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Investors look to end US shutdown as they increase their investments in world stocks
The dollar was stable and government bond yields were rising. Global shares rose Monday on the back of optimism that a resolution to a historic U.S. shutdown is in sight. On Sunday, the U.S. Senate advanced a measure that would reopen federal government and put an end to a shutdown of 40 days. The shutdown has caused federal workers to be unable to work and food aid delays and slowed air travel. In a procedural motion, the Senate advanced a bill passed by the House. The amended version will fund government operations until January 30, and includes a package of 3 full-year appropriations. Wall Street is expected to open higher, with Nasdaq Futures rising 1.5% and S&P 500 Futures increasing 0.9%. The STOXX pan-European 600 index rose by about 1.4%. Diageo's shares also soared following the appointment of a new CEO. Prashant Nnewnaha, senior Asia-Pacific rate strategist at TD Securities said: "A possible ending to the longest-running U.S. shut down is a positive development for markets." We expect that a vote in the House will take place on Wednesday and the government will reopen next Friday. The Senate may pass the bill but it must be approved by both the House of Representatives, and then sent to the President Donald Trump, who will sign the package. This process could take a few days. The shutdown has had a negative impact on the U.S. economic system. Federal workers, from airports to the military and law enforcement are not paid. Meanwhile, the central bank is blinded by the limited reporting of government data. Kevin Hassett, White House economist, said in an article that the fourth quarter GDP could be negatively affected if shutdown continues. The data released on Friday shows that the U.S. consumer's sentiment fell to a near 3-1/2 year low in early Novembre as consumers worried about economic consequences. Mark Haefele is the chief investment officer of UBS Global Wealth Management. He said that allocations in quality fixed income and gold as part of a well-diversified, risk-managing portfolio can help to manage risks. Haefele wrote in a report that "overall, the combination between Fed easing, robust corporate earnings, and quality bonds offers an attractive risk-reward ratio." Under-allocated investors must add exposure to transformative growth trends, including AI. On Monday, gold rose by around 2.5% to reach its highest level in the past two weeks, at $4,097 per ounce. This was due to a combination of weak U.S. data, Federal Reserve expectations for rate cuts, and a weaker dollar. On Monday, the overall risk sentiment was still positive. The CSI300 blue chip index in China closed with a gain of almost 0.4%. This reversed early losses. Hong Kong's Hang Seng Index also rose by 1.6%. The data released on Sunday shows that China's producer prices deflation has eased and consumer prices have returned to positive territory. This is as the government intensifies its efforts to reduce overcapacity and fierce competition between firms. The benchmark 10-year Treasury yield increased by about 4 basis points, to 4.13%. This was due to the risk-on sentiment that has taken hold on global markets. The dollar has recovered some of the losses it suffered last week as investors weighed the prospects for the U.S. economic outlook against a Fed that is more hawkish. Last week, Fed officials reiterated that they prefer to be cautious about further rate reductions. Recent data has stoked concerns over a weakening U.S. labor market. The markets are pricing in 63% of a rate cut by the Fed for December. Dollar rose by 0.44% against the yen to 154.11. However, the dollar was not much different against the Euro and Sterling. A summary of the opinions expressed at the Bank of Japan's October meeting revealed that policymakers were increasingly convinced of the need to increase interest rates soon. Some even argued for the necessity of ensuring wage increases will continue. Brent crude futures rose 29 cents per barrel to $63.92, while U.S. Crude climbed 27 cents, to $60.02. Reporting by Nell Mackenzie, Rae Wee and Kim Coghill Editing by Dhara Ranasinghe, Clarence Fernandez and Kim Coghill
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Vale is preparing to meet Indian steel demand, as China's output has stagnated. CEO of Vale says
Vale, a Brazilian mining company, is gearing up to meet the rising demand for iron ore from India. The country could double its production of steel by the end a decade. He said that the stagnant steel demand in China could be offset by increased sales to India and other Asian countries. In China, steel production has flattened at around 1 billion metric tonnes annually, and may even decline in future years. Pimenta, in an interview conducted at Vale's Rio de Janeiro headquarters, said that India has 1.6 billion citizens, is bigger than China and requires massive infrastructure investments. This means steel. In the next five or seven years, he said that the capacity of India’s steel producers will likely double to 300 million tonnes. Pimenta said that the high-grade ore from Vale and India's lower quality supply blend well together, creating new opportunities for both markets. "We add quality to the Indian mix." "We see an enormous growth opportunity as steel production doubles," Pimenta stated. India will import around 10 million tons this year of Vale ore, a significant increase from the almost zero imported a few short years ago. However, it is still a tiny fraction of Vale sales, which are accounted for by China. Vale believes that China's output will stabilize, even though it remains the world's largest steel producer. "We do not see any growth in the future." Pimenta stated that China's production is likely to remain stable, or even decrease, in comparison with India's annual growth of 12%. Vale expects a rise in demand from other Asian countries, including Vietnam, where sales are projected to reach 8 million tons by 2025. This is a sharp increase from the previous year. VALE DAY Vale's strong third-quarter results, including its strongest iron ore production since 2018 and a 5% increase in sales, puts it well ahead of its long-term strategic update that will be presented at its annual investor event "Vale Day", which takes place on December 2 in New York. Pimenta refused to comment on the new production targets but said Vale would outline projects to increase iron ore and Copper capacity in its Northern System operations. Vale has announced that it will invest 70 billion reais (12.95 billion dollars) in Brazil's "Novo Carajas program" by 2030, which includes a project to increase the annual iron ore production capacity by 20 millions tons. The initiative, which is now 80% completed, will begin operating in late 2026. Pimenta stated that as we continue to explore Carajas' potential, we become more optimistic. We'll increase investor confidence by bringing more visibility to Vale Day. Vale also plans to double copper production by 2035. Vale is implementing expansion plans and expects to regain the title of the world's biggest iron ore producer in 2019. Rio Tinto had taken the lead following Vale's 2019 Brumadinho Dam disaster. Vale, outside Brazil, is considering selling the Thompson Nickel Mine in Canada due to market interest and low prices caused by Indonesia's booming output. Pimenta explained that it was a difficult asset to get to the price level they wanted. "We're assessing whether there's another owner." The mine will produce about 10,000 tonnes in 2024 or 6% of Vale’s total. $1 = 5.4039 Reais (Reporting and Writing by Marta Nogueira, Marcela Ayres and Chris Reese, Editing and Revision by Brad Haynes, Chris Reese and Brad Haynes)
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Blog of the ECB says that euro zone banks are adjusting loan rates to greener companies
According to a blog published on Monday by the European Central Bank, euro zone banks offer loans at more favorable terms to companies that have a better performance in climate change. They may also be punishing those who pollute. Since years, the ECB has pushed banks to disclose and manage climate risk using a variety of tools, such as binding supervisory orders and fines, and collateral repricing. This is important because the European economy heavily relies on bank financing for investment in contrast to the United States where capital markets are used more frequently to generate funding. The blog, which analysed responses to the ECB Bank Lending Survey quarterly, said that banks offer a climate discount' when assessing risk for green firms and companies in transition. Also, they appear to charge a "climate risk premium" for high-emitting companies. Net 20% of banks said they expected to relax credit standards for green companies and 13% planned to do the similar for transitional firms. A net 35% of banks surveyed said climate risk would lead to tighter lending standards for high-emitting firms. Transition risk will not have a significant impact on the financial costs of firms facing climate change, but it can affect physical risks. Mortgages are also experiencing a similar trend. High-energy-performance buildings have an increasingly dampening impact on credit standards and banks also see increasing demand to finance such units. Balazs Koranyi is the reporter; Emelia Sithole Matarise is the editor.
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United Arab Emirates to sign trade agreement with Chad before 2025
The United Arab Emirates' trade minister stated on Monday that the Gulf state could complete negotiations for a bi-lateral trade agreement with central African state, Tchad, by the end the year. The Comprehensive Economic Partnership Agreements (CEPA) are trade, investment, and cooperation agreements that form a crucial part of the UAE's long-term strategy to boost growth and reduce its dependency on fossil fuels. Thani Al Zeyoudi, speaking on the sidelines at the UAE-Chad Trade and Investment Forum in Abu Dhabi's capital, said: "We are building a strong bilateral relation between the UAE and Chad." Zeyoudi added that the negotiations have moved to market access. Zeyoudi stated that bilateral trade between UAE and Chad is $1.9 billion. This represents a growth of more than 30% over the past year. In Abu Dhabi, the Chad launched its national development program "Chad Connection 2030" on Monday. The IMF-backed program seeks $30 billion of public and private investment. Tahir Hamid nguilin, the finance minister of Chad, said that there was a very good chance for this goal to be achieved. The UAE will be expected to play a major role in the plan's economic sectors, including infrastructure, energy, agriculture, mining, agribusiness and logistics. Zeyoudi stated that more than 39 agreements had been signed at the event. 18 of these were UAE-based, and the total value of all the projects would exceed $6.2 billion, if they were fully implemented. Zeyoudi stated that CEPA negotiations were also nearing completion with Nigeria, and are at an advanced level with Rwanda. Reporting by Rachna uppal, Editing by Frances Kerry
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Gold reaches two-week highs as US data weakens and rate cuts are expected
Gold prices rose by 2% Monday, reaching their highest level for two weeks. Weak U.S. data increased expectations of a Federal Reserve rate reduction next month. A weaker dollar also helped to support gold. Gold spot rose 2.1%, to $4,082.17 an ounce, at 1138 GMT. This is the highest price since October 27. U.S. Gold Futures for December Delivery rose 2% to $4.090.50 an ounce. Gold is now more affordable to overseas buyers due to the drop in the dollar index. Jigar Trivedi is a senior research analyst with Reliance Securities. He said, "There are concerns about the U.S. economic situation because of the weak numbers, and that the main focus continues to be on the dollar index." Trivedi said that the bullion market has benefited from safe-haven purchases due to geopolitical tensions and the ongoing trade war. Last week, data showed that the U.S. economy lost jobs in October. These losses were in the retail and government sectors. A survey on Friday showed that the U.S. consumer's sentiment dropped to its lowest level for nearly three-and-a half years early in November due to concerns over the economic impact of the longest government shutdown ever. The U.S. Senate passed a bill on Sunday that would reopen federal government offices and end the shutdown of 40 days. In an interview broadcast on Sunday, White House economist Kevin Hassett warned that the U.S. economy could experience a negative fourth-quarter growth if the government shutdown continues. The market participants see a 66% chance that the Fed will cut rates in December. Gold is a non-interest bearing asset that benefits from low rates and economic uncertainty. Saxo Bank stated in a report that "we are cautious" about predicting an immediate return to highs. Palladium rose 2.2% to $1410.48. Platinum rose 1.7% to 1,571.10. (Reporting and editing by Emelia Sithole Matarise and Joe Bavier in Bengaluru)
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Swedish industrial giants agree to invest new modular nuclear reactors
Vattenfall CEO, Vattenfall, said that Sweden was closer than ever to building new reactors. This is after a group large industrial firms decided to invest 400 millions Swedish crowns (42.5 million dollars) in small modular nuclear reactors. Industrikraft is a group of 17 industrial firms, including SKF and Volvo Group, that have agreed to invest in Videberg Kraft. This company was set up to help build several small modular reactors. In a Monday joint statement, the group said it planned to take 20% of Videberg Kraft in the future. Vattenfall plans to build three to five small modular reactors in its existing Ringhals facility in Varo, south-west Sweden. This will provide a combined output of approximately 1,500 MW. Vattenfall CEO Anna Borg stated that the announcement was a vote of confidence for new nuclear power in Sweden. She told reporters that "we are closer than we've been in 40-years and, if it were up to us, this will happen." The final decision about the investment is still many years away. Vattenfall shortlisted Britain's Rolls-Royce SMR and U.S. Group GE Vernova as two possible suppliers for the nuclear reactors. Borg stated that a decision would be made in 2026. The government is willing to share the risks of investing in new nuclear reactors. (1 dollar = 9.4155 Swedish Crowns) (Reporting and editing by Conor Humphries; Reporting by Johan Ahlander)
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Aluminum premium reaches record high in the US due to tariffs and global squeeze
The U.S. physical market for aluminium has seen record-high premiums due to steep import tariffs as well as a shortage of supplies. On June 4, President Donald Trump increased tariffs on aluminum imports by 50% in order to encourage investment in U.S. manufacturing of the metal. It is used for construction, power generation and packaging. The benchmark price at the London Metal Exchange is usually paid by buyers on the U.S. Physical Market plus a premium to cover costs like freight and taxes. Since June, the duty-paid Midwest Premium has risen, reaching a record of 88.10 Cents per lb, or $1,942 per metric ton, on Friday. A U.S. buyer on the spot market will pay $4,792 per ton if the aluminum price is $2,850. The duty on U.S. aluminum imports is now $2,850 per ton. This compares to $560 a tonne at the beginning of the year. Harbor Aluminum, a consultancy, said that the increase was also due to falling aluminum stocks After Trump ended trade negotiations with Canada in October, he was "strongly convinced" that tariffs in the U.S. would be permanent and without exemptions. According to Trade Data Monitor, U.S. aluminum imports from Canada accounted for more than 2.7 millions tons or 70% of total imports last year. "Trump said he would not do a deal until he finished his term." Even the optimists have now retreated for the moment," said Dmitri Cernes, a U.S. aluminium trader. The U.S. consumer also faces intense competition when sourcing aluminum, in part due to China's 45-million-ton production limit. Tom Price, an analyst at Panmure Liberum, expects a deficit in the aluminium market of 1.8 millions tons this year. Price stated that "China's net exports have dropped from 1.9 million to 900,000 tonnes a year over the past 2-3 years." Over the same period of time, aluminum metal production outside China fell by 1.1 million tonnes a year. This is a total of two million tons less aluminium available outside China. (Reporting and editing by Alexander Smith; Pratima Deai)
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As the reserve agreement expires, Uniper has mothballed the Swedish oil-fired unit.
The German utility Uniper has mothballed its 335 megawatt oil-fired Karlshamnverket 2, located in southern Sweden, after the contract to provide backup power during the winter expired. Svk said that the move, which takes effect on November 16, is a direct result of the cancellation of the purchase of Sweden's Strategic Power Reserve announced by the transmission grid operator in October. It added that the cancellation of the contract left it without any long-term contracts and also with no commercial conditions for continuing operations. Henrik Svensson said that the manager of the power plant, Uniper, believes the closure would have a negative impact on the system's adequacy. The region is more vulnerable to shortages because the demand in southern Sweden often exceeds supply. It said that by mothballing the unit, block 2 was preserved and adapted to a longer period of downtime. Uniper also maintains an ongoing dialogue with the relevant authorities and the government about the current situation and future options. Uniper stated that Block 3 of Karlshamnverket is also not affected, with a 335 MW capacity. However, in order to continue operation, a solution on a longer-term basis must be found. Block 1 of Karlshamnverket has been permanently closed since 2015. Reporting by Nora Buli and editing by Terje Solsvik
Appian Capital and Sibanye reach $215-million settlement on cancelled Brazil Mines Deal
The companies announced on Monday that they had reached a settlement of $215 million over the South African company's cancellation of a $1.2billion deal to purchase the investment firm’s Brazilian nickel-and-copper mines.
Sibanye's shares rose by more than 5% at the Johannesburg Stock Exchange in line with those of other gold and silver miners who have been boosted by rising metal prices.
The London High Court has ordered Sibanye to compensate Appian in October 2024 for the failed transaction.
In a joint press release, the companies stated that the agreement was announced one day before the court hearing to determine the amount of the award.
Richard Stewart, CEO of Sibanye, said, "We are happy with the commercial settlement that has been agreed. It prevents the need for further legal proceedings and costs, and gives certainty to the group and all its stakeholders."
Michael W. Scherb, the founder and CEO of Appian, said that both parties had reached a "constructive solution".
Scherb stated that "this positive outcome allows us the opportunity to close this case on appropriate terms, and focus all our attention on managing our fund and driving continued growth throughout our portfolio."
Appian, based in London, filed a compensation claim against Sibanye following the Johannesburg-based precious-metals producer's cancellation of a January 2022 deal to purchase the Santa Rita mine and Serrote in Brazil. (Reporting and editing by Emelia Sithole Matarise; Nelson Banya)
(source: Reuters)