Nuclear Security Administration. The contract is to establish a supply of HPDU (high purity depleted Uranium) for U.S. military purposes. The contract will require the nuclear component maker to initiate the construction of a HPDU manufacturing facility in Jonesborough (Tennessee) that will produce 300 metric tonnes of HPDU per year. The National Nuclear Security Administration released a statement separately on Tuesday that said, "This capability will provide the Y-12 National Security Complex with depleted uranium to be used for production and will ensure NNSA’s ability modernize and maintain nuclear deterrent." The primary mission of the Tennessee-based Y-12 is to support Department of Energy nuclear weapons stockpile program. It also supplies enriched uranium to the U.S. Navy for its nuclear-powered aircraft carriers and submarines. The company received a contract worth $1.5 billion from the DOE's semi-autonomous agency to build a domestic uranium plant in Erwin. BWX received a $2.6 Billion order in July to manufacture components for naval nuclear reactors.
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Source: US government will take 5% of Lithium Americas, and a joint venture with GM.
A source familiar with the negotiations has confirmed that the U.S. Department of Energy is taking a 5% share in Lithium Americas as well as a separate 5% in its joint venture Thacker Pass Lithium Mine with General Motors. After-hours trading in New York on Wednesday saw shares of Vancouver-based Lithium Americas rise 34% after stake negotiations were completed. The Trump administration will make this investment, which follows recent investments in Intel and MP Materials. It is a bid to boost industries deemed vital to U.S. security. Last week, it was reported that officials from the administration were in talks with Lithium Americas regarding an equity stake, as they renegotiated the terms of a government loan of $2.26 billion for the mine. The mine is slated to be the largest source of battery metal lithium within the Western Hemisphere. Lithium Americas representatives and GM representatives were not available for immediate comment. Chris Wright, the U.S. Energy secretary, said on Bloomberg TV Tuesday that Washington will take a stake. The percentage of the stake and the separate stake within the GM joint-venture have never been disclosed. Earlier, it was reported that the government, which will be acquiring the stakes through no-cost warrants and the loan's repayment schedule, has requested an unspecified equity amount during recent discussions. Lithium Americas, in response to this request and to secure the initial tranche of loan financing, offered last week the government warrants at no cost that would equal 5% to 10% its common shares. According to a source, the terms of the investment were finalized last week, and even yesterday. GM is a company that Invested $625 Million in the Mine Last year, for a stake of 38%, the company has the right to purchase all the lithium produced in the first phase of the project and a portion in the second phase over a period 20 years. Initially, administration officials wanted a guarantee from GM that it would purchase the metal, regardless of the market conditions. The automaker refused, and this led to the request for an equity stake, as previously reported. Both Republicans and Democrats have long praised the Thacker Pass project as a way to increase U.S. production of critical minerals and reduce reliance on China. Albemarle, a Nevada-based company, produces less than 5 metric tons (5,000 pounds) of lithium. Thacker Pass’s first phase will produce 40,000 metric tonnes of battery-quality Lithium Carbonate per year. This is enough to power up to 800,000. China is the world's third largest producer of lithium, after Australia and Chile, with an annual production of more than 40,000 tons. China's influence in the refining industry is much greater, as it converts over 75% (of all lithium) into battery-grade materials. (Reporting and editing by Ernest Scheyder, Veronica Brown, David Gregorio).
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Stocks surge in late trading as US shutdown looms
On Tuesday, caution ruled the world markets. The dollar and equity prices shook in choppy trading and gold briefly hit a record-high on concerns that a possible U.S. shutdown would delay important jobs data. Donald Trump stated that the United States was likely headed for its 15th shutdown since 1981 and his administration would make irreversible decisions in this scenario. As investors prepared for the shutdown, the dollar fell broadly while U.S. stock markets managed to recover early losses and end slightly higher. The possibility of a U.S. shutdown puts the spotlight on jobs. A government shut down would delay this Friday's release of important employment statistics. This report, released by the Department of Labor on Tuesday, showed that U.S. hiring was down in August and job openings were up marginally. The Federal Reserve could cut rates again next year despite the resilient consumer spending, if labor market conditions remain weak. Monica Guerra of Morgan Stanley Wealth Management, who is the head of U.S. Policy, said that a full-government shutdown on October 1, appears to be more likely. The U.S. stock market suffered modest losses throughout the day, before making gains in the last hours of trading. The S&P 500 gained 0.4%. The Dow Jones Industrial Average gained 0.2%. And the Nasdaq Composite rose 0.3%. Wall Street's gains Tuesday were the culmination of a stellar month for U.S. stock prices. The S&P 500 had its best September ever with a 3.5% gain. The MSCI All-World Index rose 0.4% after the late surge in U.S. stocks. The Nikkei, Japan's stock market, closed at a loss of 0.25%. The STOXX 600 rose 1% for the month. This is its best performance since May. Shaniel Ramjee is the co-head of Pictet Asset Management's multi-asset division. "The earnings picture is improving quite significantly at the same moment that central banks around the world are cutting interest rates, and global growth continues to be good." The Australian dollar gained after the central banks held rates at their current levels, as was widely expected. Oil prices dropped more than 1% due to the prospect of increased production by OPEC+. Meanwhile, China's manufacturing activity declined for a sixth consecutive month in September. A GOLDEN MONTH Gold's impressive rally was boosted by the threat of a government shutdown. Gold briefly reached a record of $3,871.45 an ounce before trading down on the day. It is on track to achieve its largest monthly percentage gain in July 2020. The dollar fell 0.5% to 147.9yen while the euro remained flat at $1.17355. Both the Swiss Franc and the pound also firmed up against the dollar. The dollar index is expected to finish September with little change. ING currency analysts wrote in a report that the yen would likely outperform as a hedge against a U.S. shutdown. The Fed will be calculating the timing of rate reductions based on the September employment report, which is due this Friday. The Fed's meeting on October 29 could be thrown into confusion by a prolonged government shutdown. China's purchasing manager's index increased to 49.8 from 49.4 at the end of August. This is below 50, which separates growth from contraction. The report suggested that producers were waiting for more stimulus to boost the domestic demand as well as clarification on a U.S. Trade Deal. China's blue chip CSI300 Index gained almost 0.5%. This is the longest streak of gains since October 2017, and it was also its fifth consecutive month. Reserve Bank of Australia kept its cash rate at 3.60%. Recent data indicated that inflation could be higher than expected in the third quarter, and the economic outlook was uncertain. The data that showed an increase in inflation in four important German states did not have a significant impact on the market. The oil price remained weaker because of an expected production increase by OPEC+, and the resumption in Iraq's Kurdistan. Brent crude oil fell by 1.3%, to $67.10 a barrel. U.S. crude dropped 1.5%, to $62.51.
Australia PM worried about China's reported pause in BHP iron ore purchase
The Australian Prime Minister Anthony Albanese expressed concern on Wednesday about a report stating that China's iron ore state buyer has taken steps to stop purchases of iron ore from BHP.
Bloomberg News reported Tuesday, citing sources familiar with the situation, that the state-owned China Mineral Resources Group had asked steelmakers and traders in the country to halt purchases of BHP’s seaborne iron ore shipments denominated in dollars during the annual price negotiations.
Albanese, a reporter, said: "I'm concerned about this and we want to ensure that the markets are operating properly."
We have dealt with these issues before. I want Australian iron ore that can be exported to China with no hindrance.
CMRG did not respond to an email request for comment. BHP's spokesperson stated on Tuesday that the company doesn't comment on commercial negotiation.
Albanese expressed his hope that the issue will be resolved soon and acknowledged that differences may occur during price negotiations.
Australian Treasurer Jim Chalmers announced that he would arrange a meeting between BHP CEO Mike Henry.
The most valuable product Australia exports is iron ore. However, a report by the government in June stated that earnings could drop to A$105 Billion ($69.39 Billion) for the fiscal year ending June 2026 from A$116 Billion the previous year due to an increase in global supply.
China, which is the largest consumer of iron ore in the world, purchases about 75% global seaborne ore. Three years ago, CMRG was set up to purchase ore for its steelmakers, gaining more leverage by being a single large buyer.
BHP is the largest listed mining company in the world and China's third biggest iron ore supplier after Rio Tinto and Vale. Reporting by Melanie Burton and Renju José in Melbourne; editing by Jamie Freed.
(source: Reuters)