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Morning bid Europe-Nvidia earnings to likely overshadow US delayed data
Tom Westbrook gives us a look at what the future holds for European and global markets. On Monday, the U.S. economy will start to flow again with figures on construction spending for August. On Thursday, September's jobs data will be released. The next month will bring more up-to date figures on labour and prices. However, due to concerns over the quality of these data and hawkish comments from policymakers, expectations for a December rate cut are fading. The main event for markets this week is likely Nvidia earnings after the close on Wednesday, which are shaping as a test for the artificial-intelligence bull run. According to LSEG analysts are becoming more optimistic with regards to future revenue, leaving the company a lot of room to improve. On Monday, the markets in Asia were cautious, with the dollar rising a bit. The deepening diplomatic dispute between China and Japan also impacted the Tokyo stock market. After China warned its citizens to avoid Japan, shares of Muji parent Ryohin Kaikaku, department-store operator Isetan Mitsukoshi, and Shiseido each saw losses of about 10%. After Japan's Prime Minster Sanae Takaichi warned lawmakers that a Chinese attack against Taiwan could threaten Japan’s survival, and possibly trigger a military reaction, a row broke out. Japanese media reported that a senior Japanese diplomat would be heading to China to try and calm down the situation. Separate Japanese news reports on plans to spend $110 billion on a government stimulus package put pressures on Japanese bonds. Market developments on Monday that may have a significant impact - Canada inflation data - Delayed U.S. construction data; November Empire State manufacturing survey Fed's Williams Jefferson Kashkari Waller
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Saudi Crown Prince visits US to discuss defence, AI, and nuclear issues
Saudi Arabia's de-facto ruler will visit the White House on Tuesday for talks with U.S. president Donald Trump. The goal is to expand and deepen longstanding cooperation in oil and security, while also enhancing ties to commerce, technology, and even nuclear energy. This will be Crown Prince Mohammed bin Salman's first visit to the U.S. after the killing by Saudi agents of Saudi critic Jamal Khashoggi in Istanbul last year, which caused an international uproar. U.S. Intelligence concluded that MBS had approved the capture or murder of Khashoggi. The Crown Prince, also known as MBS and widely known for his initials, denied ordering the attack but admitted responsibility in his role as de facto ruler of the Kingdom. After more than seven years, the largest economy in the world and the top oil producer in the world want to move on. Trump wants to take advantage of a Saudi Arabian investment pledge worth $600 billion made during Trump's May visit. He avoided mentioning human-rights concerns during his May visit and will likely do so again. Saudi Arabia's leader wants security guarantees in the face of regional unrest, access to artificial-intelligence technology and progress on a civilian nuke programme. Aziz Alghashian is a Saudi lecturer in international relations who teaches at Naif Arab University of Security Sciences. Focus on DEFENCE DEAL Saudi Arabia and the United States have had a long-standing agreement whereby the Saudi Arabian kingdom sells oil at favorable prices in exchange for security provided by the superpower. Washington's inaction when Iran attacked oil installations in Saudi Arabia in 2019 shook this equation. In September, Israel's attack on Doha in Qatar in which it claimed to have targeted Hamas militants in Palestine re-emerged as a source of concern. Trump then signed an executive order to sign a defense pact between the United States and Qatar. Many analysts, regional officials and diplomats believe that the Saudis are going to get something similar. Saudi Arabia sought to have a recent defence pact approved by the U.S. Congress during recent negotiations. Washington, however, has put a condition on this: normalizing relations between the kingdom and Israel. Riyadh, in turn, has linked this to the commitment of Israel's right-wing government to the creation of a Palestinian state. Benjamin Netanyahu, the Israeli Prime Minister who, after two years war, agreed to a ceasefire in Gaza mediated by Trump last month, reaffirmed on Sunday his opposition to Palestinian statehood. A Trump executive agreement on defence, similar to the one with Qatar, would not be the defense agreement that the Saudis are seeking. Alghashian, however, said that it would be "a step along the way, a part of the processes, not the ending of the processes." One Western diplomat in the Gulf summarized the dynamics: "Trump wants to normalize and Saudi Arabia wants a full-fledged defence pact but the circumstances do not allow." Both sides are likely to get less than what they wanted in the end. That's diplomacy." Dennis Ross, former Middle East negotiator for Democratic, Republican and now the Washington Institute for Near East Policy said that he expected an executive order calling for the U.S. to consult with the Saudis on "what to do to respond to the threat", but not to commit Washington to come to Riyadh's defence. He said that this could include a variety of assistance including replacing weapons, deploying defensive rocket batteries such as THAAD and Patriot, or deploying marines with naval forces. DEALS KEY IN REGIONAL RIVALRY Riyadh also pushed for deals on nuclear energy and artificial Intelligence as part of its ambitious Vision 2030 Plan to diversify the economy and improve its position in relation to rivals. The approval of advanced computer chips is crucial to the Kingdom's plans to compete with United Arab Emirates which signed a multi-billion dollar data centre deal in the United States in June, giving it access to high end chips. MBS wants to reach an agreement with Washington to develop a Saudi civil nuclear programme as part of his efforts to diversify away from oil. A deal like this would give Saudi Arabia access to U.S. security and nuclear technology, as well as allowing it to compete with its traditional enemy Iran and the UAE. The Saudis refused to accept a U.S. clause that would have prohibited the enrichment of uranium and the reprocessing of spent fuel, both possible paths to making a nuclear bomb. Ross said that he was expecting an announcement on nuclear energy or at least progress in reaching one. (Reporting from Riyadh by Timour Azhari; Editing by Cynthia Osterman).
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Gold remains steady as attention turns to US data and Fed signals
Gold prices rose on Monday, as investors waited to see a number of economic reports from the United States this week which could shed light on Federal Reserve's rate policy. As of 0256 GMT, spot gold was up by 0.1% to $4,083.92 an ounce. U.S. Gold Futures for December Delivery fell 0.2% to $4.085.30 an ounce. Tim Waterer, Chief Market Analyst at KCM Trade, said that the selling pressure on Gold last Friday may have been a little overdone. Gold's yield is being harmed by the Fed's tempered expectations of a rate cut next month. Although the shutdown is over, it does not mean that the Fed or the markets will be able to see the full picture of how the economy is performing. The market participants will be looking for clues about the health of America's largest economy this week. This includes the nonfarm payrolls data on Thursday. The Bureau of Economic Analysis of the Commerce Department said that it is working on updating its schedule of economic data releases affected by the recent government shutdown. The traders are now pricing in 46% of a Fed rate reduction next month. This is down from 50% last week. A growing number of Fed policymakers have expressed reluctance to further ease the monetary conditions, citing concerns about inflation and signs that the labour market has remained relatively stable after two rate cuts in this year. Gold that does not yield tends to perform well in low interest rate environments and times of economic uncertainty. The dollar index held its ground against its rivals and made gold less appealing for other currency holders. SPDR Gold Trust is the largest gold-backed ETF in the world. Its holdings dropped 0.47% on Friday to 1,044.00 tons from 1,048.93 tonnes on Thursday. Silver spot rose 0.8%, to $50.96 an ounce. Platinum gained 0.7%, to $1.552.36. Palladium climbed by 1.7%, to $1.408.13. (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)
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Iron ore prices rise on China's stimulus hopes and firm demand in the near term
Iron ore futures rose on Monday. This was aided by renewed hopes for stimulus from China, the world's largest consumer, after a series of weak data and strong near-term demand. By 0230 GMT, the most traded January iron ore contract at China's Dalian Commodity Exchange(DCE) had risen 0.84% to $781 yuan ($109.93) per metric ton. It reached its highest level at 785 Yuan earlier in session. As of 0220 GMT the benchmark December iron ore traded on the Singapore Exchange had risen by 0.69% to $103.3 per ton after reaching its highest level in November at $103.55 earlier that day. In an interview given to Xinhua News Agency on Saturday, China's Finance Minister said that the country will be strengthening its fiscal policy in the next five-year period. November is a month that lacks macro-political guidance. The second largest economy in the world is on course to reach its annual growth goal of around 5%. However, a series of weak data have highlighted challenges ahead. This has reignited hope of stimulus following a December politburo. Analysts at Zhenxin Futures wrote in a report that an unexpected increase in demand had supported the rebound in ore price. As of November 13, the average daily hot metal production, which is a measure of iron ore consumption, ended six weeks of declines and rose 1.1% on a weekly basis to reach a new three-week-high of 2,37 million tons. The pressure of rising portside inventories, and increased shipments, limited the price increases. Coking coal, coke and other steelmaking components rose by 0.21% and 0.74 %, respectively. The benchmarks for steel on the Shanghai Futures Exchange have been moving sideways. Hot-rolled coil and rebar both rose by 0.98%, while stainless steel fell 0.12%. ($1 = 7,1046 Chinese Yuan) (Reporting and editing by Amy Lv, Lewis Jackson)
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Chandra Asri receives $750 million in funding from KKR for the purchase of Exxon's Singapore petrol stations
Chandra Asri Pacific, based in Indonesia, announced on Monday that it had secured a bespoke financing package of $750 million from investment firm KKR for its purchase of ExxonMobil’s Esso retail fuel station network. The Indonesian conglomerate announced late October that it would retain the Esso brand, continue to source fuel from ExxonMobil and integrate its existing workforce. Chandra Asri has not disclosed financial details about the transaction until now. The deal includes almost 60 fuel stations and associated supply agreements. KKR Capital Markets will arrange the financing solution, which is anchored on KKR’s private credit and Insurance platforms. SJ Lim (Managing Director and Head of Asia Private Credit at KKR) said: "This transaction aligns to our focus on tailoring capital solutions to leading businesses across Asia Pacific and we look forward supporting Chandra Asri’s continued growth, as it strengthens downstream energy and its retail presence in Singapore." Chandra Asri shares were up by 1.1% to 7,075 Rupiah. The company's market capitalization is $36.22 billion, and the stock has lost roughly 6% this year.
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Stocks on edge as Nvidia's earnings test looms
Asia's stock market struck a cautious note on Monday, as traders awaited a week full of corporate earnings. They also awaited U.S. catch-up data. The focus was on interest rate expectations and the fate of the artificial intelligence rally. Market expectations of a U.S. interest rate cut in December have fallen from 60% to 40% a week earlier, and this has put pressure on the stock market. S&P futures rose 0.3% in the early trading. Nikkei remained flat but retail and tourism stocks plunged after China warned its citizens not to visit Japan amid a growing diplomatic dispute. The shares of cosmetics maker Shiseido and department store operator Isetan Mitsukoshi have fallen by around 10%. The Australian stock market hit a 4-month low after a 0.7% decline for BHP following the British high court's ruling that it was responsible for a dam failure in Brazil. Wall Street indexes rebounded from a steep selling off on Friday, resulting in a mixed closing. The S&P 500 saw a slight drop and the Nasdaq saw a modest gain. The yields on ten-year U.S. Treasury bonds rose in Tokyo, holding at 4.156%. Jobs, Delay This week, the headline U.S. release will be the delayed September jobs report on Thursday. Private surveys have already indicated a slowdown in the labour market, so these figures are likely to be outdated. The Federal Reserve will be making 19 public appearances this week. Their interpretation of the data is also going to be scrutinised. On Friday, Kansas City Federal Reserve president Jeffrey Schmid and Dallas Federal Reserve president Lorie Logan were hawkish in their outlook and questioned the need for a rate cut next month. There is an expectation that a weaker job market and higher inflation will equalize risks. Bob Savage is the head of BNY's markets macro strategy. He said that neither are good for risk as stagflation has returned to the language. Data from Asia revealed that Japan's economy shrank for the first quarter in six due to tariffs imposed by the United States. The Nikkei reported on the weekend that Japan was considering spending approximately 17 trillion yen (110 billion dollars) for Prime Minister Takaichi’s first stimulus package. This highlights her focus of expansionary fiscal policies. The yen was held at 154.54 to the dollar, and markets were on high alert. Meanwhile, the bond market fell and 10-year yields reached their highest level since 2008. Analysts see flight risks if the faith of investors in fiscal discipline is shaken. This was evident in Britain last weekend when stocks, bonds, and sterling fell on reports that Finance Minister Rachel Reeves would back away from tax increases. NVIDIA EARNINGS Home Depot, Target and Walmart report their earnings this week in the U.S. All eyes are on Nvidia, as the market response will be a test for the recent rally. If you don't get the growth I believe the market expects around Nvidia, or the positive comments that we're likely to receive from Nvidia moving forward, I'm afraid you're going see a bigger dent in those types of trades," Orton stated. Nvidia's shares have increased by about 1,000% in value since the launch ChatGPT, which took place in November 2022. Nvidia's market value surpassed $5 trillion last month after a gain of over 40% year-to date. The dollar was slightly higher in other foreign exchange markets, with the euro holding steady at $1.1607, and the major currencies creeping up. Gold lost ground on Friday, slipping to $4,084 per ounce. Brent crude futures fell 1% in Asia morning to $63.78. Bitcoin, which in recent weeks has acted as a barometer for liquidity and sentiment on technology stocks was suffering its biggest weekly drop since March. It had lost more than 10% the previous week. It was trading at $94,717. Reporting and editing by Jamie Freed in Singapore.
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Australia rejects co-hosting the climate summit with Turkey
Anthony Albanese, Australia's Prime Minister, announced on Monday that Australia will not co-host COP31 with Turkey due to the ongoing stalemate in relations between the two nations. Turkish diplomatic sources said on Sunday that Turkey had proposed to jointly lead next year's U.N. Climate Summit with Australia, and that the discussions regarding the hosting standoff remained unresolved. Albanese told a Melbourne media briefing that co-hosting was not allowed under the United Nations Framework Convention on Climate Change. "So, that's not an alternative and people know that it isn't an option. That is why it was ruled out." Both Australia and Turkey submitted bids to host COP31 in 2022 and neither has withdrawn their bid, resulting in an attention-sucking situation Impasse The COP30, which is currently being held in Belem (Brazil), must overcome these challenges. Conference of the Parties (COP) is the main global forum for climate action. Over the years, it has evolved from diplomatic gatherings to vast trade shows that host countries can use to promote their economic prospects. The host is important because they set up the agenda and are the ones who lead the diplomatic efforts to achieve global agreements. This month, Albanese In an effort to resolve the dispute, Erdogan has spoken to the Turkish president Tayyip Erdoan in order to push for hosting the summit of Pacific Island Nations for the first-time. The Pacific Islands Forum is a regional diplomatic bloc made up of 18 countries that supports Australia's bid. The rising sea levels are a threat to several Pacific island nations.
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IperionX blasts short seller report as shares plunge 24% after halt
IperionX Ltd, an Australian titanium manufacturer, "strongly" rejected a critical report from Spruce Capital on Monday. Its shares fell as much as 24,4% after the trading halt lifted. IperionX shares dropped to A$4.24 at the opening of early trading, the lowest price since July 10. This was the largest decline on the benchmark S&P/ASX 200 Index, which fell 0.2%. IperionX stopped trading on Thursday last week to prepare a reply to Spruce Point’s 93-page study, in which the company was accused of exaggerating its prospects, denying its valuation, and questioning project claims. The short seller raised concerns about discrepancies with project data and finances, despite announcing a A$17,000,000 ($11.11,000,000) supply agreement with Ford Motor Co. The short seller also cast doubts on the management's credibility by citing links with Piedmont Lithium which was previously targeted. IperionX, in its rebuttal to the criticism, said that it stood by its technology. It cited government funding of about $47,000,000 to scale up titanium production. Taso Arima, the chief executive of Taso Arima Corporation, said that a recent Pentagon deal "underscores U.S. Government's commitment to reshore a all-American supply chain for titanium" and confirmed plans to increase production at its Virginia facility. IperionX stated that Spruce Point never contacted its management prior to publishing the report, and has never visited its titanium operations in Virginia. Spruce Point’s attack has put the company's shares to the test. They have tripled in value since 2024. In 2022, the lithium developer Lake Resources fell after a short seller report. Piedmont Lithium - once headed by IperionX CEO - faced similar allegations in 2017.
Copper prices fall as concerns grow about a US rate cut for December
Copper prices eased Monday, amid a general sell-off in the base metals complex. Concerns about a possible December rate cut were fueled by hawkish comments from U.S. Federal Reserve officials.
As of 0250 GMT, the most active copper contract traded on Shanghai Futures Exchange fell 0.78%, trading at 86 560 yuan (12 182,63 yuan) per metric ton.
The benchmark copper for three months on the London Metal Exchange fell 0.16%, trading at $10 835 per ton.
Markets are under pressure because traders have bet against the Fed cutting rates in December.
Some policymakers from the U.S. Central Bank expressed concern about inflation and questioned whether another rate reduction is needed.
On Friday, the U.S. Government announced that it would begin releasing economic data delayed due to the shutdown of government including Thursday's delayed jobs report.
As the market priced in hawkish opinions, the U.S. Dollar grew stronger on Monday. The dollar's strength makes commodities priced in greenbacks more expensive to investors who use other currencies.
The market's sentiment continued to be weakened by disappointing economic data and weak China demand.
Aluminium and lead declined by 1.05%. Zinc fell by 0.44%. Nickel dropped by 0.88%. Tin also fell 1.38%.
Last week, inventories of all base metals except copper rose on SHFE, which indicates a weakening demand.
Lead, nickel, and tin all fell 0.31%. Aluminium and zinc were not affected. $1 = 7.1052 Chinese Yuan Renminbi (Reporting and editing by Dylan Duan, Lewis Jackson)
(source: Reuters)