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No payrolls, no problem as stocks hit record highs
The world stock market was on track for a solid gain this week and new record highs as the unstoppable rise in tech stocks and expectations of lower U.S. rates offset uncertainty over the U.S. shutdown. Investors have mostly ignored the 15th shutdown since 1981. But on Friday, it meant that traders were unable to get the most important economic data of the month - the U.S. monthly payroll figures. MSCI's 47-country world share index didn't seem to be bothered by the overnight record highs in Wall Street and Europe on Thursday. Equities have had their best week since early April. The euro also ticked up on Friday thanks to the Eurozone services sector PMIs. They accelerated to a high of eight months due to moderate growth in Germany and Spain. However, France's political uncertainties continued to weigh. Christopher Hodge is the U.S. economist for Natixis. He said that the lack of payrolls later has in some way bolstered forecasters' current views on the possibility of another rate cut this month. Hodge added that the markets had also dealt with shutdowns in the U.S. for a long time. The only difference this time around is that the economic and policy cycle is more ambiguous. Benchmark government bonds yields, the main driver for global borrowing costs, increased in both the U.S. The markets have almost completely priced in a Fed rate cut of 25 basis points this month, and at least four by the end 2026. GOING GOLD The MSCI main Asian share index rose overnight, closing with a weekly gain of 2.3%. It has now increased by about 23% in this year. China and other parts of Asia were closed on holiday. Trading was therefore lighter than usual, although Taiwan reached a new record high. Japan's Nikkei also rose 1.5% before the weekend's crucial vote to determine the next Prime Minister. Wall Street futures also pointed higher. All three major U.S. indices closed at new peaks on Friday, buoyed by the insatiable enthusiasm of investors for AI. Weiheng chen, global investment strategist, J.P. Morgan Private Bank said that investors seem willing to give Washington some time to settle its differences, even though a prolonged shut down may begin to affect the markets. Chen stated that investors are currently more interested in the possible impacts of the Fed rate-cutting cycles, immigration and trade policy, economic data and corporate earnings. Investors have relied on alternative data, both public and private, to gauge the state of the U.S. labor market. The dollar is now under pressure. The dollar index, which compares it to six other major currencies, is down again in Europe. It's on track for its largest weekly drop since august. The Japanese yen is the most significant beneficiary of the drop in the dollar, although it fell 0.3% on Friday to 147.74 dollars after Bank of Japan Governor Kazuo Umeda failed to provide any clues as when the Bank will raise interest rates next. Oil prices in commodities recovered slightly for the day, but are on track to experience their biggest weekly decline in more than three months. Brent crude futures were at $64.81 a barrel, while U.S. West Texas Intermediate crude was at $61.30 a barrel. Gold, on the other hand, is on track to reach a record high of $3.896 per ounce, which was set on Thursday. Low interest rates make it a popular asset in times of uncertainty. The stock has risen 47% in the past year. Gold is the best safe haven as the U.S. Dollar's position as the world reserve currency is being tested. We continue to see gold as the ultimate asset diversifier, said Greg Hirt.
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Take Five: Low Visibility Ahead
Even though the U.S. Government is shut down, this has not stopped stocks from reaching new highs. They are confident that rate cuts that favor bulls will continue to keep momentum. One problem is that it's difficult to see what's happening with the economy. Here is your week ahead from Alden Bentley, Rocky Swift and Amanda Cooper, in London, and Alun, Dhara and Amanda Ranasinghe in New York. 1/ DOLLAR BEAR SHARPENS THEIR CLAWS The dollar is in a good position to start the final quarter of 2025. After falling in the first two quarterly periods, due to criticism of U.S. exceptionalism, the dollar ended Q3 with an 1% increase against major competitors. The greenback is still down 10% this year, but its stabilisation has brought some calm to the nearly $10 trillion a day FX markets. The immediate threat to the independence of the Federal Reserve, a source of potential dollar stress, has abated. The weak labour market adds to Fed rate cut bets. Dollar bears are unlikely to hibernate long, especially if the U.S. shutdown continues. Experts in FX say that the yen is particularly attractive, while the euro may still reach $1.20, which it was so close to reaching last month. 2/ WHO NEEDS DATA? The U.S. data schedule for next week is light. This means that further market disruptions from the shutdown of the federal government should be minimal. Also, the U.S. Treasury Department will conduct a normal note and bond auction. The market is likely to make due without the U.S. International Trade Report on Tuesday and Friday's preliminary University of Michigan October sentiment index. Treasury will sell $58 billion in notes for three years on Tuesday, $39 Billion in 10-year notes on Wednesday, and $22 Billion in 30-year bonds Thursday. Bond market cannot yet calculate the fiscal impact of a furlough of federal employees indefinitely. Demand could be strong as long as the benchmark yield on 10-year bonds is above 4%. The earnings parade for Wall Street's largest banks will begin the following week with the announcement of the third-quarter results by Delta Airlines, Levi Strauss and other companies. 3/ A SHOT IN THE ARROW Global pharmaceutical stocks that were in trouble have received a boost thanks to a deal struck between Pfizer, the U.S. and Medicaid in which the price of prescription drugs will be lowered in exchange for tariff reductions. U.S. president Donald Trump took aim at the industry over high U.S. drug prices, which sent shares of drugmakers to multi-decades lows. Investors now believe that the agreement, which is more benign, will lead to more deals. The U.S. Healthcare stocks have gained 5.6% in the past week, their largest weekly gain since over three years. European healthcare stocks are up 7.6% and on track to their best week ever. It's now time to wait and see if the deals come to fruition, and if they justify this optimism. The U.S. also imposed tariffs on imported kitchen cabinets, furniture and timber. Trump has said that he will impose a 100 percent tariff on all films made overseas which are sent to the U.S. The oil industry is struggling to cope with the hefty global supply, which only seems to increase. Demand also does not seem to be able to keep up. According to the International Energy Agency, there may be a surplus of 3 million barrels a day by 2026 compared to an excess of 600,000. The OPEC+ Group, which includes OPEC, other exporters, including Russia, met at the weekend. It is expected that the group will accelerate its pace of unwinding production curbs imposed by the pandemic. Around $65 per barrel, the price of crude oil is about half that it was in 2022 when Russia invaded Ukraine. Geopolitics will continue to be the wildcard for producers, consumers and forecasters alike. 5/ DIRECTION UNDER DOWN It is almost certain that the Reserve Bank of New Zealand's rates will be cut next week. How much will the Reserve Bank of New Zealand cut rates? In August, the RBNZ cut interest rates to a low of just 3%. This was the lowest rate in three years. Last month, data showed that New Zealand's second-quarter economy shrank by 0.9% due to uncertainty over tariffs and a weakening housing market. Money markets are fully pricing in a quarter point cut to 2.5% at the RBNZ meeting on October 8. However, the likelihood of a half-point drop has risen to 44.5% compared to about 25% one week ago. The RBNZ's policy divergence from the Reserve Bank of Australia which held rates at the same level in September could cause further weakness for the kiwi. It is already down three years against the Antipodean counterpart.
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The world food price index drops as sugar and dairy prices fall, while meat prices rise.
The Food and Agriculture Organization of the United Nations reported on Friday that global food commodity prices fell in September, as decreases in dairy and sugar offset a new high for meat prices. The FAO Food Price Index (which tracks a basket international traded food commodities) averaged 128,8 points in September. This is down from an August revised to 129,7. The index rose 3.4% over the same period last year. However, it is down nearly 20% from its record high in March 2022 after Russia invaded Ukraine. Lowest Sugar Prices Since March 2021 Last month, the indicator fell by 4.1%, reaching its lowest level since March 2021. FAO stated that the fall in sugar prices reflected an improved supply outlook with Brazil's production exceeding expectations and India and Thailand's harvest prospects being favorable. The dairy price index of the agency fell 2.6% on a month-to-month basis, mainly due to a steep decline in butter prices in Oceania amid an increase in production prospects. FAO's benchmark cereal price fell 0.6% from August. Wheat prices dropped for the third consecutive month because of large harvests and low international demand. Prices of maize also fell, partly due to a temporary suspension in export taxes. The rice index of the agency also fell by a month due to reduced orders from buyers in Africa and the Philippines. US BEEF MARKET DRIVES RECORD MEAT PRICES Vegetable oil fell in price by 0.7%, as palm and soybean oil quotes declined and offset the increase for sunflower and rapeseed oils. FAO's indicator of meat prices rose 0.7%, reaching a record high. This was due to the increase in beef and lamb meat quotes. The price of beef also reached new heights, boosted by a strong demand in America amid a limited supply. In a separate document, the FAO raised its forecast of global cereal production for 2025 from 2.961 million metric tons last month to 2.971 millions metric tons. It said that the latest forecast showed a 3.8% increase in output compared to 2024, which is the highest annual growth since 2013. The upward revision has been attributed to the higher production prospects of wheat, maize and risotto. Reporting by Gus Trompiz, Editing by Mark Potter
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What is known about Indonesia's radioactive contamination
Indonesia detected radioactive contamination in a sprawling area of industrial zones near Jakarta. The zone was found to contain high levels Caesium 137 (Cs-137), an artificial radionuclide. What we know about the world so far is summarized in these facts: - Two sites in August were found to have high levels of Cs 137 contamination. Indonesia's Environment Minister now states that the contamination was discovered in approximately 10 locations within the Modern Cikande Industrial Estate which is home to various industries. The Centers for Disease Control and Prevention in the United States say that Cs-137 can be found in medical devices and gauges. Cs-137 is also a byproduct of nuclear fission in nuclear reactors, and of testing nuclear weapons. Indonesia does not have nuclear weapons or reactors. The environment minister stated that the radiation reading at some industrial estates in Indonesia is 1,000 microSieverts (or 1 milliSiervert per hour). The units used to measure radiation are Sieverts. They quantify the amount of radiation that is absorbed by the human tissue. Natural radiation exposure is between 2 milliSievert and 3 milliSiervert. Exposure to 100mSv per year is the level where any increase in cancer risks is evident. One Sievert (1,000 milliSierverts) cumulatively would cause cancer in 5 of 100 people exposed. At least nine individuals have been treated due to exposure at the Indonesian Industrial Estate. It's unclear how long the workers or residents were exposed to the contamination and how much they took in while living near the highest levels. Authorities believe that the metal factory located on the estate is the source of contamination. The estate was investigated first for contamination following the August discovery by the U.S. Food and Drug Administration that a batch exported from Indonesia to the United States contained Cs-137. The shrimp were processed at the industrial estate. The FDA stated that the shrimps did not enter U.S. trade. The FDA has derived an intervention level for Cs137 of 68 Bq/kg. This is lower than the level detected in this shipment. FDA - FDA stated that the product was not a serious hazard for consumers but warned against eating or selling the shrimp imported by this company. The FDA said that avoiding products containing such levels would reduce exposure to low-level radioactivity, which could have adverse health effects with continued exposure. The Indonesian Industrial Estate is still in operation, but the authorities are closely monitoring it and taking steps to decontaminate. In January 2020, Indonesian nuclear agency detected Cs137 contamination near a residential area of Serpong, in South Tangerang. (Reporting and editing by Martin Petty, Clarence Fernandez).
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India's palm oil imports in September hit a 4-month low; soyoil jumps up to a 3-month high
Five dealers claim that India's palm-oil imports fell in September to the lowest level for four months as refiners substituted palm oil with soyoil. India's increasing soyoil and lower palm oil imports could impact the benchmark Malaysian palm futures, while supporting U.S. soybean futures. According to dealers, palm oil imports dropped 15.9% on a monthly basis in September, to 833,000 tons, the lowest level since May. Dealer estimates show that soyoil imports have risen 37.3%, to 505,000 tonnes, to their highest level since July 20, 22. Meanwhile, sunflower oil imports are up 5.8%, to 272,000 tons, an eight-month record. Estimates show that India's total imports of edible oils in September fell 0.7% from the previous month to 1.61 millions tons due to lower palm oil imports. Dealers said that the import figures do not include duty-free shipments from Nepal which arrived via land border. Sandeep Bajoria is the chief executive officer of Sunvin Group in Mumbai, an oil brokerage. Bajoria, a Bajoria spokesperson, said that the palm oil stocks in India are at a comfortable level after large imports from June to August before the festival season. The demand for edible oils in India, especially palm oil, usually increases during festival season due to the increased consumption of sweets, fried foods, and fried food. Rajesh Patel is the managing partner of edible oil trader GGN Research. He said that in September, India imported 11,000 tons soyoil, which was the first shipment for a very long time. India's palm-oil imports in October are expected to drop to about 600,000 tonnes, while imports of soyoil will likely surpass 450,000 tons. This was the prediction from a Mumbai-based trader with a global trading house. India imports mainly palm oil from Indonesia and Malaysia and soyoil from Argentina, Brazil and Russia and Ukraine. GGN Research estimates that Nepal's edible oils imports fell to 35,000 tons from 95,000 in August. (Reporting and editing by Eileen Soreng; Rajendra Jadhav)
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Gold prices rise for the seventh consecutive week on fears of a US shutdown and rate cuts expectations
Gold prices held firm on Friday as they headed for their seventh consecutive weekly increase, as the expectation of more U.S. rate cuts and concern over an extended government shutdown contributed to support. As of 0739 GMT on Friday, spot gold remained at $3,859.69 an ounce after reaching a record-high of $3,896.49 per ounce on Thursday. This week, the bullion price has risen by 2.7%. U.S. Gold Futures for December Delivery were up 0.4% to $3,883. The U.S. shutdown is now in its third week, as of Friday. This has caused key economic data to be delayed, including the nonfarm payrolls report that was scheduled for Friday. Alternative data from both public and private sources showed that the U.S. employment market likely remained stagnant in September, with slow hiring and no change to unemployment rates. UBS analyst Giovanni Staunovo said that the data indicates the Fed will cut rates. "And as we expect further rate cuts in the coming months, this should further support the gold prices over the next few months. We are looking for the yellow metallic to surpass the $4,000/oz by the end this year." According to CME Group’s FedWatch tool, investors are pricing in 97% of a rate cut of 25 basis points in October and 88% of another such cut in December. Lorie Logan, President of the Federal Reserve Bank of Dallas, said that the Fed had taken out insurance against a sharp decline in the labour markets with its rate reduction last month but still needed to be cautious. In an environment of low interest rates, gold, which is often used to store value in times of political or financial uncertainty, thrives. Bullion prices have risen by 47% this year. In India, gold demand rose despite the record-high prices this week, and Chinese markets were closed on a holiday. Silver spot rose 0.7% at $47.30 an ounce. Platinum was up 0.2% at $1,571.91 while palladium increased 0.7%, to $1250. (Reporting and editing by Anmol Mukherjee and Anmol Choubey in Bengaluru)
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Oil prices rise 1% following fire at US refinery. Set to end four-session loss streak
After four consecutive sessions of declines, oil prices rose by 1% on Friday following a fire at one of the biggest refineries in the U.S. West Coast. However, they were still on course for their steepest week-long fall since late June. Brent crude futures rose 61 cents or 1% to $64.73 per barrel at 0658 GMT. U.S. West Texas Intermediate Crude climbed by 62 Cents, or 1% to $61.10 per barrel. According to a county official, the fire was contained to just one area at Chevron’s El Segundo Refinery. The U.S. Energy Major also reported a flare-up emergency at its 290,000 BPD refinery that produces primarily gasoline, jet fuel, and diesel. Brent traded 7.6% lower and WTI fell 7% weekly due to expectations that OPEC+ could increase output despite concerns about oversupply. Sources told The Week that OPEC+ may agree to increase oil production in November by as much as 500,000 barrels a day, which is triple the October increase, because Saudi Arabia wants to regain market share. Tony Sycamore is an analyst with IG. He said, "If OPEC+ announces a 500,000 bpd hike this weekend, that's likely to be a large enough increase to send crude back down, first to the support level of $58.00 before testing this year's lowest levels (of about $55.00)." Analysts say that a potential increase in OPEC+ oil supply, a slowdown in global crude refinery operations due to maintenance, and upcoming seasonal drops in demand will accelerate the buildup of oil stocks in the U.S. Energy Information Administration reported on Wednesday that U.S. crude, gasoline, and distillate inventory rose last week due to a decline in refining and demand. JPMorgan analysts wrote in a report that they believe September was a turning-point, and the oil market is now headed towards a large surplus in Q4 of 2025 as well as next year. The Group of Seven finance ministers announced on Wednesday that they would increase pressure on Russia, targeting those countries who continue to buy Russian oil. (Reporting and editing by Jamie Freed; Jacqueline Wong, Mrigank Dhaniwala, and Sudarshan Varadhan)
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ASIA GOLD - India's festive spirit boosts demand for gold; China is on holiday
The physical gold demand in India increased this week, despite the record-high prices. A major festival in India's second largest bullion market boosted purchases while Chinese markets were shut for a holiday. Indians celebrated Dussehra, the day when gold is considered auspicious. Amit Modak is the CEO of PN Gadgil and Sons, a jeweller. Despite the fact that demand has increased this week, experts in the industry say it is still lower than last year. Modak stated that the share of gold coins in small denominations rose, but jewellery volume declined due to higher manufacturing costs. The overall festive demand is nearly 15% lower than last year. On Friday, domestic gold prices were around 117.200 rupees for 10 grams after reaching a record-high of 117.300 rupees in the morning. Indian dealers quoted a premium This week, the premium could be as high as $9 per ounce, which includes 6% import duties and 3% sales taxes, compared to last week's $7. India's gold and silver imports nearly doubled from August to September, despite record prices. A Mumbai-based gold dealer said that the festive season started on a better note than anticipated, as buyers continued to purchase despite increasing prices. Chinese markets will be closed during the Golden Week and reopen October 9th. Last week, gold discounts for the top bullion consumer increased to $31-$71 an ounce. Peter Fung said that if we see a correction in the price, there could be a strong buying activity once the Chinese market returns after the holiday. People would still want to buy gold, and they are confident about gold on the long-term. In Hong Kong, gold In Singapore, the price was $1.50 higher than in Singapore. Gold traded at par prices with a premium of $2.20. In Japan, bullion The price was equal to or higher than spot prices by $1 per ounce.
PIC, the South African state investor, benefits from the mining stocks rally and green bets decline
Public Investment Corporation, a South African state-owned investor, reported an increase of 22.5% in its listed equity portfolio for the fiscal year ending March 2025. The report was published on Friday.
PIC is Africa's largest asset management company, managing assets for clients in the public sector including South African civil servants pension funds.
The South African stock exchange's 31.3% return on the dollar over that period, significantly outpacing the 8.6% growth of emerging markets according to MSCI, was a major factor in the financial returns for the 2024/25 year. This was mainly due to cyclical and resources-heavy sectors.
PIC's investment in non-life insurance companies led the sub-sector with a 62% increase, while stocks of construction and materials in its portfolio grew by 44% on expectations for infrastructure recovery.
PIC reported that precious metals and mining stocks gained 42.5%, as geopolitical concerns boosted demand for assets such as gold and platinum. These are seen as safe-haven assets.
PIC's alternative energies stocks, on the other hand, fell by 51.3% due to regulatory obstacles and low gas prices. Chemicals declined 36.5% as a result of weaker gas and ammonia markets. Industrial metals also fell 24.2% due to falling commodity prices and increasing production costs.
This divergence highlights the greater challenge facing emerging markets in balancing economic growth with climate ambitions. South Africa has committed to reducing greenhouse gas emissions by net zero in 2050. It is also seeking climate finance from wealthy nations to help it transition from coal to renewables.
PIC stated that regulatory restrictions prevented it from increasing exposure to financials which affected overall performance. The fund has emphasized that it is increasing its commitment to sustainable and early-stage investments. However, they are still small compared to the listed equity holdings. $1 = 17.2378 rand (Reporting and editing by Colleen Goko; Susan Fenton).
(source: Reuters)