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Shanghai copper gains on increasing bets of December Fed rate reduction
Shanghai copper continued its gains for the fourth consecutive session on Thursday as renewed hopes of a December rate cut by U.S. Federal Reserve boosted sentiment. As of 0330 GMT the most traded copper contract at the Shanghai Futures Exchange had risen 0.27% to 86,920 Yuan ($12,277.70), after reaching 87,300 Yuan earlier in the session, which was the highest since November 14 The benchmark copper for three months fell 0.44%, to $10 927 per ton. The London copper price eased after it broke through $11,000 per ton on the previous Wednesday. It reached $11,025, its highest level since October 30. ING analysts wrote in a recent note that the market now prices in a probability greater than 80% for a Fed cut in December, up from 30% a few weeks ago. As U.S. retail sales and consumer confidence weakened, a rate cut was expected this year. Codelco is the top copper producer in the world and they are pushing for a premium of up to $350 per ton. This is a steep increase from the $89 last year. Some Chinese buyers may not sign a contract for this year. Nicholas Snowdon, the high-profile copper bull who is also the head of Mercuria's metals research, stated that he expected copper prices to reach new heights in 2025. He cited the shortage of copper concentrates when delivering a keynote address at the World Copper Conference 2020 on Wednesday. Other base metals in the SHFE rose 0.33%. Zinc jumped 0.27%. Tin soared 1.84%. Lead fell 0.79%. Nickel dropped 0.61%. Aluminium, zinc, lead, and nickel all fell in price on the LME. Tin was the only metal to gain, with a gain of 0.68%. Final Nov. 27th DATA/EVENTS 1000 EU Consumer Confid. Final Novembre
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Iron ore prices remain unchanged amid weaker demand and a weaker dollar
Iron ore futures were unable to find direction on Thursday, as falling China lump-ore premiums indicated weak demand for steelmaking materials and offset support from a soft dollar. By 0317 GMT, the most-traded contract for January iron ore on China's Dalian Commodity Exchange climbed 0.13% to 797 Yuan ($112.57) per metric ton. The benchmark December Iron Ore at the Singapore Exchange fell 0.04% to $106.5 per ton. According to Chinese consultancy Mysteel, China's seaborne Iron Ore Lump Premiums against 62% Fe Fines have fallen 42.2% since two months ago and reached their lowest level in late May 2024. Mysteel stated that the low premiums are due to a decline in demand from steelmakers who have been suffering losses. India's finished imports of steel during the first seven-months of the current financial year fell 34.1% on an annual basis, and China's output is expected to fall below 1 billion tonnes this year for first time in 6 years following a pledge by the government to reduce production. Galaxy Futures, a Chinese broker, says that the decline in iron ore and coking coal prices has accelerated due to increased coal supplies and inventory accumulations at coal mines. Galaxy stated that the pig iron production will continue to fall this week. This will put pressure on raw materials. The U.S. Dollar Index was flat at 99.543, having fallen from its six-month high reached a week earlier to reach its biggest weekly drop since July. Dollar-denominated investments are more affordable for holders of currencies other than the greenback. Coke and coking coal were both up or down on the DCE. The benchmarks for steel on the Shanghai Futures Exchange are mostly down. The price of rebar fell 0.36%. Hot-rolled coils dropped 0.15%. Stainless steel declined 0.36%. Wire rod rose 0.48%. ($1 = 7.0800 Chinese yuan) (Reporting by Lucas Liew; Editing by Subhranshu Sahu)
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Noguchi, the Bank of Japan's Noguchi, advocates gradual rate increases
Asahi Noguchi, a member of the Bank of Japan's board, said that it can increase interest rates as soon as tariff risks subside, but only at a "measured and step-by-step pace". He stressed the importance of treading carefully when increasing borrowing costs. Noguchi warned against keeping interest rates low too long, as it could have negative effects on the economy. For example, the yen would weaken and inflation would rise unwelcomely. These remarks come after those made by Governor Kazuo ueda, and other members of the nine-member BOJ board who indicated that there was a possibility of an increase to the BOJ policy rate next month. The warnings come at a time when the recent decline of the yen to its 10-month-low against the dollar has triggered currency intervention warnings, a sign that the administration is concerned about the impact of the weak currency on import costs and inflation. Noguchi stated in a recent speech that while the sole goal of monetary policies is to achieve stable prices, changes in exchange rates and asset prices are important transmission channels. He said that if the yen falls, it will exert upward pressure on prices and economic activity through imports and exports. Noguchi stated that although a weaker yen boosted exports in Japan during the deflationary period, these benefits start to diminish as the economy nears full employment, and the output gap closes. He added that "as supply constraints increase, positive effects will eventually fade and be replaced by negative ones which push inflation above the needed level." NONE OF THE FASTNESS OR SLOWNESS IS TOO HIGH The BOJ put its policy on hold to examine the impact of U.S. Tariffs. Noguchi stated that as the impact of higher U.S. tariffs subsides the BOJ could gradually increase rates again, if the economy is moving in line with the BOJ's projections and prices are rising. He said that for inflation to move sustainably around its 2% goal, the BOJ needs to ensure real wages stabilize around 1%. This condition is likely to be achieved sometime between the second half of fiscal year 2026 and fiscal year 2027. Noguchi stated that the BOJ, with this time frame in mind, should move rates to neutral levels at a rate which is neither too rapid nor slow. The pace of rate increases could be too rapid, which would hurt the wage-hike momentum of companies and make it harder to achieve the central bank's inflation target of 2%. He added that rate increases too slowly could destabilise the economy and prices. He said that the BOJ should carefully examine the various economic channels and how they ultimately impact economic activity and prices. The policy rate can be used to adjust the level of monetary flexibility as needed. Next, the BOJ will hold a policy-making meeting from December 18-19. A second one is scheduled for January of next year. A survey showed that a small majority of economists believe the BOJ will raise rates in March. All of them predict a rate hike of 0.75% in March 2019. Japan's consumer price inflation has been above the BOJ's target of 2% for more than three years. The increase in wages is primarily due to the stubbornly high prices of food, but a growing labour shortage also has a role. (Reporting and editing by Christian Schmollinger; Leika Kihara)
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China releases first batch of crude oil import quotas 2026 for independent refiners
Multiple trade sources reported on Thursday that independent refiners have received the first batch of crude import quotas from China for 2026. These quotas can be used to purchase cargoes due to arrive by the end the year. The new quota will boost crude oil imports to the world's biggest oil importer. Supply glut Two sources familiar with the matter confirmed that Hengli Petrochemical was the refiner who received the quota for the import of 2 million metric tonnes (40,000 barrels of crude per day). Three sources familiar with the matter confirmed that Rongsheng Petrochemical had been granted a quota of 750,000 tons. Shenghong Petrochemical, Hongrun Petrochemical, and Hongrun Petrochemical were each given 120,000 and 530,000 tonnes, respectively. Sources at a second independent refiner confirmed that the company expects to receive official notification on Thursday. Three trade sources reported that 21 refiners have received nearly 8 million tonnes of quota, compared to 6.04 million in November 2024. The Ministry of Commerce of China, which controls crude oil import quotas in China, did not respond immediately to a request for comment sent by fax. The ministry set the crude oil price last month. import quota For 2026, the non-state trade is unchanged at 257 millions tons. One source said that Beijing will dispatch the remaining quotas for 2026 as early as next year.
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Stocks surge on hopes of Fed easing, but yen is locked in the intervention zone
The dollar fell on Thursday as traders began to weigh the possibility of a rate increase before the end of the year. Asian stocks also rose. The holiday-shortened week has resulted in limited movements across the markets. Stocks have maintained a generally positive tone, while currencies are more calm as investors shed AI bubble fears that had shaken equities early in November. The U.S. market is closed on Thanksgiving Day, Thursday. It will reopen for a brief session on Friday. MSCI's broadest Asia-Pacific share index outside Japan rose 0.4%, following Wall Street gains and on track to end a three-week loss streak. Japan's Nikkei, and South Korea's Kospi both surged by over 1%. Charu Chanana is the chief investment strategist for Saxo. He said that stocks have responded positively to renewed Fed rate-cut expectations, which helped to cool recent AI bubble concerns. The Fed's anticipated cut and strong seasonality make December a difficult to bearish month, and Santa rally is still on the table. China's property sector has been in the spotlight again after China Vanke, a property developer, sought approval from bondholders to delay repayment of an onshore bond worth 2 billion yuan (282.6 million dollars). At the opening of the market on Thursday, bonds issued by Vanke continued to fall. This is a continuation of this week's losses. Vanke's bonds in yuan have fallen by more than 20%. Some are down as much as 40%. China's CSI300 property index dropped to a new low of 1.5%. The broader CSI300 Index however ticked up by 0.4%. WAGE WAGERS FOR SURGING RATE CUTTING The U.S. data has returned since the 43-day record government shutdown ended in mid-November. However, the majority of economic reports released so far are significantly outdated and offer very little insight on the state of the economy. Investors are now focusing on the comments of Fed officials in order to determine U.S. monetary policies. Comments this week by San Francisco Federal Reserve Bank president Mary Daly, and Fed Governor Christopher Waller have boosted expectations for a rate reduction. CME FedWatch shows that traders now price in 85% of a rate reduction next month, compared to just 30% one week ago. George Boubouras of K2 Asset Management said that the weakening labour market is sufficient to offset inflation. A rate cut in December looks reasonable. While core inflation is higher than target, the U.S. breakeven 10-year inflation rate of around 2.25 percent suggests that markets remain comfortable with inflation expectations. The euro reached its highest level in over a week, at $1.16115. The dollar index (which measures the U.S. currencies against six rivals) was 99.431, down 0.28% from the previous day. According to data released on Wednesday, the number of Americans who applied for unemployment benefits last week fell to its lowest level in seven months. This suggests that layoffs are still low. The sterling rose to $1.3247 in a month's time, after the UK Finance Minister Rachel Reeves budget eased some concerns about Britain's finances on a long-term basis. Watches YEN The Japanese yen gained a little to 156.07 dollars as investors waited for Tokyo to intervene after weeks of verbal scolding by authorities to stop the currency's steady decline. Sanae Takaichi, Prime Minister of Japan, ruled out Wednesday that Japan might face a "Truss Moment" or loss in market confidence resulting from her fiscal expansion. Since the beginning of October, the Japanese currency has fallen by almost 10 yen. This is because Takaichi assumed the presidency amid concerns that the government's spending plan will require heavy borrowing and doubts about the timing of the Bank of Japan's next rate increase. Sources have told us that the BOJ has been preparing the markets for an upcoming rate hike. It may even be as early as next month. The BOJ could also adopt a more consistent path of rate hikes to change the trajectory of its currency. Bitcoin gained 1.75% on Thursday to $91,787.55, on course to end a four-week loss streak with a gain of nearly 3%. Gold fell 0.4% to $4146.53 an ounce after rising by 0.8% the previous session. (Reporting and editing by Shri Navaratnam in Singapore, Ankur Banerjee)
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ASIA COPPER WORRK-Comex copper Premium here to stay: LME executive
A senior executive at the London Metal Exchange said that the premium in copper prices on the U.S. Comex will likely persist for the next 18-months, citing uncertainty over tariffs on copper in the United States. Robin Martin, the Head of Market Development for the LME, said in a speech at the World Copper Conference Asia that there was a 2 to 3 percent premium on CME contracts. CME-LME divergence, a result of U.S. Tariffs, has led to a shift in copper stocks from LME sheds to COMEX sheds. On Monday, U.S. exchange inventories of copper exceeded 400,000 short tonnes for the first ever time. EXPAND ACCESS TO CHINA Martin stated that the LME was working hard to make their service more accessible for Chinese customers. He said that the exchange was making significant efforts to accept offshore Yuan as collateral, and was working with major Chinese banks in order to streamline service. The LME executive said the exchange was also looking into accepting Chinese government bond as collateral for its clearinghouse. (Reporting and editing by Tom Hogue, Sonali Paul and Lewis Jackson)
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Prices of oil drop as a result of the ceasefire in Ukraine, which will allow Russian supplies to be released
Oil prices dropped on Thursday, as traders remained thin because of the U.S. holiday Thanksgiving. Brent crude futures fell 21 cents or 0.3% to $62.92 a barrel as of 0108 GMT. U.S. West Texas Intermediate Crude futures also dropped 21 cents or 0.4% to $58.44 a barrel. Investors weighed the oversupply risks and the prospects of a Russia/Ukraine peace agreement as they assessed Wednesday's settlement prices. Steve Witkoff, U.S. ambassador to Russia and other senior U.S. officials will travel to Moscow with Russian leaders next week for discussions on a potential plan to end the nearly 4-year-old conflict in Ukraine. This war is the deadliest to have occurred in Europe since World War Two. A senior Russian diplomat stated on Wednesday that Russia would not make any big concessions in regards to a peace plan. This was after a recording of Witkoff's call with Moscow revealed that he advised Moscow how to approach U.S. president Donald Trump. In a client letter, Commonwealth Bank of Australia analyst Vivek dhar stated that a ceasefire would reduce the perceived supply risk associated with U.S. sanction on Russian oil producers Rosneft, and Lukoil. He added that sanctions which went into effect on November 21 had already affected Russia's oil, and refined products exports. Dhar noted that "a Ukraine-Russia agreement should see Brent drop to $60 per barrel relatively quickly", noting also that a ceasefire will allow Russian refinery activities to return to normal as Ukraine's drone strikes would stop. The market was also affected by a larger-than expected increase in U.S. crude oil inventories. The Energy Information Administration reported on Wednesday that U.S. crude oil inventories rose 2.8 million barrels, to 426.9 millions barrels. Imports also reached a record high of 11 weeks. Analysts expected a rise of 55,000 barrels. Baker Hughes, an energy services company, said that U.S. firms have reduced the number of oil drilling rigs to 407, the lowest level since September 2021. This is a sign the market has plenty of supply. Three OPEC+ source told Reuters on Tuesday that the Organization of the Petroleum Exporting Countries (OPEC) and its allies will likely leave the output levels unchanged during a Sunday meeting. Several members of the group that pumps half the oil in the world have increased production since April, to gain market shares. The rising expectation of a rate cut by the U.S. Federal Reserve in December helped to support crude oil prices. Lower rates are known to stimulate economic growth, which in turn boosts oil demand. (Reporting and editing by Christopher Cushing; Yuka Obayashi)
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Stocks surge on hopes of US rate cuts, but yen remains in the intervention zone
The dollar fell on Thursday as traders began to expect a Federal Reserve rate cut next month. Meanwhile, the yen was in the spotlight with traders considering the possibility of a rate increase before the end the year. The holiday-shortened week has resulted in limited movements across the markets, with stocks maintaining a generally positive tone and currencies more sedate. The U.S. market is closed on Thanksgiving Day and will resume trading on Friday. MSCI's broadest Asia-Pacific share index outside Japan rose 0.27%, following Wall Street gains and on track to end a three-week loss streak. Japan's Nikkei, and South Korea's Kospi both surged by over 1%. Investors will also focus on the Chinese real estate sector, as China Vanke is seeking bondholder approval for a delay in the repayment of an onshore bond worth 2 billion yuan (282.6 million dollars). The first public bond extension for the state-backed developer would be a first. This property developer is a household name in China with numerous projects. It could cause a new wave in the financial and real estate markets. WAGE WAGERS FOR SURGING RATE CUTTING The U.S. government shutdown, which lasted 43 days and ended in mid-November was a record. However, the majority of economic reports released so far are dated. They offer little insight on the state of the economy. Investors are now focusing on the comments of Fed officials in order to determine U.S. monetary policies. Comments this week by San Francisco Federal Reserve Bank president Mary Daly, and Fed Governor Christopher Waller have boosted expectations for a rate reduction. CME FedWatch shows that traders now price in an 85% probability of a rate reduction next month, compared to just 30% one week ago. George Boubouras of K2 Asset Management said that the weakening labour market is sufficient to offset inflation. A rate cut in December looks reasonable. While core inflation is higher than target, the U.S. breakeven inflation rate of around 2.25 percent over a 10-year period suggests that inflation expectations are still reasonable. The short-term USD strength will continue, but it is expected to reverse in the March quarter of 2026. In early trading, the euro reached its highest level in over a week. It was 1.16045. The dollar index (which measures the U.S. currencies against six rivals) was unchanged at 99.523, after falling 0.28% the previous day. According to data released on Wednesday, the number of Americans who applied for unemployment benefits last week fell to its lowest level in seven months. This suggests that layoffs are still low. The sterling rose to $1.3247 in a month's time, after the UK Finance Minister Rachel Reeves budget eased some concerns about Britain's finances on a long-term basis. Watches YEN The Japanese yen gained a little to 156.16 dollars as investors waited for Tokyo to intervene after weeks of verbal scolding by authorities to stop the currency's steady decline. Sanae Takaichi, Prime Minister of Japan, ruled out Wednesday that Japan might face a "Truss Moment" or a loss of confidence in the market due to her fiscal expansion. Since the beginning of October, the Japanese yen has fallen by almost 10 yen. This is because Takaichi assumed the presidency amid concerns that the government's spending plan will require heavy borrowing and doubts about the timing of next rate hikes from the Bank of Japan. Sources have told us that the BOJ has been preparing the markets for an upcoming rate hike. It may even be as early as next month. The BOJ could also adopt a more consistent path of rate hikes to change the currency's trajectory. Bitcoin was above $90,000. It is on course to end a four-week loss streak, with a gain of nearly 3%. Gold remained flat at $4164.81 an ounce after rising by 0.8% the previous session. (Reporting and editing by Shri Navaratnam in Singapore)
Investors weigh Fed rate-cut betting as gold steadies near two-week-high
The gold price was largely unchanged on Thursday, after reaching a two-week high the previous session. Market participants were weighing the possibility of an interest rate cut in December by the U.S. Federal Reserve amid contradictory signals.
As of 0200 GMT, spot gold was down by 0.2%, at $4,154.09 an ounce. U.S. Gold Futures for December Delivery fell 0.3% per ounce to $4,151.20.
GoldSilver Central MD Brian Lan stated that the Fed was not clear about what it would do next. Gold is consolidating ahead of the Fed meeting, which begins this week.
Investors seeking to protect themselves from increased policy uncertainty have increased the flow of swaptions and derivatives linked to overnight rates.
Some Fed officials have said that a December easing could be warranted because the weak labor market is putting downward pressures on Treasury yields.
In the previous session, benchmark 10-year Treasury yields were near their lowest levels in over a month.
However, their stance contrasted with that of several regional Fed presidents who advocated a pause on easing until the inflation showed a more compelling move towards the 2% target.
Kevin Hassett has also said that rates should be lowered, as has Donald Trump.
According to CME's FedWatch, U.S. rate forwards price in an 85% probability of a rate reduction in December.
Gold that does not yield tends to do well in an environment of low interest rates.
Data on Wednesday revealed that the number of weekly jobless claims dropped last week, despite the fact that there are still not enough jobs to go around.
In November, U.S. consumer sentiment also declined due to concerns about the economy and household finances.
Other than that, silver spot fell by 0.9%, to $52.89 an ounce. Platinum gained 1.4%, to $1.611.04, while palladium dropped 0.9%, to $1.409.87. (Reporting by Ishaan Arora in Bengaluru; Editing by Rashmi Aich)
(source: Reuters)